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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>OR</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_908_edei--ContactPersonnelName_c20230101__20231231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_z3x80cU7ivq"><ix:nonNumeric contextRef="From2023-01-012023-12-31_dei_BusinessContactMember" id="Fact000031" name="dei:ContactPersonnelName">Howard
Lee</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Chairman
and Chief Executive Officer</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Telephone:
(<span id="xdx_90B_edei--CityAreaCode_c20230101__20231231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zZKkGedYpjmd"><ix:nonNumeric contextRef="From2023-01-012023-12-31_dei_BusinessContactMember" id="Fact000032" name="dei:CityAreaCode">86</ix:nonNumeric></span>) <span id="xdx_90F_edei--LocalPhoneNumber_c20230101__20231231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_z4MOKUGPqqr6"><ix:nonNumeric contextRef="From2023-01-012023-12-31_dei_BusinessContactMember" id="Fact000033" name="dei:LocalPhoneNumber">18500976532</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Email:
info@lucasgc.com</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_907_edei--EntityAddressAddressLine1_c20230101__20231231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zxPu5dlvoqa2"><ix:nonNumeric contextRef="From2023-01-012023-12-31_dei_BusinessContactMember" id="Fact000034" name="dei:EntityAddressAddressLine1">Room
5A01, 4th Floor</ix:nonNumeric></span>,</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_90C_edei--EntityAddressAddressLine2_c20230101__20231231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zvzJ8LxgYFAg"><ix:nonNumeric contextRef="From2023-01-012023-12-31_dei_BusinessContactMember" id="Fact000035" name="dei:EntityAddressAddressLine2">Air
China Building, Xiaoyun Road</ix:nonNumeric></span>,</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_90C_edei--EntityAddressAddressLine3_c20230101__20231231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_zL16YrPA8zfb"><ix:nonNumeric contextRef="From2023-01-012023-12-31_dei_BusinessContactMember" id="Fact000036" name="dei:EntityAddressAddressLine3">Sanyuanqiao</ix:nonNumeric></span>,
<span id="xdx_902_edei--EntityAddressCityOrTown_c20230101__20231231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_z1jfyneWA1Nj"><ix:nonNumeric contextRef="From2023-01-012023-12-31_dei_BusinessContactMember" id="Fact000037" name="dei:EntityAddressCityOrTown">Chaoyang District</ix:nonNumeric></span>,</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Beijing
<span id="xdx_90F_edei--EntityAddressPostalZipCode_c20230101__20231231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_z15fcd02eI9f"><ix:nonNumeric contextRef="From2023-01-012023-12-31_dei_BusinessContactMember" id="Fact000038" name="dei:EntityAddressPostalZipCode">100027</ix:nonNumeric></span>, <span id="xdx_907_edei--EntityAddressCountry_c20230101__20231231__dei--EntityAddressesAddressTypeAxis__dei--BusinessContactMember_z0onzSlJKrh1"><ix:nonNumeric contextRef="From2023-01-012023-12-31_dei_BusinessContactMember" format="ixt-sec:countrynameen" id="Fact000039" name="dei:EntityAddressCountry">China</ix:nonNumeric></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Name,
Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Securities
registered or to be registered pursuant to Section 12(b) of the Act:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 40%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Title
    of each class</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 20%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Trading
    Symbol(s)</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 36%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name
    of each exchange on which registered</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_906_edei--Security12bTitle_c20230101__20231231_zF5uHgmTzpn4"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000040" name="dei:Security12bTitle">Ordinary
    shares, par value US$0. 000005 per share</ix:nonNumeric></span></b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_90B_edei--TradingSymbol_c20230101__20231231_zunx0ZnmzWr8"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000041" name="dei:TradingSymbol">LGCL</ix:nonNumeric></span></b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The<span id="xdx_905_edei--SecurityExchangeName_c20230101__20231231_zbRT8gw7mvG9">
                                            <ix:nonNumeric contextRef="From2023-01-01to2023-12-31" format="ixt-sec:exchnameen" id="Fact000042" name="dei:SecurityExchangeName">Nasdaq</ix:nonNumeric></span> Stock Market LLC</b></span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(The
    Nasdaq Capital Market)</b></span></p></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Securities
registered or to be registered pursuant to Section 12(g) of the Act:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>None</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Title
of Class)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>None</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(Title
of Class)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
the number of outstanding shares of each of the issuer&#8217;s classes of capital or common stock as of the close of the period covered
by the annual report:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As
of December 31, 2023, there were <span id="xdx_908_edei--EntityCommonStockSharesOutstanding_iI_pid_c20231231_zZw4zQamxMmh"><ix:nonFraction name="dei:EntityCommonStockSharesOutstanding" contextRef="AsOf2023-12-31" id="Fact000043" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">78,063,300</ix:nonFraction></span> ordinary shares issued and outstanding, par value US$0.000005 per share.</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes &#9744; <span id="xdx_90D_edei--EntityWellKnownSeasonedIssuer_c20230101__20231231_zzmctIZsA0W9"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000044" name="dei:EntityWellKnownSeasonedIssuer">No</ix:nonNumeric></span> &#9746;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 Yes &#9744; <span id="xdx_906_edei--EntityVoluntaryFilers_c20230101__20231231_zR3wccoVW9lk"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000045" name="dei:EntityVoluntaryFilers">No</ix:nonNumeric></span> &#9746;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days. <span id="xdx_908_edei--EntityCurrentReportingStatus_c20230101__20231231_zZAhY07j5lyk"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000046" name="dei:EntityCurrentReportingStatus">Yes</ix:nonNumeric></span> &#9746; No &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (&#167;232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). <span id="xdx_903_edei--EntityInteractiveDataCurrent_c20230101__20231231_z7GNeMm5lzBd"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000047" name="dei:EntityInteractiveDataCurrent">Yes</ix:nonNumeric></span> &#9746; No &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company. See definition of &#8220;large accelerated filer, &#8220;accelerated filer&#8221; and &#8220;emerging growth company&#8221;
in Rule 12b-2 of the Exchange Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 20%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large
    accelerated filer</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 4%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 20%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated
    filer</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 4%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 20%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90A_edei--EntityFilerCategory_c20230101__20231231_zpVTDGlCjtFa"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" format="ixt-sec:entityfilercategoryen" id="Fact000048" name="dei:EntityFilerCategory">Non-accelerated
    filer</ix:nonNumeric></span></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 4%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 25%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging
    growth company</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 3%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_907_edei--EntityEmergingGrowthCompany_c20230101__20231231_zK3GgnDhqkg"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" format="ixt:booleantrue" id="Fact000049" name="dei:EntityEmergingGrowthCompany">&#9746;</ix:nonNumeric></span></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act. <span id="xdx_90A_edei--EntityExTransitionPeriod_c20230101__20231231_zJ4TQph7gFSl"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" format="ixt:booleanfalse" id="Fact000050" name="dei:EntityExTransitionPeriod">&#9744;</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8224;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    term &#8220;new or revised financial accounting standard&#8221; refers to any update issued by the Financial Accounting Standards
    Board to its Accounting Standards Codification after April 5, 2012.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant has filed a report on and attestation to its management&#8217;s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. <span id="xdx_901_edei--IcfrAuditorAttestationFlag_c20230101__20231231_zkdBi6suyMn5"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" format="ixt:booleanfalse" id="Fact000051" name="dei:IcfrAuditorAttestationFlag">&#9744;</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. <span id="xdx_90F_edei--DocumentFinStmtErrorCorrectionFlag_c20230101__20231231_zJLSQmHAOgKi"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" format="ixt:booleanfalse" id="Fact000052" name="dei:DocumentFinStmtErrorCorrectionFlag">&#9744;</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant&#8217;s executive officers during the relevant recovery period pursuant to &#167;240.10D-1(b). &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 25%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_905_edei--DocumentAccountingStandard_c20230101__20231231_zvJtmzacYML"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000053" name="dei:DocumentAccountingStandard">U.S. GAAP</ix:nonNumeric></span> &#9746;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 46%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">International
    Financial Reporting Standards as issued</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 25%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
    &#9744;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">by
    the International Accounting Standards Board &#9744;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
&#8220;Other&#8221; has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow: Item 17 &#9744; Item 18 &#9744;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes &#9744; No<span id="xdx_905_edei--EntityShellCompany_dbF_c20230101__20231231_zKHDehLzuHSa"> <ix:nonNumeric contextRef="From2023-01-01to2023-12-31" format="ixt:booleanfalse" id="Fact000054" name="dei:EntityShellCompany">&#9746;</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. &#9744; Yes &#9744; No</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>TABLE
OF CONTENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 0.5in; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Page</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Su_001">INTRODUCTION</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ii</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Su_002">FORWARD-LOOKING INFORMATION</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">iii</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Su_003">PART I</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Su_004">ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Su_005">ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Su_006">ITEM 3. KEY INFORMATION</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Su_007">ITEM 4. INFORMATION ON THE COMPANY</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">36</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 4A. UNRESOLVED STAFF COMMENTS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">49</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">49</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">75</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">80</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_005"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 8. FINANCIAL INFORMATION</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">80</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 9. THE OFFER AND LISTING</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">81</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_007"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 10. ADDITIONAL INFORMATION</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">81</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_008"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">93</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_009"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">93</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><a href="#S1_010"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PART II</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">94</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_011"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">94</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_012"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">94</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_013"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 15. CONTROLS AND PROCEDURES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">94</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_014"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16. [RESERVED]</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">95</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_015"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">95</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_016"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16B. CODE OF ETHICS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">95</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_017"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">95</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_018"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">95</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_019"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">95</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_020"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16F. CHANGE IN REGISTRANT&#8217;S CERTIFYING ACCOUNTANT</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">95</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_021"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16G. CORPORATE GOVERNANCE</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">96</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_022"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16H. MINE SAFETY DISCLOSURE</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">96</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_023"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">96</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_024"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16J. INSIDER TRADING POLICIES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">96</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_025"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 16K. CYBERSECURITY</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">96</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><a href="#S1_026"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PART III</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">96</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_027"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 17. FINANCIAL STATEMENTS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">96</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_028"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 18. FINANCIAL STATEMENTS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">96</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 20pt; vertical-align: top"><a href="#S1_029"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM 19. EXHIBITS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">96</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><a href="#S1_030"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">SIGNATURES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">97</td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><a href="#S1_031"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-1</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Su_001"></span>INTRODUCTION</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
otherwise indicated or the context otherwise requires, all information in this annual report reflects the following:</span></p>

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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;CAC&#8221;
    refers to the Cyberspace Administration of China;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;CSRC&#8221;
    refers to the China Securities Regulatory Commission;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;CAGR&#8221;
    refers to compound average growth rate;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;China&#8221;
    or the &#8220;PRC&#8221;, in each case, refers to the People&#8217;s Republic of China, excluding, for the purpose of this annual
    report only, Hong Kong, Macau and Taiwan. The term &#8220;Chinese&#8221; has a correlative meaning for the purpose of this annual
    report. When used in the case of laws and regulations, of &#8220;China&#8221; or &#8220;the PRC&#8221;, it refers to only such laws
    and regulations of mainland China;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;EIT&#8221;
    refers to enterprise income tax;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Hong
    Kong&#8221; refers to Hong Kong Special Administrative Region in the PRC;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;ordinary
    shares&#8221; or &#8220;shares&#8221; refer to our ordinary shares of par value US$0.000005 per share;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;R&amp;D&#8221;
    refers to research and development;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;RMB&#8221;
    and &#8220;Renminbi&#8221; refer to the legal currency of mainland China;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;SEC&#8221;
    refers to the Securities and Exchange Commission;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;US$&#8221;
    and &#8220;U.S. dollars&#8221; refer to the legal currency of the United States;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;U.S.
    GAAP&#8221; refers to generally accepted accounting principles in the United States; and</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;we,&#8221;
    &#8220;us,&#8221; &#8220;our company,&#8221; and &#8220;our&#8221; refer to Lucas GC Limited, a Cayman Islands company and its subsidiaries.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Su_002"></span>FORWARD-LOOKING
INFORMATION</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
annual report contains forward-looking statements that reflect our current expectations and views of future events. Known and unknown
risks, uncertainties and other factors, including those listed under &#8220;Risk Factors,&#8221; may cause our actual results, performance
or achievements to be materially different from those expressed or implied by the forward-looking statements.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
can identify some of these forward-looking statements by words or phrases such as &#8220;may,&#8221; &#8220;will,&#8221; &#8220;expect,&#8221;
&#8220;anticipate,&#8221; &#8220;aim,&#8221; &#8220;estimate,&#8221; &#8220;intend,&#8221; &#8220;plan,&#8221; &#8220;believe,&#8221;
&#8220;is/are likely to,&#8221; &#8220;potential,&#8221; &#8220;continue&#8221; or other similar expressions. We have based these forward-looking
statements largely on our current expectations and projections about future events that we believe may affect our financial condition,
results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    goals and strategies;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    future business development, financial condition and results of operations;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    expected growth of the integrated logistics industry in China;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    expectations regarding demand for and market acceptance of our products and services;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    expectations regarding our bases of customers;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    plans to invest in our products and services;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">competition
    in our industries; and</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">developments
    in government policies and regulations relating to our industry.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking
statements are reasonable, our expectations may later be found to be incorrect. The forward-looking statements made in this annual report
relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law,
we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future
events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should
thoroughly read this annual report and the documents that we refer to herein with the understanding that our actual future results may
be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
annual report contains certain data and information that we obtained from various government and private publications. Statistical data
in these publications also include projections based on a number of assumptions. China&#8217;s services for professionals industry may
not grow at the rate projected by market data, or at all. Failure of this industry to grow at the projected rate may have a material
and adverse effect on our business and the market price of our ordinary shares. In addition, the highly-fragmented and rapidly changing
nature of the services for professionals industry results in significant uncertainties for any projections or estimates relating to the
growth prospects or future condition of our industry. Furthermore, if any one or more of the assumptions underlying the market data are
later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance
on these forward-looking statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Su_003"></span>PART
I</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Su_004"></span>ITEM
1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Su_005"></span>ITEM
2. OFFER STATISTICS AND EXPECTED TIMETABLE</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Su_006"></span>ITEM
3. KEY INFORMATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Our
Company</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are the largest technology-driven online agent-centric human capital management service provider targeting professionals based on Platform-as-a-Service,
or PaaS, in China in terms of the number of active users in the human resources industry as of June 30, 2022 and total net revenues for
the year ended December 31, 2021. As a company empowered by artificial intelligence, or AI, data analytics, and blockchain technologies,
we are committed to digitalizing and intellectualizing the entire human capital management process. We provide a platform to support
trusted and private social networks of professionals, through which we provide services consisting of recruitment services, outsourcing
services, and other services such as information technology services and training services. Our users are primarily professionals who
work in human resources related functions. Our corporate customers are corporations with recruitment, training, sales leads generation
and outsourcing demands.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have developed into a comprehensive social network platform providing various services targeting professionals spanning multiple industries
in China. We provide services consisting of recruitment services, outsourcing services, and other services such as information technology
services and training services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risks
Related to Doing Business in China</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are not a Chinese operating company, but a Cayman Islands holding company with operations mainly conducted by its subsidiaries based
in mainland China.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
face various legal and operational risks and uncertainties associated with being based in and having the majority of our operations in
mainland China and the complex and evolving mainland China laws and regulations. For example, we face risks associated with the fact
that the PRC government has significant authority in regulating our operations and may influence or intervene in our operations at any
time, regulatory approvals on offerings conducted overseas by, and foreign investment in, China-based issuers, anti-monopoly regulatory
actions, and oversight on data security, which may impact our ability to conduct certain businesses, accept foreign investments, or continue
to list on a United States exchange. These risks could result in a material adverse change in our operations and the value of our shares,
significantly limit or hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities
to significantly decline or become worthless.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Permissions
Required from the PRC Authorities for Our Operations and Overseas Securities Offerings</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operations in China are governed by PRC laws and regulations. We are required to obtain certain licenses, permits and approvals from
relevant governmental authorities in China in order to operate our business. As of December 31, 2023, we had obtained the licenses,
permits and registrations from the PRC government authorities that are material and necessary for our business operations in China.
Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by
relevant government authorities, and the promulgation of new laws and regulations and amendment to the existing ones, we may be
required to obtain additional licenses, permits, registrations, filings or approvals for our business operations in the future. We
cannot assure you that we will be able to obtain, in a timely manner or at all, or maintain such licenses, permits or approvals, and
we may also inadvertently conclude that such permissions or approvals are not required. Any lack of or failure to maintain requisite
approvals, licenses or permits applicable to us may have a material adverse impact on our business, results of operations, financial
condition and prospects and cause the value of any securities we offer to significantly decline or become worthless. For details,
see &#8220;Item 3. Key Information &#8212; D. Risk Factors &#8212; Risks Related to Our Business and Industry&#8212; Any lack of
requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our
business, financial condition and results of operations.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 12.5pt; text-align: justify; text-indent: 22pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 14, 2021, the CAC, issued the Administrative Regulations of Cyber Data Security (Draft for Comments), or the Draft Cyber
Data Security Regulations, which provide that data processors conducting the following activities shall apply for cybersecurity
review: (i) merger, reorganization or spin-off of Internet platform operators that have acquired a large number of data resources
related to national security, economic development or public interests affects or may affect national security; (ii) listing abroad
of data processors processing over one million users&#8217; personal information; (iii) listing in Hong Kong which affects or may
affect national security; (iv) other data processing activities that affect or may affect national security. On December 28, 2021,
the CAC, together with other twelve PRC regulatory authorities, jointly promulgated the Cybersecurity Review Measures which became
effective on February 15, 2022. According to the Cybersecurity Review Measures, critical information infrastructure operators that
procure internet products and services are subject to the cybersecurity review if their activities affect or may affect national
security. The Cybersecurity Review Measures further stipulate that an internet platform operator who possesses personal information
of more than one million users shall apply for a cybersecurity review before any public offering in a foreign country, and the
relevant governmental authorities may initiate a cybersecurity review if they consider that the relevant network products or
services or data processing activities affect or may affect national security. As of December 31, 2023, we had not received any
notice that we are a critical information infrastructure operator from any government authority, nor had we received any request
from the CAC to undergo a cybersecurity review in relation to our initial public offering. However, in connection with any future
overseas capital markets activities, we cannot assure you that we will not be required to undergo a cybersecurity review conducted
by the CAC, or meet other regulatory requirements that may be adopted in the future by mainland China authorities. To the extent
such requirements are or become applicable, we cannot assure you that we would be able to comply with them. For more detailed
information, see &#8220;Item 3. Key Information &#8212; D. Risk Factors &#8212; Risks Related to Doing Business in China &#8212; We
are subject to a variety of laws and regulations regarding cybersecurity and data protection, and any failure to comply with
applicable laws and regulations, including improper use or appropriation of personal information provided directly or indirectly by
our customers or end users, could have a material adverse effect on our business, financial condition and results of
operations.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 12.5pt; text-align: justify; text-indent: 22pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 17, 2023, the CSRC promulgated the Trial Measures of the Overseas Securities Offering and Listing by Domestic Companies (the
&#8220;Overseas Listing Trial Measures&#8221;) and five interpretive guidelines (collectively, the &#8220;CSRC Filing Rules&#8221;),
which became effective on March 31, 2023. Under the CSRC Filing Rules, a filing-based regulatory system shall be applied to &#8220;indirect
overseas offerings and listings&#8221; of PRC domestic enterprises, which refers to securities offerings and listings in an overseas
market made under the name of an offshore entity but based on the underlying equity, assets, earnings or other similar rights of a domestic
enterprise that operates its main business domestically. The CSRC Filing Rules state that, any post-listing follow-on offering by an
issuer in the same overseas market where it has previously offered and listed securities, including issuance of shares, convertible notes
and other similar securities, shall be subject to filing requirement within three business days after the completion of the offering,
and if the subsequent offering is conducted in other overseas markets, it shall be filed with the CSRC within three working days after
the applications for such offerings are submitted. Therefore, any of our future offering and listing of our securities in an overseas
market shall be subject to the filing requirements under the CSRC Filing Rules. In addition, we are required to submit a report to CSRC
after the occurrence and public disclosure of the following material events: (1) change of control; (2) investigations or sanctions imposed
by overseas securities regulatory agencies or other relevant competent authorities; (3) change of listing status or transfer of listing
segment and (4) voluntary or mandatory delisting. If we fail to complete the filing or reporting procedures, under the CSRC Filing Rules
or otherwise, for any future overseas securities offering or listing, we may face sanctions by the CSRC or other PRC regulatory authorities,
which may include orders for correction, warnings and fines. Any adverse regulatory actions or sanctions could have a material adverse
effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ordinary
Shares. <span style="background-color: white">We have completed the required filings
with the CSRC for our initial public offering in accordance with the requirements under these measures and the supporting guidelines.
The CSRC has concluded the filing procedure and published the filing results on the CSRC website on </span> October 19, 2023. In addition, as of the date of this annual report, we have not received
any formal inquiry, notice, warning, sanction, or regulatory objection from the CSRC with respect to our initial public offering and
listing overseas. However, we could be subject to the filing requirements with the CSRC if we conduct subsequent offerings. See &#8220;Item
4. Information on the Company &#8212; Regulations &#8212; Regulations on M&amp;A and Overseas Listings&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 12.5pt; text-align: justify; text-indent: 22pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
cannot assure you that we can complete the filing procedures, obtain the approvals or complete other compliance procedures in a timely
manner, or at all, or that any completion of filing or approval or other compliance procedures would not be rescinded. Any such failure
would subject us to sanctions by the CSRC or other PRC regulatory authorities. These regulatory authorities may impose restrictions and
penalties on the operations in China, significantly limit or completely hinder our ability to launch any new offering of our securities,
limit our ability to pay dividends outside of China, delay or restrict the repatriation of the proceeds from future capital raising activities
into China, or take other actions that could materially and adversely affect our business, results of operations, financial condition
and prospects, as well as the trading price of our ordinary shares. Furthermore, the PRC government authorities may further strengthen
oversight and control over listings and offerings that are conducted overseas. Any such action may adversely affect our operations and
significantly limit or completely hinder our ability to offer or continue to offer securities to you and cause the value of such securities
to significantly decline or be worthless.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>The
Holding Foreign Companies Accountable Act</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. Pursuant to the HFCA Act, if the Securities
and Exchange Commission, or the SEC, determines that we have filed audit reports issued by a registered public accounting firm that has
not been subject to inspections by the Public Company Accounting Oversight Board, or the PCAOB, for two consecutive years, the SEC will
prohibit our ordinary shares from being traded on a national securities exchange or in the over-the-counter trading market in the United
States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or
investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor. On December
15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the
list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 12.5pt; text-align: justify; text-indent: 22pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
auditor, Marcum Asia CPAs LLP (&#8220;Marcum Asia&#8221;), the independent registered public accounting firm that issues the audit
report included elsewhere in this annual report, as auditor of companies that are traded publicly in the United States and firms
registered with the PCAOB, has been subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to
assess its compliance with the applicable professional standards. Marcum Asia is not subject to the determinations announced by the
PCAOB on December 16, 2021. The PCAOB is expected to continue to demand complete access to inspections and investigations against
accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already made plans to resume
regular inspections in early 2023 and beyond. For this reason, we do not expect to be identified as a Commission-Identified Issuer
under the HFCA Act after we file this annual report on Form 20-F. Each year, the PCAOB will determine whether it can inspect and
investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future
that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and if we
use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with
the SEC by then, we may be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for
the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future
fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the
HFCA Act, and the value of our ordinary shares may significantly decline or become worthless. For details, see &#8220;Item 3. Key
Information &#8212; D. Risk Factors &#8212; Risks Related to Doing Business in China &#8212; The PCAOB had historically been unable
to inspect auditors in mainland China and Hong Kong in relation to their audit work. If the PCAOB determines in the future that it
no longer has full access to inspect and investigate completely accounting firms in these jurisdictions and if we use an accounting
firm headquartered in one of these jurisdictions to issue an audit report by then, our ordinary shares may be prohibited from
trading in the United States under the HFCA Act, and such delisting or the threat of delisting may materially and adversely affect
the value of your investment.&#8221;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Selected
Financial Data</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following selected consolidated statements of income and comprehensive income data for the years ended December 31, 2021, 2022 and 2023,
selected consolidated balance sheets data as of December 31, 2022 and 2023, and selected consolidated cash flows data for the years ended
December 31, 2021, 2022 and 2023 have been derived from our audited consolidated financial statements, which are included in this annual
report beginning on page F-1.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 33.75pt; text-align: justify; text-indent: 33.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United
States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should
read this Selected Consolidated Financial Data section together with our consolidated financial statements and the related notes in conjunction
with &#8220;Item 5. Operating and Financial Review and Prospects&#8221; included elsewhere in this annual report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table presents our selected consolidated statements of income and comprehensive income data for the years ended December 31,
2021, 2022 and 2023:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>&#160;</p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table presents our selected consolidated balance sheets data as of December 31, 2022 and 2023:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">RMB</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Selected Consolidated Balance Sheet Data:</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">40,496</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Deferred tax assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,222</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,705</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left"><b>Total liabilities</b></td><td><b>&#160;</b></td>
    <td style="text-align: left"><b>&#160;</b></td><td style="text-align: right"><b>123,459</b></td><td style="text-align: left"><b>&#160;</b></td><td><b>&#160;</b></td>
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  <tr style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table presents our selected consolidated cash flows data for the years ended December 31, 2021, 2022 and 2023:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">RMB</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 40%; text-align: left">Net cash provided by/ (used in) operating activities</td><td style="width: 2%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Effect of exchange rate changes on cash, cash equivalents and restricted cash</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Net increase/(decrease) in cash, cash equivalents and restricted cash:</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">

    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">[<b><span style="text-decoration: underline">Reserved</span>]</b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    applicable.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">

    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Risk
    Factors</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Summary
Risk Factors</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business is subject to numerous risks and uncertainties, including risks that may prevent us from achieving our business objectives or
may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more
fully below and include, but are not limited to, risks related to:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Risks
Related to Our Business and Industry</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have a limited operating history under our current platforms and business model, which makes it difficult to evaluate our business
    and prospects, and any future changes to our business model could materially and adversely affect our business, financial condition
    and results of operations.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    growth depends on our ability to attract and retain a large number of users, and the loss of our users, or failure to attract new
    users, could materially and adversely affect our business.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
    a substantial portion of the services we offer are recruitment services, if we fail to attract more corporate customers to our platforms,
    or if corporate customers decide to purchase less of our recruitment services for any reason, our revenues may stagnate or decline,
    and our business and prospects may be materially and adversely affected.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
    a significant portion of the services we offer are outsourcing services, a decline in the demand or the market for outsourcing services
    could materially and adversely affect our business, prospects, financial condition and results of operations.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Volatility
    in the financial and economic environment in the markets where we have operations could harm our business.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
    the market for freelancers and the services they offer is not sustained or develops more slowly than we expect, our growth may slow
    or stall.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    face significant competition, which may cause us to suffer from a weakened market position that could materially and adversely affect
    our results of operations.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    historical revenue growth should not be considered indicative of our future performance.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have incurred negative cash flows in operating activities in the past and may incur operating losses in the future and may not maintain
    profitability.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    depend on a limited number of customers for a significant portion of our revenues and the loss of one or more of these customers
    could adversely affect our business, financial condition, and results of operations.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    may fail to successfully enter necessary or desirable strategic alliances or make acquisitions or investments, and we may not be
    able to achieve the anticipated benefits from these alliances, acquisitions or investments we make.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
    our technology capabilities in AI, data analytics and blockchain fail to yield satisfactory results or fail to improve, our platforms
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    for our users, and our user growth, retention, results of operations and business prospects may suffer consequently.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    laws and regulations, including improper use or appropriation of personal information provided directly or indirectly by our customers
    or end users, could have a material adverse effect on our business, financial condition and results of operations.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to</span></p>
                                                                              <p style="margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span>to our leased properties.</p></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
    lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our
    business, financial condition and results of operations.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
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    employees instead of independent contractors.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Changes
    in laws and regulations related to the internet and fixed telecommunications or changes in the internet infrastructure and fixed
    telecommunications networks itself may diminish the demand for our services and could have a negative impact on our business.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive
    position.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Risks
Related to Doing Business in China</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change
    in China&#8217;s economic, political or social conditions, laws, regulations or governmental policies could have a material adverse
    effect on our business, financial conditions and results of operations.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Uncertainties
    with respect to the PRC legal system, including uncertainties regarding the interpretation and enforcement of laws, and sudden or
    unexpected changes of PRC laws and regulations with little advance notice could adversely affect us and limit the legal protections
    available to you and us, and the Chinese government may exert more oversight and control over offerings that are conducted overseas,
    which changes could materially hinder our ability to offer or continue to offer our securities, and cause the value of our securities
    to significantly decline or become worthless.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Chinese government has substantial oversight and influence over the manner in which we must conduct our business and may intervene
    or influence our operations at any time, which actions could impact our operations materially and adversely, and significantly limit
    or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly
    decline or be worthless.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    PCAOB had historically been unable to inspect auditors in mainland China and Hong Kong in relation to their audit work. If the PCAOB
    determines in the future that it no longer has full access to inspect and investigate completely accounting firms in these jurisdictions
    and if we use an accounting firm headquartered in one of these jurisdictions to issue an audit report by then, our ordinary shares
    may be prohibited from trading in the United States under the HFCA Act, and such delisting or the threat of delisting may materially
    and adversely affect the value of your investment.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
    may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against
    us or our management named in the annual report based on foreign laws.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
    may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing
    actions in Hong Kong against us or our management named in this annual report based on Hong Kong laws.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">It
    may be difficult for overseas regulators to conduct investigations or collect evidence within China.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">It
    may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within Hong Kong.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
    we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences
    to us and our non-PRC shareholders.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    M&amp;A Rules and certain other PRC regulations may make it more difficult for us to pursue growth through acquisitions.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Risks
Related to Our Ordinary Shares</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    trading price of our ordinary shares is likely to be volatile, which could result in substantial losses to investors.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
    securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations
    regarding our ordinary shares, the market price for our ordinary shares and trading volume could decline.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
    we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ordinary shares for return
    on your investment.</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
    can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any
    taxable year, which could subject U.S. investors in our ordinary shares or ordinary shares to significant adverse U.S. federal income
    tax consequences.</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
    may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because
    we are incorporated under Cayman Islands law.</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
    judgments obtained against us by our shareholders may not be enforceable.</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    are a &#8220;controlled company&#8221; within the meaning of the Nasdaq Stock Market listing rules and, as a result, may rely on
    exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies may make our ordinary
    shares less attractive to investors.</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions
    applicable to United States domestic public companies.</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risks
Related to Our Business and Industry</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have a limited operating history under our current platforms and business model, which makes it difficult to evaluate our business and
prospects, and any future changes to our business model could materially and adversely affect our business, financial condition and results
of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
we initiated our business in 2011 as a recruitment company assisting conglomerates and Fortune 500 companies to recruit mid- to high-level
executives, we upgraded our business model in 2016 to incorporate cutting-edge technologies including AI and data analytics, and launched
one of the first AI+ recruitment platforms in China. In 2019 and 2022, we launched our platforms, <i>Columbus</i> and <i>Star Career</i>,
respectively, on which our users can recommend job opportunities, health-related products and training services to their acquaintances
via their own private mobile social networks. As a result, we have only limited experience with our current business model, which makes
it difficult to evaluate our business and future prospects and future growth. We have encountered, and will continue to encounter, risks
and difficulties frequently experienced by growing companies in rapidly changing industries, including difficulties in our ability to
achieve market acceptance of our platforms and attract and retain users, as well as increasing competition and increasing expenses as
we continue to grow our business. As a result, we may from time to time decide to make further changes to our business model due to a
variety of factors, including changes in the market for our platforms and competitors introducing new services. We may not be successful
in addressing these and other challenges we may face in the future and changes to our business model may, among other things, result
in user dissatisfaction and could lead to a loss of users on our platforms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
growth depends on our ability to attract and retain a large number of users, and the loss of our users, or failure to attract new users,
could materially and adversely affect our business.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business includes recruitment services, outsourcing services and other services, while the recruitment services constitute our major
source of revenue. Our recruitment serves are provided via our users of our PaaS platforms, who will recommend the job opportunities
posted by our corporate customers to their acquaintances via their own private mobile social networks. Therefore, the size of our users,
including both talent scouts and corporate customers, is critical to our success. As of December 31, 2023, we had approximately 638,020
active registered users on our proprietary platforms, <i>Star Career </i>and <i>Columbus.</i> We have experienced strong growth in the
number of users on our platforms. The number of active registered users on both of our platforms grew by 48% from December 2022 to December
2023. However, we cannot guarantee that we will be able to achieve similar user growth in the future. For example, in our recruitment
services, our corporate customers and users have many different ways to market their services and secure candidates, including meeting
and contacting prospective candidates through other platforms and advertising to prospective candidates online or offline through other
methods. Job seekers have similarly diverse options to find talent scouts, such as interacting with them directly through our platforms
and finding talent scouts through other online or offline platforms. Any decrease in the attractiveness of our platforms relative to
these other options available to talent scouts and job seekers could lead to decreased engagement on our platforms, which could result
in a decrease in revenue on our platforms. If we fail to attract new professionals or our existing professionals decrease their use of
or cease using our platforms, or the quality or types of services provided by our platforms are not satisfactory to the professionals,
they may decrease their use of, or cease using, our platforms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Key
factors in attracting and retaining professionals include our ability to grow our brand awareness, attract and retain high-quality professionals
and increase the quantity and quality of products and services offered on our platforms. Thus, achieving growth in our community of users
may require us to increasingly engage in sophisticated and costly sales and marketing efforts that may not result in additional users.
We may also need to modify our revenue model to attract and retain such users.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Users
can generally decide to cease using our platforms at any time. Users may stop using our platforms and related services if the quality
of the user experience on our platforms, including our support capabilities in the event of a problem, does not meet their expectations
or keep pace with the quality of the user experience generally offered by competitive products and services. Users may also choose to
cease using our platforms if they perceive that our business model is not in line with the value they derive from our platforms or for
other reasons. In addition, expenditures by professionals may be cyclical and be affected by adverse changes in overall economic conditions
or budgeting patterns. If we fail to attract new users or fail to maintain existing users, our revenue may grow more slowly than expected
and our business and financial performance could be materially and adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Because
a substantial portion of the services we offer are recruitment services, if we fail to attract more corporate customers to our platforms,
or if corporate customers decide to purchase less of our recruitment services for any reason, our revenues may stagnate or decline, and
our business and prospects may be materially and adversely affected.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
2021, 2022 and 2023, approximately 76.3%, 53.9% and 44.7% of our net revenues were generated from recruitment services for corporate
customers, respectively. Corporate customers are by far the most important source of revenue for us, and attracting more corporate customers
to our platforms is therefore of critical importance to us. Due to their contribution to our revenues and ability to spend, large businesses
with sufficient funds would benefit us most as a revenue source, and we need to invest in developing and promoting products and services
that meet their needs. Additionally, small- and mid-sized businesses may also be a source of corporate customers growth for us, as they
have historically been underserved and usually lack direct access to a scaled user base and effective means to promulgate their businesses.
We, however, cannot assure you that our efforts to reach to more corporate customers will convince more enterprise users to use our online
recruitment platform. There is also no guarantee that our existing enterprise customers will continue to pay for our online recruitment
services at the same frequency or price going forward, as competition or alternative means of job hunting may put pressure on the demand
and pricing for our recruitment services. If we are not successful in expanding our corporate customer base or improving our monetization
of corporate customers, our revenues may stagnate or decline, and our business and prospects may be materially and adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Because
a significant portion of the services we offer are outsourcing services, a decline in the demand or the market for outsourcing services
could materially and adversely affect our business, prospects, financial condition and results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
2021, 2022 and 2023, approximately 17.4%, 39.4% and 48.4% of the services we offer relate to outsourcing services, respectively. The
market for our outsourcing services is at a relatively early stage of development in China. Many corporations are unfamiliar with these
services and may not accept the value proposition of these service offerings. Processing, tracking, collecting and remitting funds to
the applicable third parties are complex operations, and many companies may not trust us with their data. As such, companies may not
be willing to use our services as significant functions and may instead choose to continue to perform such operations in-house. If, for
any reason, the market for outsourcing services declines, including as a result of global economic conditions, automation, increased
use of artificial intelligence, or otherwise, or if demand for these services slows or businesses satisfy their needs for these services
through alternative means, the growth in the number of projects we receive may slow or decline and as a result our business, prospects,
financial condition and results of operations could be materially and adversely affected. In addition, we rely on third-party sales agents
and service providers, including technology service providers and industry experts, to source deals and deliver part of the outsourcing
services. Failure by these providers, for any reason, to source deals or deliver their services in a timely and accurate manner could
result in significant disruptions to our outsourcing operations, impact our customer relationships, harm our brand names and reputation,
and result in significant penalties or liabilities to us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Volatility
in the financial and economic environment in the markets where we have operations could harm our business.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Demand
for our PaaS services is sensitive to changes in the level of overall economic activity in the markets in which we operate. During periods
of weak economic conditions, employment levels tend to decrease, and business failures tend to increase and interest rates may become
more volatile. Current or potential corporate customers may also react to weak economic conditions or forecasted weak economic conditions
by reducing their employee headcount or by lowering their salary or compensation levels, any of which would affect our total net revenues.
These conditions may affect the willingness of our corporate customers and potential customers to pay third parties for recruitment services
and other services like ours, and may impact their ability to meet their obligations to us on time, or at all. In addition, if businesses
have difficulty obtaining funding, business growth and new business formation may be impaired, which could also harm our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
the market for freelancers and the services they offer is not sustained or develops more slowly than we expect, our growth may slow or
stall.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
PaaS primarily engages freelancers as our sales agents and talent scouts for recruitment, outsourcing and other services they may provide.
The market for freelancers and the services they offer is relatively new, rapidly evolving and unproven. Our future success will depend
in large part on the continued growth and expansion of this market and the willingness of businesses to engage freelancers to provide
services. It is difficult to predict the size or rate of expansion of this market, or the extent to which technological or other developments
will impact the overall demand for freelancers. Further, many businesses may be unwilling to engage freelancers for a variety of reasons,
including perceived negative connotations with outsourcing work or security concerns. If the market for freelancers and the services
they offer does not achieve widespread adoption, or there is a reduction in demand for freelancer services, particularly demand for information
technology services, our business, prospects, financial condition and results of operations could be materially and adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
face significant competition, which may cause us to suffer from a weakened market position that could materially and adversely affect
our results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Successful
execution of our strategy depends on our ability to attract and retain users, expand the market for our platforms, maintain a technological
edge and provide value to our users. We face competition from a number of online and offline platforms and competitors that offer recruitment
and outsourcing services as part of their broader services portfolio. According to the Frost &amp; Sullivan report, in the industry of
services for professionals, our main competitors fall into the following categories:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">online
    agent-centric service providers;</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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    HR service providers;</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">traditional
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">traditional
    workforce solutions providers.</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Well-established
internet companies, social networking providers and career-related internet portals have entered or may decide to target the market for
professional services, and some of these companies have launched products and services that directly compete with our platforms. These
or other powerful companies that have extensive and loyal user bases in the geographic markets where we operate may decide to directly
target our users, thereby intensifying competition in the services for professionals market. Although professional social networking
businesses with online recruitment functions historically have not had significant market positions in the services for professionals
market, these businesses may dedicate resources to expand their operations and as a result, become a significant competitive threat in
the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
current competitors may also consolidate or be acquired by an existing or prospective competitor, which could result in the emergence
of a stronger competitor, leading to a potential loss of our market share. There can be no assurances that we will maintain our strong
position among services for professionals marketplaces, particularly if our key competitors consolidate or if large search engines, social
media companies or other online platforms successfully leverage their large user bases to penetrate our markets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Many
of our current and potential competitors, both online and offline, enjoy substantial competitive advantages, such as greater name recognition,
longer operating histories, greater financial, technical and other resources, and, in some cases, the ability to rapidly combine online
platforms with traditional human capital management services. These companies may use these advantages to offer services similar to our
platform at a lower price, develop different products and services to compete with our platforms, spend more on advertising and brand
marketing, invest more in research and development, or respond more quickly and effectively than we do to new or changing opportunities,
technologies, standards, regulatory conditions or user preferences or requirements. As a result, our users may decide to shift from utilizing
our platforms to utilizing our competitors&#8217; products, services and solutions.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
historical revenue growth should not be considered indicative of our future performance.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have experienced substantial growth in the past. Our net revenues increased by 17.5% from RMB652.2 million in 2021 to RMB766.6 million
in 2022 and further increased by 92.3% from RMB766.6 million in 2022 to RMB1,474.0 (US$207.6 million) in 2023. Our gross profits increased
by 20.2% from RMB179.1 million in 2021 to RMB215.2 million in 2022 and further increased by 94.5% from RMB215.2 million in 2022 to RMB418.6
million (US$59.0 million) in 2023. Our expansion has placed and will continue to place, substantial demands on our managerial, financial,
operational, IT, and other resources. In order to manage and support our growth, we must continue to improve our existing managerial,
operational and IT systems, including our financial and management controls, and recruit, train and retain qualified management and other
personnel. Our planned expansion will also require us to maintain consistent and high-quality services to ensure that our brand does
not suffer as a result of any deviations, whether actual or perceived, in our service standards. We cannot assure you that we will be
able to effectively and efficiently manage the growth of our operations or maintain our service standards. If we are unable to do so,
our results of operations and financial condition may be materially and adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have incurred negative cash flows in operating activities in the past and may incur operating losses in the future and may not maintain
profitability.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
incurred negative cash flows in operating activities for the amounts of RMB15.1 million and RMB36.4 million (US$5.1
million) during the years ended December 31, 2022 and 2023, respectively, and we may incur operating losses in the foreseeable
future. We expect to continue the development and expansion of our business, particularly to invest significantly in research and
development related to artificial intelligence, data analytics and blockchain technologies, and we anticipate additional costs in
connection with legal, accounting and other administrative expenses related to operating as a public company. While our revenue has
grown in recent years, if our revenue declines or fails to grow at a rate sufficient to offset increases in our operating expenses,
we will not be able to achieve and maintain profitability in future periods. As a result, we may continue to generate losses. We
cannot ensure that we will achieve profitability in the future or that, if we do become profitable, we will be able to sustain
profitability.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
depend on a limited number of customers for a significant portion of our revenues and the loss of one or more of these customers could
adversely affect our business, financial condition, and results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
to the nature of our business and our limited operating history, we have a limited customer base and have depended on a small number
of customers for a significant portion of revenues. For the years ended December 31, 2021, 2022 and 2023, we had 399, 391 and 582
corporate customers, respectively, and net revenues generated in relation to our five largest corporate customers in terms of
contract amount accounted for approximately 25.6%, 23.3% and 15.9%, respectively. Our ability to maintain close relationships with
our top customers is essential to the growth and profitability of our business. If we fail to retain these top customers in any
particular period, or if a large customer enters into fewer engagements with us or fails to enter into any engagements with us, or
if we fail to develop additional major customers, or if we fail to develop additional major customers, then our revenue could
decline, which may adversely affect our business, financial condition, and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may fail to successfully enter necessary or desirable strategic alliances or make acquisitions or investments, and we may not be able
to achieve the anticipated benefits from these alliances, acquisitions or investments we make.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
further expand our business, we intend to grow via acquisitions, with a particular focus on targets in the Association of Southeast Asian
Nations, or ASEAN, countries and the U.S. We may evaluate and consider strategic investments and acquisitions or enter into strategic
alliances to develop new services or solutions and enhance our competitive position. Investments or acquisitions involve numerous risks,
including potential failure to achieve the expected benefits of the integration or acquisition; difficulties in, and the cost of, integrating
operations, technologies, services and personnel; potential write-offs of acquired assets or investments; and downward effect on our
operating results. These transactions will also divert the management&#8217;s time and resources from our normal course of operations,
and we may have to incur unexpected liabilities or expenses. We may also in the future enter into strategic alliances with various third
parties. Strategic alliances with third parties could subject us to a number of risks, including risks associated with potential leakage
of proprietary information, non-performance by the counterparty and an increase in expenses incurred in establishing new strategic alliances,
any of which may materially and adversely affect our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, if we do not successfully execute or effectively operate, integrate, leverage and grow acquired businesses, our financial results
and reputation may suffer. Our strategy for long-term growth, productivity and profitability depends in part on our ability to make prudent
strategic investment or acquisition decisions and to realize the benefits we expect when we make those investments or acquisitions. While
we expect our future acquisitions to enhance our value proposition to customers and improve our long-term profitability, there can be
no assurance that we will realize our expectations within the time frame we envisage, if at all, or that we can continue to support the
value we allocate to these acquired businesses, including their goodwill or other intangible assets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances,
and financing may not be available on terms acceptable to us, or at all.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
inception, we have obtained four rounds of equity financing to support the growth of our business. As we intend to continue to make investments
to support the growth of our business, we may require additional capital to pursue our business objectives and respond to business opportunities,
challenges or unforeseen circumstances, including developing new services, expanding our infrastructure, and acquiring complementary
businesses and technologies. We plan to attract more users through marketing efforts, diversify product and service offerings, provide
more training programs, continuously innovate in technology and services, and expand geographical footprint. Accordingly, we may need
to engage in equity or debt financings to secure additional funds. However, additional funds may not be available when we need them,
on terms that are acceptable to us, or at all. Repayment of the debts may divert a substantial portion of cash flow to repay principal
and service interest on such debt, which would reduce the funds available for expenses, capital expenditures, acquisitions and other
general corporate purposes; and we may suffer default and foreclosure on our assets if our operating cash flow is insufficient to service
debt obligations, which could in turn result in acceleration of obligations to repay the indebtedness and limit our sources of financing.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Volatility
in the credit markets may also have an adverse effect on our ability to obtain debt financing. If we raise additional funds through further
issuances of equity or convertible debt securities, our existing shareholders could suffer significant dilution, and any new equity securities
we issue could have rights, preferences and privileges superior to those of holders of our ordinary shares. If we are unable to obtain
adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to pursue our business objectives
and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, financial
condition, results of operations and prospects could be adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to maintain and improve the quality of our PaaS platforms, we may not be able to attract and retain users and corporate customers.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
satisfy both users and corporates, we need to continue to improve their user experience as well as innovate and introduce features and
services that users find useful and that cause them to use our platforms more frequently. This includes improving our technology to optimize
search results, tailoring our database to additional geographic and market segments and improving the user-friendliness of our platforms
and our ability to provide high-quality support. Our users depend on our support organization to resolve issues relating to our platforms.
Our ability to provide effective support is largely dependent on our ability to attract and retain employees who are well versed in our
platforms. As we continue to grow our user base, our support organization will face additional challenges. Any failure to maintain high-quality
support, or a market perception that we do not maintain high-quality support, could harm our reputation or adversely affect our ability
to market the benefits of our platforms to existing and prospective users.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, we need to adapt, expand and improve our platforms and user interfaces to keep up with changing user preferences. We invest
substantial resources in researching and developing new features and enhancing our platforms by incorporating these new features, improving
functionality and adding other improvements to meet our users&#8217; evolving demands. The success of any enhancements or improvements
to our platforms or any new features depends on several factors, including timely completion, adequate quality testing, integration with
technologies on our platforms and third-party partners&#8217; technologies and overall market acceptance. Because further development
of our platforms is complex, challenging and dependent upon an array of factors, the timetable for the release of new features and enhancements
to our platforms is difficult to predict, and we may not offer new features as rapidly as users of our platforms require or expect.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">It
is difficult to predict the problems we may encounter in introducing new features to our platforms, and we may need to devote significant
resources to the creation, support and maintenance of these features. We provide no assurances that our initiatives to improve our user
experience will be successful. We also cannot predict whether any new features will be well received by users, or whether improving our
platforms will be successful or sufficient to offset the costs incurred to offer these new features. If we are unable to improve or maintain
the quality of our platforms, our business, prospects, financial condition and results of operations could be materially and adversely
affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
our technology capabilities in AI, data analytics and blockchain fail to yield satisfactory results or fail to improve, our platforms
may not be able to effectively match our users with suitable positions from corporate customers or to optimally recommend positions for
our users, and our user growth, retention, results of operations and business prospects may suffer consequently.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
core functionality of our platforms, namely personalized recommendations of products and services to our users, is dependent on our technology
capabilities in AI, data analytics and blockchain. Our technology capabilities in AI, data analytics and blockchain, therefore, are crucial
to us continuing to retain and attract users to our platforms. Our users will continue to compare the core functionalities of our platforms
against those of the platforms run by our competitors, and may switch to a competitor platform if our platforms underperform their expectations.
In addition, managing some of the other important aspects of our operations, such as sales and marketing activities, also requires us
to make decisions informed by our AI technology and data analytics. Any failure to improve our technology capabilities in AI, big data
analytics and blockchain and any failure of our technology capabilities in those regards to produce satisfactory results may materially
and adversely affect our user retention, financial condition and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Errors,
defects or disruptions in our platforms could diminish our brand, subject us to liability, and materially and adversely affect our business,
prospects, financial condition and results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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errors, defects, or disruptions in our platforms, or other performance problems with our platforms could harm our brand and may damage
the businesses of our users. Our online systems, including our website and mobile apps, could contain undetected errors, or &#8220;bugs,&#8221;
that could adversely affect their performance. Additionally, we regularly update and enhance our website, platforms and our other online
systems and introduce new versions of our apps. These updates may contain undetected errors when first introduced or released, which
may cause disruptions in our services and may, as a result, cause us to lose market share, and our brand, business, prospects, financial
condition and results of operations could be materially and adversely affected.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
users may engage in intentional or negligent misconduct or other improper activities on our platforms or otherwise misuse our platforms,
which may damage our brand image and reputation, our business and our results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
adopt a comprehensive suite of registration procedures to verify the identity of our users and corporate customers, but we have limited
control over the real-time and offline behavior of our users and it is still possible for our platforms to be misused by our users for
inappropriate or illegal purposes.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have implemented control procedures on our platforms to detect and block illegal or inappropriate content and illegal or fraudulent activities
conducted through the misuse of our platforms. We may be required by relevant governmental authorities to report certain misbehaviors
for further investigation if such misbehaviors are subject to regulatory investigation or other governmental proceedings. Despite our
detection and filtering efforts, we may not be able to identify every incident of inappropriate content or illegal or fraudulent activities,
prevent all such content from being further disseminated or prohibit such activities from occurring. We may not be able to filter all
the content generated by our users as it appears, especially in the context of instant messaging between users and corporate customers.
Therefore, our users may engage in illegal, obscene or incendiary conversations or engage in unethical or illegal activities via our
platforms.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
user misconduct and misuse of our platforms for inappropriate or illegal purposes occur on our online recruitment platform, claims may
be brought against us for torts, defamation, libel, negligence, copyright, patent or trademark infringement. In response to allegations
of illegal or inappropriate activities conducted through our platforms, relevant governmental authorities may intervene and hold us liable
for non-compliance with applicable laws and regulations and subject us to administrative penalties or other sanctions, such as requiring
us to restrict or discontinue some or all of our features and services. In addition, our users may suffer or allege to have suffered
physical, financial or emotional harm caused by contacts initiated on our platforms. Our business and public perception of our brands
may be materially and adversely affected if we do face civil lawsuits or other liabilities initiated by such affected users. Defending
any actions brought by such affected users could be costly and require significant time and attention of our management and other resources,
which would materially and adversely affect our business.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to maintain and enhance our brand, our business, results of operations and prospects may be materially and adversely affected.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that maintaining and enhancing our brand are of significant importance to the success of our business. A well-recognized brand
is critical to increasing the number and the level of engagement of freelancers and, in turn, enhancing our attractiveness to buyers.
Successful promotion of our brand and our platforms depends on, among other things, the effectiveness of our marketing efforts, our ability
to provide a reliable, trustworthy and useful platform, the perceived value of our platform and our ability to provide quality support.
In order to maintain and enhance our brand, we will need to continuously invest in marketing programs that may not be successful in achieving
meaningful awareness levels. We aim to achieve time to return on investment, which represents the total amount of time required for us
to recover performance marketing investments in a given buyer cohort from the revenue that cohort generates, within one year or less.
However, brand promotion activities may not yield increased revenue, and even if they do, the increased revenue may not offset the expenses
we incur in building and maintaining our brand. We have conducted and may continue to conduct various marketing and brand promotion activities,
including print advertisements. We cannot assure you, however, that these activities will be successful or that we will be able to achieve
the brand awareness we expect. In addition, our competitors may increase the intensity of their marketing campaigns, which may force
us to increase our advertising spend to maintain our brand awareness.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, any negative publicity relating to our platforms, regardless of its veracity, could harm our brand. If our brand is harmed,
we may not be able to grow or maintain our user base, and our business, prospects, financial condition and results of operations could
be materially and adversely affected. Further, activities of users that are deemed to be hostile, offensive or inappropriate to other
users, including users acting under false or inauthentic identities, could damage our brand or harm our ability to expand our user base.
We do not monitor or review the appropriateness of the content generated by users or have control over the activities in which our users
engage. While we have adopted policies regarding illegal or offensive use of our platforms by our users and retain authority to remove
user generated content that violates our policies, users could nonetheless engage in these activities. The safeguards we have in place
may not be sufficient to avoid harm to our brand, especially if such hostile, offensive or inappropriate use was high profile.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
platforms contain open-source software components, and failure to comply with the terms of the underlying licenses could restrict our
ability to market or operate our platforms.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
use open-source software in connection with our technology and services. Some open-source software licenses require those who distribute
open-source software as part of their software to publicly disclose all or part of the source code (including proprietary code) to such
software and/or make available any derivative works of the open-source code on unfavorable terms or at no cost. The use of such open-source
code may ultimately require us to replace certain code used on our platforms or discontinue certain aspects of our platforms. From time
to time, we may face claims from third parties claiming infringement of their intellectual property rights, or demanding the release
or license of the open-source software or derivative works that we developed using such software (which could include our proprietary
source code) or otherwise seeking to enforce the terms of the applicable open-source license. These claims could result in litigation
and could require us to pay substantial damages, publicly release the affected portions of our source code, be limited in or cease using
the implicated software unless and until we can re-engineer such software to avoid infringement or change the use of, or remove, the
implicated open-source software.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to risks related to license requirements, use of certain open-source software can lead to greater risks than use of third-party
commercial software, as the original developers of open-source code generally do not provide warranties (with respect to, for example,
non-infringement or functionality) or indemnities or other contractual protections. Our use of open-source software may also present
additional security risks because the source code for open-source software is publicly available, which may make it easier for hackers
and other third parties to determine how to breach our website and systems that rely on open-source software. Any of these risks could
be difficult to eliminate or manage.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we are unable to protect our users&#8217; personal information, we could be exposed to data loss, litigation, and liability, and our
reputation could be significantly harmed.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Privacy
protection is increasingly demanding, and the use of electronic payment methods and collection of other personal information expose us
to increased risk of privacy and/or security breaches as well as other risks. We or our third-party service providers may experience
or be affected by with security breaches in which our users&#8217; personal information is stolen. Also, security and information systems
that we use or rely on may be compromised as a result of data corruption or loss, cyberattack or a network security incident or the independent
third-party service provider may fail to comply with applicable laws and regulations. Although private networks are used to transmit
confidential information, third parties may have the technology or know-how to breach the security of the customer information transmitted,
and the security measures employed may not effectively prohibit others from obtaining improper access to this information. The techniques
used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often difficult to detect
for long periods of time, which may cause a breach to go undetected for an extensive period of time. Advances in computer and software
capabilities, new tools, and other developments may increase the risk of such a breach. In addition, our contractors or third parties
with whom we do business or to whom we outsource business operations may be subject to cyberattack or a network security incident that
may lead to loss of our users&#8217; data or may attempt to circumvent our security measures in order to misappropriate such information,
and may purposefully or inadvertently cause a breach involving such information. If a person is able to circumvent our security measures
or those of third parties, he or she could destroy or steal valuable information or disrupt our operations. We may become subject to
claims for purportedly fraudulent transactions arising out of the unlawful access or exfiltration of personal data, and we may also be
subject to lawsuits, administrative fines or other proceedings relating to these types of incidents. Any such claim or proceeding could
cause us to incur significant unplanned expenses, which could have an adverse impact on our business, financial condition and results
of operations. Further, adverse publicity resulting from such claims or proceedings could significantly harm our reputation which, in
turn, may have an adverse effect on our business, financial condition and results of operations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to a variety of laws and regulations regarding cybersecurity and data protection, and any failure to comply with applicable
laws and regulations, including improper use or appropriation of personal information provided directly or indirectly by our customers
or end users, could have a material adverse effect on our business, financial condition and results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection.
These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable
to us are often uncertain and may be conflicting, particularly with respect to foreign laws. In particular, there are numerous laws and
regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other
user data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among
different jurisdictions.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
integrity and protection of our users, employees and company data is critical to our business. Our users and employees expect that we
will adequately protect their personal information. We are required by applicable laws to keep this personal information strictly confidential
and to take adequate security measures to safeguard such information. The PRC Criminal Law, as latest amended on December 26, 2020, prohibits
institutions, companies and their employees from selling or otherwise illegally disclosing a citizen&#8217;s personal information obtained
during the course of performing duties or providing services, or obtaining such information through theft or other illegal ways. On November
7, 2016, the Standing Committee of the National People&#8217;s Congress of the PRC, or the SCNPC, issued the Cyber Security Law of the
PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber Security Law, network operators must not collect
users&#8217; personal information without their consent and may only collect users&#8217; personal information necessary to the provision
of services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions
regarding the protection of personal information as stipulated under the relevant laws and regulations. The Civil Code of the PRC (issued
by the National People&#8217;s Congress of the PRC on May 28, 2020 and effective from January 1, 2021) provides the main legal basis
for privacy and personal information infringement claims under PRC civil law.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PRC
regulators, including the CAC, the Ministry of Industry and Information Technology, or the MIIT, and the Ministry of Public Security,
have been increasingly focused on regulation in areas of data security and data protection. The PRC regulatory requirements regarding
cybersecurity are constantly evolving. For instance, various PRC regulatory bodies, including the CAC, the Ministry of Public Security
and the State Administration for Market Regulation, or the SAMR, have enforced data privacy and protection laws and regulations with
varying and evolving standards and interpretations. In addition, certain internet platforms in mainland China have reportedly been subject
to heightened regulatory scrutiny in relation to cybersecurity matters.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
April 2020, the PRC government promulgated the Cybersecurity Review Measures (the &#8220;2020 Cybersecurity Review Measures&#8221;),
which came into effect on June 1, 2020. In July 2021, the CAC and other related authorities released a draft amendment to the 2020 Cybersecurity
Review Measures for public comments. On December 28, 2021, the PRC government promulgated the 2022 Cybersecurity Review Measures, which
came into effect and replaced the 2020 Cybersecurity Review Measures on February 15, 2022. Compared with the 2020 Cybersecurity Review
Measures, the 2022 Cybersecurity Review Measures contain the following key changes: (i) internet platform operators who are engaged in
data processing are also subject to the regulatory scope; (ii) the CSRC is included as one of the regulatory authorities for purposes
of jointly establishing the state cybersecurity review mechanism; (iii) internet platform operators holding personal information of more
than one million users and seeking to have their securities list on a stock exchange in a foreign country shall file for cybersecurity
review with the Cybersecurity Review Office; (iv) the risks of core data, material data or large amounts of personal information being
stolen, leaked, destroyed, damaged, illegally used or illegally transmitted to overseas parties and the risks of critical information
infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used maliciously by
foreign governments and any cybersecurity risk after a company&#8217;s listing on a stock exchange shall be collectively taken into consideration
during the cybersecurity review process; and (v) critical information infrastructure operators and internet platform operators covered
by the 2022 Cybersecurity Review Measures shall take measures to prevent and mitigate cybersecurity risks in accordance with the requirements
therein. According to the 2022 Cybersecurity Review Measures, (i) critical information infrastructure operators that purchase network
products and services and internet platform operators that conduct data processing activities shall be subject to cybersecurity review
in accordance with the 2022 Cybersecurity Review Measures if such activities affect or may affect national security; and (ii) internet
platform operators holding personal information of more than one million users and seeking to have their securities list on a stock exchange
in a foreign country shall file for cybersecurity review with the Cybersecurity Review Office. Under the Regulation on Protecting the
Security of Critical Information Infrastructure promulgated by the State Council on July 30, 2021, effective September 1, 2021, &#8220;critical
information infrastructure&#8221; is defined as important network facilities and information systems in important industries and fields,
such as public telecommunication and information services, energy, transportation, water conservancy, finance, public services, e-government
and national defense, science, technology and industry, as well as other important network facilities and information systems that, in
case of destruction, loss of function or leak of data, may severely damage national security, the national economy and the people&#8217;s
livelihood and public interests. And the PRC competent authorities shall be responsible for organizing the determination of critical
information infrastructure in the industry and field concerned according to the determination rules, and inform the critical information
infrastructure operators of the determination results in a timely manner and notify the public security department under the State Council
of the same. As of the date of this annual report, neither we nor any of our PRC subsidiaries has been informed by any PRC governmental
authority that we or any of our PRC subsidiaries is a &#8220;critical information infrastructure operator&#8221;, and as an internet
platform operator, we have not conducted any data processing activities that affected or may affect national security, nor do we hold
personal information of more than one million users. We believe that we are not subject to a cybersecurity review pursuant to the 2022
Cybersecurity Review Measures, as neither we nor any of our PRC subsidiaries qualify as (i) a critical information infrastructure operator,
or (ii) an internet platform operator that has conducted any data processing activities that affected or may affect national security,
or has held personal information of more than one million users as of the date of this annual report.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 14, 2021, the CAC released the draft Administrative Regulation on Network Data Security for public comments through December
13, 2021 (the &#8220;Draft Regulation on Network Data Security&#8221;). Under the Draft Regulation on Network Data Security, (i) data
processors, i.e., individuals and organizations who can decide on the purpose and method of their data processing activities at their
own discretion, that process personal information of more than one million individuals shall apply for cybersecurity review before listing
in a foreign country; (ii) foreign-listed data processors shall carry out annual data security evaluation and submit the evaluation report
to the municipal cyberspace administration authority; and (iii) where the data processor undergoes merger, reorganization and subdivision
that involves important data and personal information of more than one million individuals, the recipient of the data shall report the
transaction to the in-charge authority at the municipal level.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this annual report, neither we nor any of our PRC subsidiaries has been required by any PRC governmental authority to
apply for cybersecurity review, nor have we or any of our PRC subsidiaries received any inquiry, notice, warning, sanction in such respect
or been denied permission from any PRC regulatory authority to list on U.S. exchanges. We believe that neither we nor any of our PRC
subsidiaries is subject to the cybersecurity review, by the CAC under the 2022 Cybersecurity Review Measures with respect to the offering
of our securities or the business operations of our PRC subsidiaries, because neither we nor any of our PRC subsidiaries qualifies as
a critical information infrastructure operator or has conducted any data processing activities that affect or may affect national security
or holds personal information of more than one million users. However, as PRC governmental authorities have significant discretion in
interpreting and implementing statutory provisions and there remains significant uncertainty in the interpretation and enforcement of
relevant PRC cybersecurity laws and regulations if the PRC regulatory authorities take a position contrary to ours, we cannot assure
you that we or any of our PRC subsidiaries will not be deemed to be subject to PRC cybersecurity review requirements under the 2022 Cybersecurity
Review Measures or the Draft Administrative Regulations (if enacted) as a critical information infrastructure operator or an internet
platform operator that is engaged in data processing activities that affect or may affect national security or holds personal information
of more than one million users, nor can we assure you that we or our PRC subsidiaries would be able to pass such review. If we or any
of our PRC subsidiaries inadvertently concludes that such permission or approval is not required, or if applicable laws, regulations
or interpretations change and obligate us to obtain such permission or approvals in the future, we or our PRC subsidiaries may be subject
to fines, suspension of business, website closure, revocation of business licenses or other penalties, as well as reputational damage
or legal proceedings or actions against us, which may have a material adverse effect on our business, financial condition or results
of operations. In addition, we could become subject to enhanced cybersecurity review or investigations launched by PRC regulators in
the future pursuant to new laws, regulations or policies. Any failure or delay in the completion of the cybersecurity review procedures
or any other non-compliance with applicable laws and regulations may result in fines, suspension of business, website closure, revocation
of business licenses or other penalties, as well as reputational damage or legal proceedings or actions against us, which may have a
material adverse effect on our business, financial condition or results of operations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 10, 2021, the SCNPC promulgated the PRC Data Security Law, which became effective in September 2021. The PRC Data Security Law imposes
data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification
and hierarchical protection system based on the importance of data in economic and social development and the degree of harm it will
cause to national security, public interests or the rights and interests of individuals or organizations when such data is tampered with,
destroyed, leaked or illegally acquired or used.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and
imposes export restrictions on certain data and information. On August 20, 2021, the SCNPC promulgated the Personal Information Protection
Law, effective November 1, 2021. The Personal Information Protection Law clarifies the definition of personal information, which excludes
information that has been anonymized, and the required procedures for personal information processing, the obligations of personal information
processors, and individuals&#8217; personal information rights and interests. The Personal Information Protection Law provides that,
among other things, (i) the processing of personal information is only permissible under certain circumstances, such as prior consent
from the subject individual, fulfillment of contractual and legal obligations, furtherance of public interests or other circumstances
prescribed by laws and regulations; (ii) the collection of personal information should be conducted in a disciplined manner with as little
impact on individuals&#8217; rights and interests as possible; and (iii) excessive collection of personal information is prohibited.
In particular, the Personal Information Protection Law provides that personal information processors should ensure the transparency and
fairness of automated decision-making based on personal information, refrain from offering unreasonably differentiated transaction terms
to different individuals and, when sending commercial promotions or information updates to individuals selected through automated decision-making,
simultaneously offer such individuals an option not based on such individuals&#8217; specific characteristics or a more convenient way
for such individuals to turn off such promotions.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On July 7, 2022, the CAC promulgated the Measures for the Security Assessment
of Outbound Data Transfer, or the Data Transfer Measures, which became effective on September 1, 2022, pursuant to which, to provide data
abroad under any of the following circumstances, a data processor shall apply to the national cyberspace administration for the security
assessment of the outbound data transfer through the local provincial cyberspace administration: (i) the data processor provides important
data abroad; (ii) the critical information infrastructure operator or the data processor that has processed the personal information of
over one million people provides personal information abroad; (iii) the data processor that has provided the personal information of over
100,000 people or the sensitive personal information of over 10,000 people cumulatively since January 1 of the previous year provides
personal information abroad; and (iv) any other circumstance where an application for the security assessment of outbound data transfer
is required by the national cyberspace administration. On March 22,2024, the CAC promulgated the Provisions on Promoting and Regulating
Cross-border Data Flows, which stipulate that, if the data have not been informed or publicly announced as important data by relevant
PRC departments or regions, data processors are not required to apply for security assessment for cross-border provision of the data as
important data. Besides, to provide data abroad under any of the following circumstances, a data processor shall apply to the national
cyberspace administration for the security assessment of the outbound data transfer through the local provincial cyberspace administration:
(i) where a critical information infrastructure operator provides personal information or important data abroad; or (ii) where any data
processor other than a critical information infrastructure operator provides important data abroad or, as of January 1 of the current
year, provides personal information (excluding sensitive personal information) of not less than 1 million people or sensitive personal
information of not less than 10,000 people in aggregate to overseas parties. In case of any discrepancy between the Provisions on Promoting
and Regulating Cross-border Data Flows and the relevant provisions such as the Security Assessment of Outbound Data Transfer, or the Data
Transfer Measures promulgated on July 7, 2022 and the Measures on Standard Contracts for Cross-border Provision of Personal Information
promulgated on February 22, 2023, the provisions under the Provisions on Promoting and Regulating Cross-border Data Flows shall prevail.
As of the date of this annual report, the data collected and generated in our business does not have a bearing on national security, economic
operation, social stability, public health and security, among others, and has not been classified as important data by relevant PRC authorities,
and, neither we nor any of our PRC subsidiaries have ever provided any personal information collected and generated in the operations
within the territory of the PRC to overseas recipients. Given the above-mentioned facts, we do not believe that we or any of our PRC subsidiaries is engaged in any activity that is subject to security assessment
as outlined in the Data Transfer Measures. However, as PRC governmental authorities have significant discretion in interpreting and implementing
statutory provisions and there remains significant uncertainty in the interpretation and enforcement of relevant PRC data security laws
and regulations if the PRC regulatory authorities take a position contrary to ours, we cannot assure you that the activities we or any
of our PRC subsidiaries engaging in will not be deemed to be subject to PRC security assessment as stipulated in the Data Transfer Measures
in the future, nor can we assure you that we or our PRC subsidiaries would be able to pass such assessment. The promulgation of the above-mentioned
laws and regulations indicates heightened regulatory scrutiny from PRC regulatory authorities in areas such as data security and personal
information protection.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
uncertainties remain regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we or our
PRC subsidiaries will be able to comply with such regulations in all respects, and we or our PRC subsidiaries may be ordered to rectify
or terminate any actions that are deemed illegal by regulatory authorities. In addition, while our PRC subsidiaries take various measures
to comply with all applicable data privacy and protection laws and regulations, there is no guarantee that our current security measures,
operation and those of our third-party service providers may always be adequate for the protection of our users, employee or company
data against security breaches, cyberattacks or other unauthorized access, which could result in loss or misuse of such data, interruptions
to our service system, diminished user experience, loss of user confidence and trust and impairment of our technology infrastructure
and harm our reputation and business, resulting in fines, penalties and potential lawsuits.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to risks relating to our leased properties.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
lease real properties in China from third parties primarily as office space. We have not registered any of our lease agreements for these
properties with the PRC governmental authorities as required by PRC law. The failure to do so does not in itself invalidate the lease
agreements, so we have not taken any actions to register our leased properties with the PRC governmental authorities or find alternative
locations for our operations in the PRC. However, we may be ordered by the PRC government authorities to rectify such noncompliance and,
if such noncompliance is not rectified within a given period of time, we may be subject to fines imposed by PRC government authorities
ranging from RMB1,000 and RMB10,000 for each lease agreement that has not been registered with the relevant PRC governmental authorities.
As of the date of this annual report, eight of our lease agreements had not been registered. We may be required by PRC government authorities
to file these lease agreements for registration within a time limit, and may be subject to a maximum fine of RMB10,000 for each lease
agreement which in aggregate amounted to RMB80,000 for the eight unregistered lease agreements.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
ownership certificates or other similar proof of certain of our leased properties, including the documentation proving the lessors&#8217;
right to lease those properties to us, have not been provided to us by the relevant lessors. Therefore, we cannot assure you that such
lessors are entitled to lease the relevant real properties to us. If the lessors are not entitled to lease the real properties to us
and the owners of such real properties decline to ratify the lease agreements between us and the respective lessors, we may not be able
to enforce our rights to lease such properties under the respective lease agreements against the owners. As of the date of this annual
report, we are not aware of any claim or challenge brought by any third parties against us or our lessors with respect to the defects
in our leasehold interests. If our lease agreements are claimed as null and void by the owners of the leased real properties, we could
be required to vacate the properties and incur additional costs, in the event of which we could only initiate the claim against the lessors
under relevant lease agreements for indemnities for their breach of the relevant leasing agreements. We cannot assure you that suitable
alternative locations are readily available on commercially reasonable terms, or at all, and if we are unable to relocate our officers
in a timely manner, our operations may be interrupted.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Any
lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business,
financial condition and results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business is subject to certain regulations, and we are required to hold a number of licenses, permits and filings in connection with
our business operation, including, but not limited to, Human Resource Service License. Failure to satisfy these requirements may
result in penalties to rectify, fines, confiscation of illegal gains, or suspension of business. As of the date of this annual report, we have obtained all material licenses and permits described above for our current
operations including, among others, the Human Resource Service License. We will also apply for certain permits and filings the
government authorities if needed in the future. However, we cannot assure you that we can obtain such permits or complete such
filings in a timely manner, or at all, due to complex procedural requirements and the expansion of our business.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">New
laws and regulations may be enforced from time to time to require additional licenses and permits other than those we currently have
or provide additional requirements on the operation of our business. If the relevant governmental authorities promulgate new laws and
regulations that require additional approvals or licenses or provide additional requirements on the operation of any part of our business
and we are not able to obtain such approvals, licenses, permits or filings or adjust our business model to comply with such new laws
in a timely manner, we could be subject to penalties and operational disruption and our financial condition and results of operations
could be adversely affected.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>There
could be adverse legal, tax, and other consequences if users on our platforms were to be classified as our employees or dispatched employees
instead of independent contractors.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
users are considered as third-party independent contractors or individual businesses. We believe that our business model is consistent
with the prevailing practice in the workforce operational solution industry and recent policies of the State Council of the People&#8217;s
Republic of China, or the State Council, that promote on-demand consumer service businesses and the associated workforce model through
flexible regulatory measures. Furthermore, we believe the users on our platforms are independent contractors or individual businesses
because, among other things, we do not establish a labor relationship nor sign any labor contracts with them. As such, we do not believe
that users on our platforms should be deemed as our employees or dispatched employees under the relevant PRC laws and regulations. As
of the date of this annual report, our business model has not been investigated or challenged by any government authorities, nor are
we aware of any government action contemplated or threatened. We cannot assure you that we will not be involved in lawsuits or arbitration
cases in which the judge or arbitrator may side with the claimant in determining the relationship with users on our platforms in the
future. We also cannot assure you that we will not be subject to government investigations on or challenges to the legality of our business
model in the future. If, as a result of legislation or judicial decisions, we are required to classify users on our platform as our employees
or dispatched employees, we would incur significant additional expenses for compensating users on our platforms, potentially including
expenses associated with various employee benefits pursuant to relevant PRC laws and regulations. In addition, we may be required to
fundamentally change our operation model to comply with the relevant PRC laws and regulations, including the requirement that the total
number of dispatched employees may not exceed 10% of the total number of employees. We would also be subject to claims for vicarious
liability in relation to torts committed by users during their course of services, or other claims under the relevant PRC laws and regulations.
Any of the foregoing could significantly increase our costs to serve corporate customers, harm our reputation and brand, subject us to
rectification orders and fines, and cause us to significantly alter our existing business model and operations. As a result, our business,
financial condition, results of operations and prospects will be materially and adversely affected.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Any
failure to maintain the satisfactory performance of our technology systems and resulting interruptions in the availability of our websites,
applications, or services could adversely affect our business, results of operations and prospects.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
satisfactory performance, reliability and availability of our technology systems are critical to our success. We have developed technology
that enables us to deliver our recruitment, outsourcing and other services with simplicity, convenience, speed and reliability. These
integrated technologies support the smooth performance of certain key functions of our business. However, our technology or infrastructure
may not function properly at all times. We may be unable to monitor and ensure high-quality maintenance and upgrade of our technology
and infrastructure, and our users may experience service outages and delays in accessing and using our platforms as we seek to source
additional capacity. In addition, we may experience surges in online traffic associated with promotional activities as we scale, which
can put additional demand on our platforms at specific times. Any disruption to our technology and causing interruptions to our website,
applications, platforms or services could adversely affect our business and results of operations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
technology systems may also experience telecommunications failures, computer viruses, failures during the process of upgrading or replacing
software, databases or components, power outages, hardware failures, user errors, or other attempts to harm our technology systems, which
may result in the unavailability or slowdown of our platforms or certain functions, delays or errors in transaction processing, loss
of data, inability to accept and fulfill orders, reduced gross merchandise volume and the attractiveness of our platforms. Further, hackers,
acting individually or in coordinated groups, may also launch distributed denial of service attacks or other coordinated attacks that
may cause service outages or other interruptions in our business. Any of such occurrences could cause severe disruption to our daily
operations. If we cannot successfully execute system maintenance and repair, our business and results of operations could be adversely
affected and we could be subject to liability claims.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to keep up with the technological developments and implementation of advanced technologies, our business, results of operations
and prospects may be materially and adversely affected.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
apply technology to serve our clients more efficiently and bring them better user experience. Our success will in part depends on our
ability to keep up with the changes in technology and the continued successful implementation of advanced technology, including AI, 5G,
cloud computing, distributed architecture and big data analytics. If we fail to adapt our platforms and services to changes in technological
development in an effective and timely manner, our business operations may suffer. Changes in technologies may require substantial expenditures
in research and development as well as in modification of our services. Technical hurdles in implementing technological advances may
result in our services becoming less attractive to users and corporate customers, which, in turn, may materially and adversely affect
our business, results of operations and prospects.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Changes
in laws and regulations related to the internet and fixed telecommunications or changes in the internet infrastructure and fixed telecommunications
networks itself may diminish the demand for our services, and could have a negative impact on our business.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
future success of our business depends upon the continued use of the internet as a primary medium for commerce, communication and business
solutions. Access to the internet is maintained through state-owned telecommunication operators under the administrative control and
regulatory supervision of the MIIT. We rely on this infrastructure to provide data communications primarily through local telecommunication
lines and wireless telecommunication networks. In addition, the national networks in China are connected to the internet through international
gateways. These international gateways are the only channels through which a domestic user can connect to the internet and may not sufficiently
support the continually growing demand for internet usage. With the expansion of our business, we may be required to upgrade our technology
and infrastructure to keep up with the increasing traffic on our platforms. We cannot assure you that the internet infrastructure and
the fixed telecommunications networks in China can support the demands associated with the continued growth in internet usage. If we
cannot increase our capacity to deliver our online services, we may not be able to accommodate the increases in traffic we anticipate
from our expanding user base and the adoption or acceptance of our offerings may be hindered, which could adversely impact our business
and profitability. In the event of disruptions, failures or other problems with internet infrastructure, we or our users may not have
access to alternative networks on a timely basis, if at all. Additionally, we have no control over the costs of the services provided
by telecommunication service providers. If the prices we pay for telecommunications and internet services rise significantly, our results
of operations may be materially and adversely affected. Furthermore, if internet access fees or other charges to internet users increase,
some users may be prevented from accessing the mobile internet and thus cause the growth of mobile internet users to decelerate. Such
deceleration may adversely affect our ability to continue expanding our user base.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
technology infrastructure may encounter disruptions or other outages caused by problems or defects in our technologies and systems, such
as malfunctions in software or network overload. Incidents of serious network overload may cause laggings for some of our users for a
period of several hours each time, and may negatively affect our user experience. Our growing operations will place increasing pressure
on our server and bandwidth capacities as we further expand our user base and develop more features and functions. We may encounter problems
when upgrading our systems or services and there may be undetected programing errors, which could adversely affect the performance of
our operating systems and user experience. Furthermore, our infrastructure is also vulnerable to damages from fires, floods, earthquakes,
power loss and telecommunication failures.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Government
bodies or agencies in jurisdictions where we have operations have in the past adopted, and may in the future adopt, laws or regulations
affecting the use of the Internet as a commercial medium. Changes to these laws or regulations could require us to modify our solutions
in order to comply with these changes. In addition, government agencies or private organizations may begin to impose taxes, fees or other
charges for accessing the Internet or commerce conducted via the Internet. These laws or charges could limit the growth of Internet-related
commerce or communications generally, result in reductions in the demand for internet-based services such as ours.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the use of the Internet as a business tool could be adversely affected due to delays in the development or adoption of new
standards and protocols to handle increased demands of Internet activity, security, reliability, cost, ease of use, accessibility, and
quality of service. The performance of the Internet and its acceptance as a business tool has been adversely affected by &#8220;viruses&#8221;,
&#8220;worms&#8221; and other malicious programs and the Internet has experienced a variety of outages and other delays as a result of
damage to portions of its infrastructure. Any network interruption or inadequacy that causes interruptions to our platforms, or failure
to maintain the network and server or solve such problems in a timely manner, could reduce our user satisfaction, which in turn, could
adversely affect our reputation, user base and our business, financial condition, results of operations and prospects.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
regard our patents, trademarks, copyrights, domain names, know-how, proprietary technologies, and similar intellectual property (which
we have ownership or legal rights to use) as critical to our success, and we rely on a combination of intellectual property laws and
contractual arrangements, including confidentiality, invention assignment and non-compete arrangements with our employees and others,
to protect our proprietary rights. As of the date of this annual report, we have ten patents registered in the U.S. and seven patents
registered in China, all in the areas of artificial intelligence, data analytics and blockchain technology, 68 registered trademarks,
74 registered copyrights, and ten registered domain names. In addition, as of the date of this annual report, we have nine additional
patent applications that are pending in both the U.S. and China. Despite these measures, any of our intellectual property rights could
be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive
advantages. In addition, there can be no assurance that our patent applications will be approved, that any issued patents will adequately
protect our intellectual property, or that such patents will not be challenged by third parties or found by a judicial authority to be
invalid or unenforceable. Further, because of the rapid pace of technological change in our industry, parts of our business rely on technologies
developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third
parties on reasonable terms, or at all.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">It
is often difficult to register, maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject
to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation.
Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies
available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce
our contractual rights in China. Policing any unauthorized use of our intellectual property is difficult and costly and the steps we
take may be inadequate to prevent the infringement or misappropriation of our intellectual property. In the event that we resort to litigation
to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and
financial resources, and could put our intellectual property at risk of being invalidated or narrowed in scope. We cannot assure you
that we will prevail in such litigation, and even if we do prevail, we may not obtain a meaningful recovery. In addition, our trade secrets
may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in maintaining, protecting
or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of
operations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate patents, copyrights
or other intellectual property rights held by third parties. We have been, and from time to time in the future may be, subject to legal
proceedings and claims relating to the intellectual property rights of others. In addition, there may be other third-party intellectual
property that is infringed by our solutions or services, the solutions or services provided by third-party merchants on our marketplace,
or other aspects of our business. There could also be existing patents of which we are not aware that our solutions or services may inadvertently
infringe. We cannot assure you that holders of patents purportedly relating to some aspects of our technology platform or business, if
any such holders exist, would not seek to enforce such patents against us in China, the United States or any other jurisdictions. Further,
the application and interpretation of China&#8217;s patent laws and the procedures and standards for granting patents in China are still
evolving and are uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis. If we are
found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or
may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our
own. In addition, we may incur significant expenses, and may be forced to divert management&#8217;s time and other resources from our
business and operations to defend against these third-party infringement claims, regardless of their merits. Successful infringement
or licensing claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations
by restricting or prohibiting our use of the intellectual property in question. Finally, we use open-source software in connection with
our solutions and services. Companies that incorporate open-source software into their solutions and services have, from time to time,
faced claims challenging the ownership of open-source software and compliance with open-source license terms. As a result, we could be
subject to suits by parties claiming ownership of what we believe to be open-source software or noncompliance with open-source licensing
terms. Some open-source software licenses may require users who distribute open-source software as part of their software to publicly
disclose all or part of the source code to such software and make available any derivative works of the open-source code on unfavorable
terms or at no cost. Any requirement to disclose our source code or pay damages for breach of contract could be harmful to our business,
results of operations and financial condition.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
business depends on the continued efforts of our senior management, particularly our founder, chairman of the Board and CEO, Mr. Howard
Lee. If Mr. Lee, or one or more other of our key executives and employees, were unable or unwilling to continue in their present positions,
our business may be severely disrupted.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business operations depend on the continuing services of our senior management, particularly Mr. Lee, our founder, chairman of the Board
and CEO, and our other executive officers named in this annual report. While we have provided different incentives to our management,
we cannot assure you that we can continue to retain their services. If one or more of our key executives were unable or unwilling to
continue in their present positions, we may not be able to replace them easily or at all, our future growth may be constrained, our business
may be severely disrupted and our financial condition and results of operations may be materially and adversely affected, and we may
incur additional expenses to recruit, train and retain qualified personnel. In addition, although we have entered into confidentiality
and non-competition agreements with our key executives of our subsidiaries in China, there is no assurance that any member of our management
team will not join our competitors or form a competing business. Moreover, it is possible that our key employees, upon their departure,
will join our competitors or start their own competing businesses, and may solicit certain of our current customers, which may adversely
affect our business, financial results and daily operations. If any dispute arises between us and our current or former officers, we
may have to incur substantial costs and expenses in order to enforce such agreements in China or we may be unable to enforce them at
all.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
majority of our executive officers have no prior experience in operating a U.S. public company, and their inability to operate the public
company aspects of our business could harm us.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
majority of our executive officers have no experience in operating a U.S. public company, which makes our ability to comply with applicable
laws, rules and regulations uncertain. Our failure to comply with all laws, rules and regulations applicable to U.S. public companies
could subject us or our management to regulatory scrutiny or sanction, which could harm our reputation and share price.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance
with such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and
legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations
in various jurisdictions in which we conduct activities, including the U.S. Foreign Corrupt Practices Act, or FCPA, and other anti-corruption
laws and regulations. The FCPA prohibits us and our officers, directors, employees and business partners acting on our behalf, including
agents, from corruptly offering, promising, authorizing or providing anything of value to a &#8220;foreign official&#8221; for the purposes
of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires
companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain
a system of adequate internal accounting controls.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have direct or indirect interactions with officials and employees of government agencies and state- owned affiliated entities in the
ordinary course of business. These interactions subject us to an increased level of compliance- related concerns. We are in the process
of implementing policies and procedures designed to ensure compliance by us and our directors, officers, employees, representatives,
consultants, agents and business partners with applicable anti-corruption, anti-bribery, anti-money laundering, financial and economic
sanctions and similar laws and regulations. However, our policies and procedures may not be sufficient, and our directors, officers,
employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Non-compliance
with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower
complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences,
remedial measures and legal expenses, all of which could materially and adversely affect our business, results of operations, financial
condition and reputation. In addition, changes in economic sanctions laws in the future could adversely impact our business and investments
in our shares.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Content
posted or displayed on or linked to our online recruitment platform may be found objectionable by PRC regulatory authorities and may
subject us to penalties and other negative consequences.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC government has adopted laws and regulations governing internet and wireless access and the distribution of information over the internet
and wireless telecommunications networks. Under these laws and regulations, internet content providers and internet publishers are prohibited
from posting or displaying over the internet or wireless networks content that, among other things, violates the principle of the PRC
constitution, laws and regulations, impairs the national dignity of China or the public interest, or is obscene, superstitious, fraudulent
or defamatory. Furthermore, internet content providers are also prohibited from displaying content that may be deemed by relevant government
authorities as instigating ethnical hatred and harming ethnical unity, harming the national religious policy, &#8220;socially destabilizing&#8221;
or leaking &#8220;state secrets&#8221; of the PRC. Failure to comply with these requirements may result in the revocation of licenses
to provide internet content or other approvals, licenses or permits, the closure of the concerned platforms and reputational harm. The
operator may also be held liable for any censored information displayed on or linked to their platform. The liabilities and penalties
resulting from such non-compliance may materially and adversely damage our business and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 15, 2019, the CAC, released the Provisions on Ecological Governance of Network Information Content, or PEGNIC, which came into
force on March 1, 2020. The PEGNIC is one of the latest regulations governing the distribution of information over the internet and wireless
telecommunications networks in which it classifies the network information into three categories, namely the &#8220;encouraged information,&#8221;
the &#8220;illegal information&#8221; and the &#8220;undesirable information.&#8221; While illegal information is strictly prohibited
from distribution, the internet content providers are required to take relevant measures to prevent and resist the production and distribution
of undesirable information. PEGNIC further clarifies the duties owed by the internet content providers in preventing the display of content
that against the PEGNIC, such as obligations to improve the systems for user registration, account management, information release review,
follow-up comments review, website ecological management, real-time inspection, emergency response and disposal mechanism for cyber rumor
and black industry chain information.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have designed and implemented procedures to monitor content on our online recruitment platform. However, it may not be possible to determine
in all cases the types of content that could result in our liability as a distributor of such content, and we may not be able to capture
all violating content in time. If any of the content posted or displayed on our online recruitment platform is deemed by the PRC government
to violate any content restrictions, we may not be able to continue to display such content and could become subject to penalties, including
confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect
our business, financial condition and results of operations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PRC
regulatory authorities may also conduct various reviews and inspections on our business operations, especially those related to content
distribution, from time to time. If any non-compliance incidents in our business operations are identified, we may be required to take
certain rectification measures in accordance with applicable laws and regulations, or we may be subject to other regulatory actions such
as administrative penalties. It may be difficult to determine the type of content or actions that may result in liability to us and,
if we are found to be liable, we may be prevented from operating our business in the PRC. Moreover, complying with relevant regulatory
requirements may result in limitation to our scope of services, reduction in user engagement or loss of users, diversion of our management
team&#8217;s attention and increased operational costs and expenses. The costs of compliance with these regulations may continue to increase
as a result of more content being made available by an increasing number of users of our online recruitment platform, which may adversely
affect our results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are dependent on app stores to distribute our mobile applications.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
offer our recruitment and other services through our platforms, an important component of which is our mobile applications. Our mobile
applications are offered via app stores operated by third parties, such as Apple App Store and various Android app stores, which could
suspend or terminate our users&#8217; access to our mobile applications, increase access costs or change the terms of access in a way
that makes our mobile applications less desirable or harder to access. As such, the promotion, distribution and operation of our mobile
applications are subject to such distribution platforms&#8217; standard terms and policies for application developers, which are subject
to the interpretation of, and frequent changes by, these distribution channels. If Apple&#8217;s App Store or any Android app stores
interpret or change their standard terms and conditions in a manner that is detrimental to us, or terminate their existing relationship
with us, our business, financial condition and results of operations may be materially and adversely affected. In the future, it is possible
that compliance requirements of app stores may cause us to suspend our mobile applications from such stores. As a result, our ability
to expand our user base may be hindered if potential users experience difficulties in or are barred from accessing our mobile applications.
Any such incident may adversely affect our brands and reputation, business, financial condition and results of operations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to changing laws, rules and regulations in the U.S. regarding regulatory matters, corporate governance and public disclosure
that will increase both our costs and the risks associated with non-compliance.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to rules and regulations by various governing bodies and self-regulatory organizations, including, for example, the SEC and
The Nasdaq Stock Market, which are charged with the protection of investors and the oversight of companies whose securities are publicly
traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations
have resulted in and are likely to continue to result in increased general and administrative expenses and a diversion of management
time and attention from revenue-generating activities to compliance activities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Moreover,
because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time
as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs
necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations
and any subsequent changes, we may be subject to penalty and our business may be harmed.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations,
meet our reporting obligations or prevent fraud, and investor confidence and the market price of our shares may be materially and adversely
affected.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to the reporting requirements of the Exchange Act of 1934, or Exchange Act, the Sarbanes- Oxley Act of 2002 and the rules
and regulations of the Nasdaq Stock Market. Our independent registered public accounting firm has not conducted an audit of our internal
control over financial reporting, as we are not required to provide a report of management&#8217;s assessment on our internal control
over financial reporting due to a transition period established by the rules of the SEC for newly public companies. However, in the course
of auditing our consolidated financial statements, we and our independent registered public accounting firm identified one material weaknesses
in our internal control over financial reporting. As defined in standards established by the PCAOB, a &#8220;material weakness&#8221;
is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material
weakness identified relates to lack of accounting staff and resources with appropriate knowledge of the U.S. GAAP and SEC reporting and
compliance requirements to design and implement formal period-end financial reporting policies and procedures to address complex U.S.
GAAP technical accounting issue in accordance with U.S. GAAP and the SEC requirements. This material weakness, if not remediated timely,
may lead to misstatements in our consolidated financial statements in the future. Following the identification of this material weakness,
we have taken and plan to continue to take remedial measures. See &#8220;Item 15. Controls and Procedures &#8211; Internal Control over
Financial Reporting.&#8221; We cannot assure you, however, that these measures may fully address this material weakness in our internal
control over financial reporting or that we may not identify additional material weaknesses or significant deficiencies in the future.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Section
404 of the Sarbanes-Oxley Act of 2002 requires that we include a report of management on our internal control over financial reporting
in our annual report on Form 20-F beginning with our second annual report on Form 20-F. In addition, once we cease to be an &#8220;emerging
growth company&#8221; as such term is defined under the JOBS Act, our independent registered public accounting firm must attest to and
report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over
financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is
effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is
qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or
reviewed, or if it interprets the relevant requirements differently from us. In addition, as we are a public company, our reporting obligations
may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may
be unable to timely complete our evaluation testing and any required remediation.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley
Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail
to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from
time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting. If
we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements
and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.
This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of
our shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse
of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil
or criminal sanctions. We may also be required to restate our financial statements from prior periods.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
insurance coverage may not be adequate, which could expose us to significant costs and business disruptions.</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have obtained or caused relevant counterparties to obtain insurance to cover certain potential risks and liabilities. We provide social
security insurance, including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical
insurance for our employees. There can be no assurance that our insurance coverage is sufficient to prevent us from any loss or that
we will be able to successfully claim our losses under our current insurance policies on a timely basis, or at all. If we incur any loss
that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial
condition and results of operations could be materially and adversely affected.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
COVID-19 pandemic has, and will likely continue to, negatively impact the global economy and disrupt normal business activity, which
may have an adverse effect on our results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
global spread of COVID-19 and the efforts to control it have slowed global economic activity and disrupted, and reduced the efficiency
of, normal business activities in much of the world. The pandemic has resulted in authorities around the world implementing numerous
unprecedented measures such as travel restrictions, quarantines, shelter in place orders, and factory and office shutdowns. These measures
have impacted and will likely continue to impact our workforce and operations, and those of our users and clients.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Beginning
in March 2022, the outbreak of the Omicron variant of COVID-19 and the zero-COVID measures, such as lengthy city-wide lock-downs, undertaken
in certain cities in which we operate, have caused disruptions to our business. In response to governmental directives and recommended
safety measures, we have implemented personal safety measures at all our facilities. However, these measures may not be sufficient to
mitigate the risk of infection by COVID-19. If a significant number of our employees, or employees and third parties performing key functions,
including our chief executive officer and members of our board of directors, become ill, our business may be further adversely impacted.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the longer-term, the COVID-19 pandemic is likely to adversely affect the economies and financial markets of many countries, and could
result in a global economic downturn and a recession. Although China began to modify its zero-COVID policy in late 2022, and most of
the travel restrictions and quarantine requirements were lifted in December 2022, there remains uncertainty as to the future impact of
the virus, especially in light of this change in policy. Future lockdowns or other restrictive measures that may be imposed, especially
those imposed in major cities where we have a significant presence, may have a material impact on our services and our users, which may,
in turn negatively impact our results of operations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Pandemics
and epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks may disrupt our operations, which could
materially and adversely affect our business, financial condition, results of operations and prospects.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
recent years, there have been outbreaks of epidemics globally. In addition to the impact of COVID-19 as described above, our business
could be materially and adversely affected by natural disasters, such as snowstorms, earthquakes, fires or floods, the outbreak of other
widespread health epidemic, such as swine flu, avian influenza, severe acute respiratory syndrome, Ebola, or Zika or other events, such
as wars, acts of terrorism, environmental accidents, power shortage or communication interruptions. The occurrence of such a disaster
or prolonged outbreak of an epidemic illness or other adverse public health developments in the countries and regions we operate in could
materially disrupt our business and operations. Such events could also significantly affect our industry and cause a temporary closure
of the facilities we use for our operations, which would severely disrupt our operations and have a material adverse effect on our business,
financial condition, results of operations and prospects. Our operations could be disrupted if any of our employees were suspected of
having any of the epidemic illnesses, since this could require us to quarantine some or all of such. employees or disinfect the facilities
used for our operations. In addition, our revenues and profitability could be materially reduced to the extent that a natural disaster,
health epidemic or other outbreak harms the Chinese or global economy in general. Our operations could also be severely disrupted if
our clients, users or other participants were affected by such natural disasters, health epidemics or other outbreaks.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may be subject to social and natural catastrophic events that are beyond our control, such as natural disasters, health epidemics, riots,
political and military upheavals and other outbreaks in the country or region where we have our operations or where a portion of our
users are located. Such events could significantly disrupt our operations and negatively impact our business, financial condition, results
of operations and prospects.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may be subject to potential liability in connection with pending or threatened legal proceedings and other matters, which could adversely
affect our business or financial results.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
time to time, we have become and may in the future become a party to various legal or administrative proceedings arising in the ordinary
course of our business in China. We may also be subject to potential liability in connection with pending or threatened legal proceedings
arising from breach of contract claims, anti-competition claims and other matters. These proceedings, investigations, claims and complaints
could be initiated or asserted under or on the basis of a variety of laws in different jurisdictions, including data protection and privacy
laws, trucker or consumer protection laws, labor and employment laws, anti-monopoly or competition laws, transportation laws, advertising
laws, intellectual property laws, securities laws, tort laws, contract laws and property laws. There is no guarantee that we will be
successful in defending ourselves in legal and administrative actions or in asserting our rights under various laws. If we fail to defend
ourselves in these actions, we may be subject to restrictions, fines or penalties that will materially and adversely affect our operations.
Even if we are successful in our attempt to defend ourselves in legal and regulatory actions or to assert our rights under various laws
and regulations, the process of communicating with relevant regulators, defending ourselves and enforcing our rights against the various
parties involved may be expensive and time-consuming. These actions could expose us to negative publicity, substantial monetary damages
and legal defense costs, injunctive relief and criminal and civil fines and penalties, including but not limited to suspension or revocation
of licenses to conduct business.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may be subject to potential liability in connection with pending or threatened legal proceedings and other matters, which could adversely
affect our business or financial results.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
time to time, we have become and may in the future become a party to various legal or administrative proceedings arising in the ordinary
course of our business in China. We may also be subject to potential liability in connection with pending or threatened legal proceedings
arising from breach of contract claims, anti-competition claims and other matters. These proceedings, investigations, claims and complaints
could be initiated or asserted under or on the basis of a variety of laws in different jurisdictions, including data protection and privacy
laws, trucker or consumer protection laws, labor and employment laws, anti-monopoly or competition laws, transportation laws, advertising
laws, intellectual property laws, securities laws, tort laws, contract laws and property laws. There is no guarantee that we will be
successful in defending ourselves in legal and administrative actions or in asserting our rights under various laws. If we fail to defend
ourselves in these actions, we may be subject to restrictions, fines or penalties that will materially and adversely affect our operations.
Even if we are successful in our attempt to defend ourselves in legal and regulatory actions or to assert our rights under various laws
and regulations, the process of communicating with relevant regulators, defending ourselves and enforcing our rights against the various
parties involved may be expensive and time-consuming. These actions could expose us to negative publicity, substantial monetary damages
and legal defense costs, injunctive relief and criminal and civil fines and penalties, including but not limited to suspension or revocation
of licenses to conduct business.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may be subject to risks associated with increased scrutiny of environmental, social, and governance matters.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increased
attention to climate change and other environmental, social, and governance, or ESG, issues, as well as societal expectations regarding
voluntary ESG initiatives and disclosures, may result in increased costs, impact our reputation, or otherwise affect our business performance.
We may take certain actions in the future, including the establishment of ESG-related goals or targets, to address ESG issues. Achieving
our goals or targets is subject to risks and uncertainties and depends on numerous conditions, some of which are outside our control.
There can be no assurances that our commitments will be achieved in the manner we currently intend or at all, and any failure to advance
or meet such commitments may adversely impact our relationship with certain stakeholders.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risks
Related to Doing Business in China</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Change
in China&#8217;s economic, political or social conditions, laws, regulations or governmental policies could have a material adverse effect
on our business, financial conditions and results of operations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Substantially
all of our revenues are sourced from China. Accordingly, our results of operations and prospects are, to significant degree, subject
to economic, political and legal developments in China. The financial reforms that begun in the late 1970s have resulted in significant
economic growth. However, any economic reform policies or measures in China may from time to time be modified or revised. China&#8217;s
economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement,
level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented
measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and
the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still
owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development
by imposing industrial policies. The Chinese government also exercises significant control over China&#8217;s economic growth through
allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential
treatment to particular industries or companies.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
the PRC economy has experienced significant growth in the past 30 years, growth has been uneven across different regions and among different
economic sectors. The Chinese government has implemented measures to encourage economic growth and guide the allocation of the resources.
Some of these measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial condition
and results of operations may be adversely affected by government control over capital investments or changes in tax regulations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
the PRC economy has grown significantly in the past decade, that growth may not continue, as evidenced by the slowing of the growth of
the PRC economy since 2012. Any adverse changes in economic conditions in China, in the policies of the PRC government or in the laws
and regulations in China could have a material adverse effect on a specific industry including our operating companies in China. Such
developments could adversely affect our business and operating results, lead to reduction in demand for our services and adversely affect
our competitive position.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Uncertainties
with respect to the PRC legal system, including uncertainties regarding the interpretation and enforcement of laws, and sudden or unexpected
changes of PRC laws and regulations with little advance notice could adversely affect us and limit the legal protections available to
you and us, and the Chinese government may exert more oversight and control over offerings that are conducted overseas, which changes
could materially hinder our ability to continue to offer our securities, and cause the value of our securities to significantly decline
or become worthless.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operating subsidiaries are incorporated under and governed by the laws of the PRC. The PRC legal system is a civil law system based on
written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general,
such as foreign investment, corporate organization and governance, commerce, taxation and trade. As a significant part of our
business is conducted in China, our operations are principally governed by PRC laws and regulations. However, since the PRC legal
system continues to evolve rapidly, rules and regulations in China can change quickly with little advance notice. The
interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws and regulations involve
uncertainties, which may limit legal protections available to us. Uncertainties due to evolving laws and regulations could also
impede the ability of a China-based company like us, to obtain or maintain permits or licenses required to conduct business in
China. In the absence of required permits or licenses, governmental authorities could impose material sanctions or penalties on us.
See &#8220;&#8212; Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and
adverse impact on our business, financial condition and results of operations&#8221; in this subsection for more details. In
addition, some regulatory requirements issued by certain PRC government authorities may not be consistently applied by other PRC
government authorities (including local government authorities), thus making strict compliance with all regulatory requirements
impractical, or in some circumstances impossible. For example, we may have to resort to administrative and court proceedings to
enforce the legal protection that we enjoy either by law or contract. Since PRC administrative and court authorities have
significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate or
predict the outcome of administrative and court proceedings and the level of legal protection available to you and us than in more
developed legal systems.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or
at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules
until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property
(including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China
could materially and adversely affect our business and impede our ability to continue our operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly
issued an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the capital
market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement
and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system
of extraterritorial application of the PRC securities laws. Since this announcement is relatively new, uncertainties still exist in relation
to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed
implementations and interpretations will be modified or promulgated, and, if any, the potential impact such modified or new laws and
regulations will have on companies like us and our securities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Given
statements by the Chinese government indicating an intent to exert more oversight and control over securities offerings and other capital
markets activities that are conducted overseas and foreign investment in China-based companies like us. Although we are currently not
required to obtain permission from any of the PRC federal or local government and has not received any denial to list on the U.S. exchange,
it is uncertain whether or when we might be required to obtain permission from the PRC government to list on U.S. exchanges in the future,
and even if such permission is obtained, whether it will be later denied or rescinded, which could significantly limit or completely
hinder our ability to offer or continue to offer our securities to investors and cause the value of our shares to significantly decline
or be worthless. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas
could materially and adversely hinder our ability to offer or continue to offer our securities, and cause the value of our securities
to significantly decline or become worthless.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
Chinese government has substantial oversight and influence over the manner in which we must conduct our business and may intervene or
influence our operations at any time, which actions could impact our operations materially and adversely, and significantly limit or
completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly
decline or be worthless.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Chinese government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations
at any time as the government deems appropriate to further regulatory, political and societal goals. For instance, the Chinese government
has published new policies that significantly affected certain industries such as the education and internet industries. The Chinese
government has exercised, and continues to exercise, substantial control over virtually every sector of the Chinese economy through regulation
and state ownership, which could materially and adversely impact the results of our operations and future prospects.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
ability to operate in the PRC may be further harmed by changes in its laws and regulations. The central or local governments of the PRC
may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts
on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including
any decision not to continue to support economic reforms and to return to a more centrally planned economy or regional or local variations
in the implementation of economic policies, could have a significant effect on economic conditions in the PRC or particular regions thereof.
We cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely
affect our business, financial condition, results of operations and the value of our ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business is also subject to various government and regulatory interference. We could be subject to regulation by various political and
regulatory entities, including various local and municipal agencies and government sub-divisions. The Company may incur increased costs
necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. Our operations could
be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry, which
could result in further material changes in our operations and adversely impact the value of our securities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
PCAOB had historically been unable to inspect auditors in mainland China and Hong Kong in relation to their audit work. If the PCAOB
determines in the future that it no longer has full access to inspect and investigate completely accounting firms in these jurisdictions
and if we use an accounting firm headquartered in one of these jurisdictions to issue an audit report by then, our ordinary shares may
be prohibited from trading in the United States under the HFCA Act, and such delisting or the threat of delisting may materially and
adversely affect the value of your investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint
statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including
China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers
in China and higher risks of fraud in emerging markets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating
in &#8220;Restrictive Market&#8221;, (ii) adopt a new requirement relating to the qualification of management or board of director for
Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications
of the company&#8217;s auditors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 20, 2020, the U.S. Senate passed the HFCA Act requiring a foreign company to certify it is not owned or controlled by a foreign government
if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the
PCAOB is unable to inspect the company&#8217;s auditors for three consecutive years, the issuer&#8217;s securities are prohibited to
trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the HFCA Act. On December 18, 2020, the
HFCA Act was signed into law. On December 2, 2021, the SEC adopted final amendments implementing congressionally mandated submission
and disclosure requirements of the HFCA Act. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable
Act. The bill, if enacted, would shorten the three-consecutive-year compliance period under the HFCA Act to two consecutive years. On
December 29, 2022, the Accelerating HFCA Act was signed into law, which amended the HFCA Act by requiring the SEC to prohibit an issuer&#8217;s
securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead
of three. As a result, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has
not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our ordinary shares from being traded on
a national securities exchange or in the over-the-counter trading market in the United States.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate
completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was not subject to that determination.
On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or
investigate completely registered public accounting firms.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
auditor, Marcum Asia, an independent registered public accounting firm that issues the audit report included elsewhere in this annual
report, is an auditor of companies that are traded publicly in the United States and firm registered with the PCAOB and has been subject
to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional
standards. Marcum Asia has been inspected by the PCAOB on a regular basis, with the last inspection in 2020 and was not subject to the
determination announced by the PCAOB on December 16, 2021. The PCAOB is expected to continue to demand complete access to inspections
and investigations against accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already
made plans to resume regular inspections in early 2023 and beyond. For this reason, we do not expect to be identified as a Commission-Identified
Issuer under the HFCA Act following our filing of an annual report on Form 20-F for the relevant fiscal year. Each year, the PCAOB will
determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If
the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland
China and Hong Kong and if we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial
statements filed with the SEC by then, we may be identified as a Commission-Identified Issuer following our filing of an annual report
on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer
for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading
under the HFCA Act. If our ordinary shares are prohibited from trading in the United States, there is no certainty that we will be able
to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able
to trade in the United States would substantially impair your ability to sell or purchase our ordinary shares when you wish to do so,
and the risk and uncertainty associated with delisting would have a negative impact on the price of our ordinary shares. Also, such a
prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material
adverse impact on our business, financial condition, and prospects.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Under
the PRC laws, the approval of and the filing with the CSRC or other PRC government authorities may be required in connection with
any of our future offering and listing in an overseas market, and, if required, we cannot predict whether or for how long we will be
able to obtain such approval or complete such filing.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Regulations
on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&amp;A Rules, adopted by six PRC regulatory agencies
in 2006 and amended in 2009, requires an overseas special purpose vehicle, that is controlled directly or indirectly by the PRC companies
or individuals and that has been formed for overseas listing purposes through acquisitions of PRC domestic interest held by such PRC
companies or individuals, to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle&#8217;s
securities on an overseas stock exchange. The CSRC currently has not issued any definitive rule or interpretation concerning whether
our offshore offerings are subject to the M&amp;A Rules. The interpretation and application of the regulations remain unclear. If the CSRC approval is required, it is uncertain whether we can or how
long it will take us to obtain the approval and, even if we obtain such CSRC approval, the approval could be rescinded. Any failure to
obtain or delay in obtaining the CSRC approval for any of our future overseas offerings, or a rescission of such approval if obtained, would
subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations
in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially
and adversely affect our business, financial condition, and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance
with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision
on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant
regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. As a follow-up, on December 24,
2021, the CSRC issued a draft of the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing
by Domestic Companies, and issued a draft of Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic
Companies for public comments. These draft measures propose to establish a new filing-based regime to regulate overseas offerings and
listings by domestic companies. Specifically, an overseas offering and listing by a PRC company, whether directly or indirectly, an initial
or follow-on offering, must be filed with the CSRC. The examination and determination of an indirect offering and listing will be conducted
on a substance-over-form basis, and an offering and listing shall be deemed as a PRC company&#8217;s indirect overseas offering and listing
if the issuer meets the following conditions: (i) any of the operating income, gross profit, total assets, or net assets of the PRC enterprise
in the most recent fiscal year was more than 50% of the relevant line item in the issuer&#8217;s audited consolidated financial statement
for that year; and (ii) senior management personnel responsible for business operations and management are mostly PRC citizens or are
ordinarily resident in the PRC, and the principal place of business is in the PRC or carried out in the PRC. The issuer or its affiliated
PRC entity, as the case may be, shall file with the CSRC for its initial public offering, follow-on offering and other equivalent offering
activities. Particularly, the issuer shall submit the filing with respect to its initial public offering and listing within three business
days after its initial filing of the listing application, and submit the filing with respect to its follow-on offering within three business
days after the completion of the follow-on offering. Failure to comply with the filing requirements may result in fines to the relevant
PRC companies, suspension of their businesses, revocation of their business licenses and operation permits and fines on the controlling
shareholder and other responsible persons. These draft measures also set forth certain regulatory red lines for overseas offerings and
listings by PRC enterprises.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies,
or the Trial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated
No. 1 to No. 5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of
Overseas Listings by Domestic Companies and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively,
the Guidance Rules and Notice. The Trial Measures, together with the Guidance Rules and Notice, reiterate the basic supervision principles
as reflected in the Draft Overseas Listing Regulations and regulate both direct and indirect overseas offering and listing by PRC domestic
companies by adopting a filing-based regulatory regime. Pursuant to the Trial Measures, (i) an overseas offering and listing by a domestic
company, whether directly or indirectly, shall be filed with the CSRC; and (ii) the issuer or its affiliated domestic company, as the
case may be, shall file with the CSRC for its initial public offering, follow-on offering, issuance of convertible bonds, offshore relisting
after go-private transactions and other equivalent offing activities in an overseas market. In addition, after a domestic company has
offered and listed securities in an overseas market, it is required to file a report to the CSRC after the occurrence and public disclosure
of certain material corporate events, including but not limited to, change of control and voluntary or mandatory delisting. <span style="background-color: white">We have completed the required filings
with the CSRC for our initial public offering in accordance with the requirements under these measures and the supporting guidelines.
The CSRC has concluded the filing procedure and published the filing results on the CSRC website on </span>October 19<span style="background-color: white">,
2023.</span> We may be
required to file with the CSRC in connection with any of our future offering and listing in an overseas market, including follow-on offerings,
issuance of convertible bonds, offshore relisting after going-private transactions, and other equivalent offering activities. If we fail
to complete such filing procedures for any future overseas offering or listing in an overseas market, including our follow-on offerings,
issuance of convertible bonds, offshore relisting after going-private transactions, and other equivalent offering activities, we may
face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on us, restrictions on or delays
to our financing transactions offshore, or other actions that could have a material and adverse effect on our business, financial condition,
results of operations, reputation and prospects, as well as the trading price of our ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 24, 2023, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives
Administration of China jointly revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities
Offering and Listing which was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration
of China in 2009, or the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality
and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023
with the Trial Measures. One of the major revisions to the revised Provisions is expanding its application to cover indirect overseas
offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a)
a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals
or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain
state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and
file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or through
its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities
service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security
or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
or after March 31, 2023, any failure or perceived failure by the Company or PRC subsidiaries to comply with the above confidentiality
and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in that the relevant
entities would be held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability
if suspected of committing a crime.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements
on us. If it is determined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures,
including the cybersecurity review under the Measures for Cybersecurity Review and the Draft Regulation on Network for Data Security
(if implemented), are required for any of our future overseas offerings, it is uncertain whether we can or how long it will take us
to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any
failure to obtain or delay in obtaining such approval or completing such filing procedures for any of our future overseas offerings,
or a rescission of any such approval or filing if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory
authorities for failure to seek CSRC approval or filing or other government authorization for our future overseas offerings. These
regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of
China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from any of our future overseas
offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of
operations, and prospects, as well as the trading price of our listed securities. The CSRC or other PRC regulatory authorities also
may take actions requiring us, or making it advisable for us, to halt our future overseas offerings before settlement and delivery of the
shares offered.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consequently,
if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the
risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules
or explanations requiring that we obtain additional approvals or accomplish additional required filing or other regulatory procedures for our prior
overseas offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain
such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our
business, prospects, financial condition, reputation, and the trading price of our listed securities.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>You
may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us
or our management named in the annual report based on foreign laws.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a company incorporated under the laws of the Cayman Islands. However, we conduct substantially all of our operations in China and
substantially all of our assets are located in China. In addition, most of our senior executive officers reside within China for a significant
portion of the time and most of them are PRC nationals. As a result, it may be difficult for you to effect service of process upon us
or our management named in the annual report inside mainland China. It may also be difficult for you to enforce in U.S. courts of the
judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers
and directors as none of them currently resides in the United States or has substantial assets located in the United States. In addition,
there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against
us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce
foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the
country where the judgment is made or on principles of reciprocity between jurisdictions. In addition, according to the PRC Civil Procedures
Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates
the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what
basis a PRC court would enforce a judgment rendered by a court in the United States. Furthermore, class action lawsuits, which are available
in the United States for investors to seek remedies, are generally uncommon in China.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>You
may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions
in Hong Kong against us or our management named in this annual report based on Hong Kong laws.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have two subsidiaries in Hong Kong, including (i) Lucas Star Global Limited, a wholly owned subsidiary of Lucas Star Holding Limited,
which is the wholly owned subsidiary of Lucas GC Limited; and (ii) Lucas GC Limited (Hong Kong), a wholly owned subsidiary of Lucas Group
China Limited. We do have management members who are Hong Kong residents and reside within Hong Kong for a significant portion of the
time. You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing
actions in Hong Kong against us or our management named in the annual report, as judgments entered in the U.S. can be enforced in Hong
Kong only at common law. If you want to enforce a judgment of the U.S. in Hong Kong, it must be a final judgment conclusive upon the
merits of the claim, for a liquidated amount in a civil matter and not in respect of taxes, fines, penalties, or similar charges, the
proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the judgment is not contrary
to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a &#8220;competent&#8221; court as determined
by the private international law rules applied by the Hong Kong courts.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
foreign judgments of the U.S. courts will not be directly enforced in Hong Kong as there are currently no treaties or other arrangements
providing for reciprocal enforcement of foreign judgments between Hong Kong and the U.S. However, the common law permits an action to
be brought upon a foreign judgment. That is to say, a foreign judgment itself may form the basis of a cause of action since the judgment
may be regarded as creating a debt between the parties to it. In a common law action for enforcement of a foreign judgment in Hong Kong,
the enforcement is subject to various conditions, including but not limited to, that the foreign judgment is a final judgment conclusive
upon the merits of the claim, the judgment is for a liquidated amount in civil matter and not in respect of taxes, fines, penalties,
or similar charges, the proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the
judgment is not contrary to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a &#8220;competent&#8221;
court as determined by the private international law rules applied by the Hong Kong courts. The defenses that are available to a defendant
in a common law action brought on the basis of a foreign judgment include lack of jurisdiction, breach of natural justice, fraud, and
contrary to public policy. However, a separate legal action for debt must be commenced in Hong Kong in order to recover such debt from
the judgment debtor. As a result, subject to the conditions with regard to enforcement of judgments of United States courts being met,
including but not limited to the above, a foreign judgment of United States of civil liabilities predicated solely upon the federal securities
laws of the United States or the securities laws of any State or territory within the U.S. could be enforceable in Hong Kong.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>It
may be difficult for overseas regulators to conduct investigations or collect evidence within China.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shareholder
claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or
practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for
regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory
cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision
and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the
absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became
effective in March 2020 (&#8220;Article 177&#8221;), no overseas securities regulator is allowed to directly conduct investigation
or evidence collection activities within the territory of the PRC. In addition, entities or individuals are prohibited from
providing documents and information in connection with any securities business activities to any organizations and/or persons aboard
without the prior consent of the securities regulatory authority of the State Council and the competent departments of the State
Council. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an
overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase
difficulties faced by you in protecting your interests. See also &#8220;Item 3. Key Information &#8212; D. Risk Factors &#8212;
Risks Related to Our Ordinary Shares &#8212; You may face difficulties in protecting your interests, and your ability to protect
your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law&#8221; for risks associated
with investing in us as a Cayman Islands exempted company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>It
may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within Hong Kong.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Securities and Futures Commission of Hong Kong (&#8220;SFC&#8221;) is a signatory to the International Organization of Securities Commissions
Multilateral Memorandum of Understanding (&#8220;MMOU&#8221;), which provides for mutual investigatory and other assistance and exchange
of information between securities regulators around the world, including the SEC. This is also reflected in section 186 of the Securities
and Futures Ordinance (&#8220;SFO&#8221;) which empowers the SFC to exercise its investigatory powers to obtain information and documents
requested by non-Hong Kong regulators, and section 378 of the SFO which allows the SFC to share confidential information and documents
in its possession with such regulators. However, there is no assurance that such cooperation will materialize, or if it does, whether
it will adequately address any efforts to investigate or collect evidence to the extent that may be sought by the U.S. regulators.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences
to us and our non-PRC shareholders.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with &#8220;de facto management
body&#8221; within China is considered a &#8220;resident enterprise&#8221; and will be subject to the enterprise income tax on its global
income at the rate of 25%. The implementation rules define the term &#8220;de facto management body&#8221; as the body that exercises
full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise.
The Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident Enterprises on the
Basis of De Facto Management Bodies, which was issued by the State Administration of Taxation, or the SAT, on April 22, 2009 and further
amended on December 29, 2017, or Circular 82, provides certain specific criteria for determining whether the &#8220;de facto management
body&#8221; of a PRC-controlled enterprise that is incorporated offshore is located in China. Although Circular 82 only applies to offshore
enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria
set forth in the circular may reflect the SAT&#8217;s general position on how the &#8220;de facto management body&#8221; text should
be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise
controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its &#8220;de facto
management body&#8221; in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions
are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise&#8217;s
financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise&#8217;s
primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the
PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of
an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the
term &#8220;de facto management body.&#8221; If the PRC tax authorities determine that we are a PRC resident enterprise for enterprise
income tax purposes, we could be subject to PRC tax at a rate of 25% on our worldwide income, subject to any reduction set forth in applicable
tax treaties. Furthermore, if we are deemed a PRC resident enterprise, dividends payable to our non-PRC resident enterprise shareholders
and any gain realized on the transfer of ordinary shares may be subject to PRC tax at a rate of 10% in the case of non-PRC resident enterprises
or a rate of 20% in the case of non-PRC individuals unless a reduced rate is available under an applicable tax treaty. It is unclear
whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country or area of
tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your
investment in the ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
face uncertainties with respect to indirect transfer of equity interests in PRC resident enterprises by their non-PRC resident companies.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may face uncertainties regarding the reporting on and consequences of private equity financing transactions involving the transfer and
exchange of shares in our company by non-resident investors in the future. In February 2015, the SAT issued the Bulletin on Issues of
Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or Bulletin 7. Pursuant to Bulletin 7, an &#8220;indirect
transfer&#8221; of PRC assets, including a transfer of equity interests in an unlisted non-PRC holding company of a PRC resident enterprise
and excluding the transfer of PRC assets by a non-PRC resident enterprise from the purchase and sale of equities of the same listed overseas
enterprise on the public market, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of the underlying
PRC assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment
of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and
the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a
rate of 10% for the transfer of equity interests in a PRC resident enterprise.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident
Enterprise Income Tax at Source, or Bulletin 37, which came into effect on December 1, 2017 and was most-recently amended on June 15,
2018. Bulletin 37 further clarifies the practice and procedure of the withholding of nonresident enterprise income tax. We face uncertainties
on the reporting and consequences of potential future private equity financing transactions, share exchanges or other transactions involving
the transfer of shares in our company by our non-PRC resident holding enterprise shareholders. The PRC tax authorities may pursue such
non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our PRC subsidiaries
to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing
obligations or being taxed under Bulletin 7 and Bulletin 37, and may be required to expend valuable resources to comply with them or
to establish that we and our non-resident enterprises should not be taxed under these regulations, which may have a material adverse
effect on our financial condition and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC tax authorities have the discretion under Bulletin 7 to make adjustments to the taxable capital gains based on the difference between
the fair value of the taxable assets transferred and the cost of investment. If the PRC tax authorities make adjustments to the taxable
income of the transactions under Bulletin 7, our income tax costs associated with such transactions will be increased, which may have
an adverse effect on our financial condition and results of operations. We cannot assure you that the PRC tax authorities will not, at
their discretion, adjust any capital gains and impose tax return filing obligations on us or require us to provide assistance to them
for the investigation of any transactions we were involved in. Heightened scrutiny over acquisition transactions by the PRC tax authorities
may have a negative impact on potential acquisitions we may pursue in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
our preferential tax treatments are revoked or become unavailable or if the calculation of our tax liability is successfully challenged
by the PRC tax authorities, we may be required to pay tax, interest and penalties in excess of our tax provisions.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Chinese government has provided various tax incentives to our PRC subsidiaries, primarily in the form of reduced enterprise income tax
rates. For example, under the PRC Enterprise Income Tax Law and its implementation rules, the statutory enterprise income tax rate is
25%. However, the income tax of an enterprise that has been determined to be a small low-profit enterprise can be reduced to a preferential
rate of 20% on 12.5% of its taxable income with respect to the portion of the annual taxable income that does not exceed RMB1 million
during certain periods. In addition, certain of our PRC subsidiaries enjoy preferential tax treatment, including being treated as high
and new technology enterprises and entitled to enjoy a reduced 15% enterprise income tax rate. Any increase in the enterprise income
tax rate applicable to our PRC subsidiaries in China, or any discontinuation, retroactive or future reduction or refund of any of the
preferential tax treatments and local government subsidies currently enjoyed by our PRC subsidiaries in China, could adversely affect
our business, financial condition and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Further,
in the ordinary course of our business, we are subject to complex income tax and other tax regulations, and significant judgment is required
in the determination of a provision for income taxes. Although we believe our tax provisions are reasonable, if the PRC tax authorities
successfully challenge our position and we are required to pay tax, interest and penalties in excess of our tax provisions, our financial
condition and results of operations would be materially and adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Failure
to make adequate contributions to various employee benefit plans as required by PRC regulations or comply with laws and regulations on
other employment practices may subject us to penalties.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Companies
operating in China are required to participate in various government sponsored employee benefit plans, including certain social insurance,
housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of
salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time
at locations where we operate our businesses. The requirement of employee benefit plans has not been implemented consistently by the
local governments in China given the different levels of economic development in different locations. Currently, our PRC subsidiaries
are making contributions to the plans based on the standards which are lower than the mandatory standards as required by law for all
employees. In addition, the candidates to whom we pay salaries in connection with our flexible employment recruitment services may be
seen as our employees by relevant government authorities and therefore, we may be required to pay employee benefits for them. With respect
to the underpaid or unpaid employee benefits, we may be required to make up the contributions for these plans as well as to pay late
fees and fines. If we are subject to late fees or fines in relation to the underpaid or unpaid employee benefits, our financial condition
and results of operations may be adversely affected. We may also be subject to regulatory investigations and other penalties if our other
employment practices are deemed to be in violation of relevant PRC laws and regulations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may subject us to penalties or liabilities.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC Labor Contract Law, which was enacted in 2008 and amended in 2012, introduced specific provisions related to fixed-term employment
contracts, part-time employment, probationary periods, consultation with labor unions and employee assemblies, employment without a written
contract, dismissal of employees, severance, and collective bargaining to enhance previous PRC labor laws. Under the Labor Contract Law,
an employer is obligated to sign a non-fixed term labor contract with any employee who has worked for the employer for ten consecutive
years except that the employee refuses to sign. Further, if an employee requests or agrees to renew a fixed-term labor contract that
has already been entered into twice consecutively, the resulting contract, with certain exceptions, must have non-fixed term. With certain
exceptions, an employer must pay severance to an employee where a labor contract is terminated or expires. In addition, the PRC governmental
authorities have continued to introduce various new labor-related regulations since the effectiveness of the Labor Contract Law.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
laws and regulations designed to enhance labor protection tend to increase our labor costs. In addition, as the interpretation and implementation
of these regulations are still evolving, our employment practices may not be at all times deemed in compliance with the regulations.
As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
M&amp;A Rules and certain other PRC regulations may make it more difficult for us to pursue growth through acquisitions.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
M&amp;A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, and some other regulations and rules concerning mergers
and acquisitions established complex procedures and requirements for acquisition of Chinese companies by foreign investors, including
requirements in some instances that the Ministry of Commerce of the PRC be notified in advance of any change-of-control transaction in
which a foreign investor takes control of a PRC domestic enterprise engaging in certain industries. Moreover, the Anti-Monopoly Law promulgated
by the SCNPC, which became effective in 2008 and was recently amended in June 2022, requires that transactions which are deemed concentrations
and involve parties with specified turnover thresholds must be cleared by the relevant anti-monopoly authority before they can be completed.
In addition, the Rules on Implementation of Security Review System for the Merger and Acquisitions of Domestic Enterprises by Foreign
Investors issued by the Ministry of Commerce and became effective in September 2011 specify that mergers and acquisitions by foreign
investors that raise &#8220;national defense and security&#8221; concerns and mergers and acquisitions through which foreign investors
may acquire de facto control over domestic enterprises that raise &#8220;national security&#8221; concerns are subject to strict review
by the Ministry of Commerce, and the rules prohibit any activities attempting to bypass a security review, including by structuring the
transaction through a proxy or contractual control arrangement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the future, we may pursue potential strategic acquisitions that are complementary to our business and operations. Complying with the
requirements of the above-mentioned regulations and other rules to complete such transactions could be time-consuming, and any required
approval processes, including obtaining approval or clearance from the Ministry of Commerce, may delay or inhibit our ability to complete
such transactions, which could affect our ability to expand our business or maintain our market share. Furthermore, according to the
M&amp;A Rules, if a PRC entity or individual plans to merge or acquire its related PRC entity through an overseas company legitimately
incorporated or controlled by such entity or individual, such a merger and acquisition will be subject to examination and approval by
the Ministry of Commerce. The application and interpretations of M&amp;A Rules are still uncertain, and there is possibility that the
PRC regulators may promulgate new rules or explanations requiring that we obtain approval of the Ministry of Commerce for our completed
or ongoing mergers and acquisitions. There is no assurance that we can obtain such approval from the Ministry of Commerce for our mergers
and acquisitions, and if we fail to obtain those approvals, we may be required to suspend our acquisition and be subject to penalties.
Any uncertainties regarding such approval requirements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC
regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries&#8217; ability to change their
registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties
under PRC laws. In addition, any failure to comply with PRC regulations with respect to registration requirements for offshore financing
may subject us to legal or administrative sanctions.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
July 2014, the State Administration of Foreign Exchange (&#8220;SAFE&#8221;) promulgated the Circular on Relevant Issues Concerning Foreign
Exchange Control on Domestic Residents&#8217; Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles,
or SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign
individuals that are deemed as PRC residents for foreign exchange administration purpose) to register with SAFE or its local branches
in connection with their direct or indirect offshore investment activities. SAFE Circular 37 further requires amendment to the SAFE registrations
in the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as change of a PRC individual
shareholder, name and operation term, or any significant changes with respect to the offshore special purpose vehicle, such as increase
or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders
who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
these foreign exchange regulations, PRC residents who make, or have previously made, prior to the implementation of these foreign exchange
regulations, direct or indirect investments in offshore companies are required to register those investments. In addition, any PRC resident
who is a direct or indirect shareholder of an offshore company is required to update its previously filed SAFE registration, to reflect
any material change involving its round-trip investment. If any PRC shareholder fails to make the required registration or update the
previously filed registration, the PRC subsidiary of that offshore parent company may be restricted from distributing their profits and
the proceeds from any reduction in capital, share transfer or liquidation to their offshore parent company, and the offshore parent company
may also be restricted from injecting additional capital into its PRC subsidiary. Moreover, failure to comply with the various foreign
exchange registration requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange
restrictions, including (i) the requirement by SAFE to return the foreign exchange remitted overseas or into the PRC within a period
of time specified by SAFE, with a fine of up to 30% of the total amount of foreign exchange remitted overseas or into PRC and deemed
to have been evasive or illegal and (ii) in circumstances involving serious violations, a fine of no less than 30% of and up to the total
amount of remitted foreign exchange deemed evasive or illegal.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are committed to complying with and to ensuring that our shareholders who are subject to these regulations will comply with the SAFE
rules and regulations. However, due to the inherent uncertainty in the implementation of the regulatory requirements by the PRC authorities,
such registration might not be always practically available in all circumstances as prescribed in those regulations. In addition, we
may not always be able to compel them to comply with SAFE Circular 37 or other related regulations. We cannot assure you that SAFE or
its local branches will not release explicit requirements or interpret the PRC laws and regulations otherwise. We may not be fully informed
of the identities of all our shareholders or beneficial owners who are PRC residents, and we cannot provide any assurance that all of
our shareholders and beneficial owners who are PRC residents will comply with our request to make, obtain or update any applicable registrations
or comply with other requirements under SAFE Circular 37 or other related rules in a timely manner.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
there is uncertainty concerning the reconciliation of these foreign exchange regulations with other approval requirements, it is unclear
how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented
by the governmental authorities. We cannot predict how these regulations will affect our business operations or future strategy. For
example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance
of dividends and foreign-currency-denominated borrowings, which may adversely affect our results of operations and financial condition.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, our offshore financing activities, such as the issuance of foreign debt, may also be subject to PRC laws and regulations. In
accordance with such laws and regulations, we may be required to complete examination and registration with the National Development
and Reform Commission, or NDRC, prior to such activities. Failure to comply with the requirements may result in administrative meeting,
warning, notification and other regulatory penalties and sanctions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may be materially adversely affected if our shareholders and beneficial owners who are PRC entities fail to comply with the PRC overseas
investment regulations.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 26, 2017, the NDRC promulgated the Administrative Measures on Overseas Investments by Enterprises, which took effect as of March
1, 2018. According to this regulation, non-sensitive overseas investment projects are subject to record-filing requirements with the
NDRC or its provincial branch. On September 6, 2014, the Ministry of Commerce promulgated the Administrative Measures on Overseas Investments,
which took effect as of October 6, 2014. According to this regulation, overseas investments of PRC enterprises that involve non-sensitive
countries and regions and non-sensitive industries are subject to record-filing requirements with Ministry of Commerce or its provincial
branch. According to the Circular of the State Administration of Foreign Exchange on Issuing the Regulations on Foreign Exchange Administration
of the Overseas Direct Investment of Domestic Institutions, which was promulgated by the State Administration of Foreign Exchange, or
SAFE, on July 13, 2009 and took effect on August 1, 2009, and Notice on Further Simplifying and Improving the Administration of the Foreign
Exchange Concerning Direct Investment, which was promulgated by the SAFE on February 13, 2015 and took effect on June 1, 2015, PRC enterprises
must register for overseas direct investment with authorized banks.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may not be fully informed of the identities of all our shareholders or beneficial owners who are PRC entities, and we cannot provide
any assurance that all of our shareholders and beneficial owners who are PRC entities will comply with our request to complete the overseas
direct investment procedures under the aforementioned regulations or other related rules in a timely manner, or at all. If they fail
to complete the filings or registrations required by the overseas direct investment regulations, the authorities may order them to suspend
or cease the implementation of such investment and make corrections within a specified time and other legal or administrative sanctions,
which may adversely affect our business, financial condition and results of operations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may
have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our
ability to conduct our business.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a Cayman Islands holding company and we rely principally on dividends and other distributions on equity from our PRC subsidiary for
our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders for services of
any debt we may incur. If our PRC subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict
its ability to pay dividends or make other distributions to us. Under PRC laws and regulations, our PRC subsidiary, which is a foreign-owned
enterprise, may pay dividends only out of its respective accumulated profits as determined in accordance with PRC accounting standards
and regulations. In addition, a foreign-owned enterprise, according to the PRC Companies Law, is required to set aside 10% of its accumulated
after-tax profits each year, if any, to fund a certain statutory reserves fund, until the aggregate amount of such fund reaches 50% of
its registered capital. Such reserve funds cannot be distributed to us as dividends.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
PRC subsidiaries generate essentially all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result,
any restriction on currency exchange may limit the ability of our PRC subsidiary to use their Renminbi revenues to pay dividends to us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put forward
by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of
our PRC subsidiary to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make
investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable
to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties
or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises
are incorporated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>You
may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of our ordinary shares.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Enterprise Income Tax Law and its implementation rules, PRC withholding tax at a rate of 10% is generally applicable to the income
derived from sources within China of non-PRC resident enterprises, which are established outside of China and do not have an establishment
or place of business in China, or which are established outside of China and have an establishment or place of business in China but
its income is not effectively connected with the establishment or place of business. Accordingly, dividends from us to and any gain realized
on the transfer of shares by non-PRC resident enterprise investors is subject to 10% PRC enterprise income tax if these gains are regarded
as income derived from sources within China. Under the PRC Individual Income Tax Law and its implementation rules, dividends regarded
as income derived from sources within China and paid to foreign individual investors who are not PRC residents are generally subject
to a PRC withholding tax at a rate of 20% and gains from PRC sources realized by these investors on the transfer of shares are generally
subject to 20% PRC income tax. Any such PRC tax liability may be reduced by the provisions of an applicable tax treaty. Although substantially
all of our business operations are in China, it is unclear whether the dividends we pay with respect to our shares, or the gains realized
from the transfer of our shares, would be treated as income derived from sources within China and as a result be subject to PRC income
tax. If PRC income tax is imposed on gains realized through the transfer of our ordinary shares or on dividends paid to our non-PRC resident
investors, the value of your investment in our ordinary shares may be materially and adversely affected. Furthermore, our shareholders
whose jurisdictions of residence have tax treaties or arrangements with China may not qualify for benefits under these tax treaties or
arrangements.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, pursuant to the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance
of Double Taxation and the Prevention of Fiscal Tax Evasion With Respect to Taxes On Income, and the Notice on Certain Issues with Respect
to the Enforcement of Dividend Provisions in Tax Treaties issued in 2009 by the SAT, if a Hong Kong resident enterprise owns more than
25% of the equity interest of a PRC company at all times during the twelve-month period immediately prior to obtaining a dividend from
such company, the 10% withholding tax on the dividend is reduced to 5%, provided that certain other conditions and requirements are satisfied
at the discretion of the PRC tax authority, however, if the PRC tax authorities determine, in their discretion, that a company benefits
from the reduced income tax rate due to a structure or arrangement that is primarily tax-driven, the PRC tax authorities may adjust the
preferential tax treatment. If our Hong Kong subsidiaries are determined by PRC government authorities as receiving benefits from reduced
income tax rates due to a structure or arrangement that is primarily tax-driven, the dividends paid by our PRC subsidiaries to our Hong
Kong subsidiaries will be taxed at a higher rate, which will have a material adverse effect on our financial performance.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC
regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion
may delay or prevent us from using the proceeds of our subsequent offerings to make loans or additional capital contributions to our
PRC subsidiaries in China, which could materially and adversely affect our liquidity and our ability to fund and expand our business.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an offshore holding company conducting our operations in China through our PRC subsidiaries. We may make loans to our PRC subsidiaries,
or we may make additional capital contributions to our PRC subsidiaries, or we may establish new PRC subsidiaries and make capital contributions
to these new PRC subsidiaries, or we may acquire offshore entities with business operations in China in an offshore transaction.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Most
of these ways are subject to PRC regulations and approvals or registration. For example, loans by us to our wholly-owned PRC subsidiary
to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE. If we decide to finance
our wholly owned PRC subsidiary by means of capital contributions, these capital contributions are subject to registration with the SAMR
or its local branch, reporting of foreign investment information with the PRC Ministry of Commerce, or registration with other governmental
authorities in China.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">SAFE
promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement
of Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective June 2015. According to SAFE Circular 19, the flow and use
of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that
RMB capital may not be used for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of banks
loans that have been transferred to a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated
registered capital of a foreign-invested enterprise to be used for equity investments within China, it also reiterates the principle
that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used
for purposes beyond its business scope. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and
Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which
reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign
currency- denominated registered capital of a foreign-invested company to issue RMB entrusted loans, repay inter-enterprise loans or
repay bank loans that have been transferred to a third party to a prohibition against using such capital to issue loans to non-associated
enterprises. On October 23, 2019, the SAFE promulgated the Notice for Further Advancing the Facilitation of Cross- border Trade and Investment,
or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated
capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and does not
violate the negative list on foreign investment. SAFE promulgated the Circular on Optimizing Administration of Foreign Exchange to Support
the Development of Foreign-related Business on April 10, 2020, which stipulated that, eligible enterprises are allowed to make domestic
payments by using their capital funds, foreign debts and the income under capital accounts of overseas listing, with no need to provide
the evidentiary materials concerning authenticity of such capital for banks on a transaction-by-transaction basis in advance, provided
that their capital use shall be authentic and in line with provisions, and conform to the prevailing administrative regulations on the
use of income under capital accounts. The concerned bank shall conduct spot checking in accordance with the relevant requirements. However,
it is unclear how SAFE and competent banks will carry them out in practice.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies,
we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals
on a timely basis, or at all, with respect to future loans to our PRC subsidiary or future capital contributions by us to our PRC subsidiary.
As a result, uncertainties exist as to our ability to provide prompt financial support to our PRC subsidiary when needed. If we fail
to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from our subsequent offerings
and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity
and our ability to fund and expand our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Fluctuations
in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People&#8217;s Bank of China, or
the PBOC. The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of Renminbi against
the U.S. dollar and other currencies is affected by changes in China&#8217;s political and economic conditions and by China&#8217;s foreign
exchange policies, among other things. We cannot assure you that Renminbi will not appreciate or depreciate significantly in value against
the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange
rate between Renminbi and the U.S. dollar in the future.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Substantially
all of our income and expenses are denominated in Renminbi and our reporting currency is Renminbi. Significant revaluation of the Renminbi
may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars we receive
from our initial public offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would reduce
the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the
purpose of paying dividends or for other business purposes, appreciation of the U.S. dollar against the Renminbi would reduce the U.S.
dollar amount available to us.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Very
limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into
any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging
transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to hedge our exposure
adequately or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our
ability to convert Renminbi into foreign currency.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Governmental
control of currency conversion may limit our ability to utilize our income effectively and affect the value of your investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of
currency out of China. We receive substantially all of our income in Renminbi. Under our current corporate structure, our Cayman Islands
holding company may rely on dividend payments from our PRC subsidiary to fund any cash and financing requirements payable outside of
China. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments
and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying
with certain procedural requirements. Specifically, under the existing exchange restrictions, cash generated from the operations of our
PRC subsidiary in China may be used to pay dividends to our company without prior approval of SAFE. However, approval from or registration
with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China
to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval
or complete certain mandatory registration procedures to use cash generated from the operations of our PRC subsidiary to pay any debts
they may incur in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside
China in a currency other than Renminbi.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, if any of our shareholders who is subject to SAFE regulations fails to satisfy the applicable overseas direct investment filing
or approval requirement, the PRC government may restrict our access to foreign currencies for current account transactions. If we are
prevented from obtaining sufficient foreign currency to satisfy our foreign currency demands, we may not be able to pay dividends in
foreign currencies to our shareholders, including holders of the ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the
corporate governance of these entities could be severely and adversely compromised.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature.
Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security
Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The
chops of our PRC subsidiaries are generally held securely by personnel designated or approved by us in accordance with our internal control
procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes,
the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide
by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to
do so.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risks
Related to Our Ordinary Shares</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
trading price of our ordinary shares is likely to be volatile, which could result in substantial losses to investors.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
trading price of our ordinary shares is likely to be volatile and could fluctuate widely due to factors beyond our control. This may
happen because of broad market and industry factors, like the performance and fluctuation of the market prices of other companies with
business operations located mainly in China that have listed their securities in the United States. A number of Chinese companies have
listed or are in the process of listing their securities on U.S. stock markets. The securities of some of these companies have experienced
significant volatility, including price declines in connection with their initial public offerings. The trading performances of these
Chinese companies&#8217; securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the
United States in general and consequently may impact the trading performance of our ordinary shares, regardless of our actual operating
performance.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to market and industry factors, the price and trading volume for our ordinary shares may be highly volatile for factors specific
to our own operations, including the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">variations
                                            in our income, earnings and cash flow;</span></td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif"/><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">announcements
                                            of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;</span></td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif"/><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">announcements
                                            of new services and expansions by us or our competitors;</span></td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif"/><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes
                                            in financial estimates by securities analysts;</span></td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif"/><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">detrimental
                                            adverse publicity about us, our services or our industry;</span></td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif"/><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">additions
                                            or departures of key personnel;</span></td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif"/><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">release
                                            of lock-up or other transfer restrictions on our outstanding equity securities or sales of
                                            additional equity securities; and</span></td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif"/><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">potential
                                            litigation or regulatory investigations.</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 60.5pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
of these factors may result in large and sudden changes in the volume and price at which our ordinary shares will trade.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the past, shareholders of public companies have often brought securities class action suits against those companies following periods
of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount
of our management&#8217;s attention and other resources from our business and operations and require us to incur significant expenses
to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our
reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be
required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations
regarding our ordinary shares, the market price for our ordinary shares and trading volume could decline.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
trading market for our ordinary shares will be influenced by research or reports that industry or securities analysts publish about our
business. If one or more analysts who cover us downgrade our ordinary shares, the market price for our ordinary shares would likely decline.
If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial
markets, which in turn could cause the market price or trading volume for our ordinary shares to decline.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales
of substantial amounts of our ordinary shares in the public market, or the perception that these sales could occur, could adversely affect
the market price of our ordinary shares and could materially impair our ability to raise capital through equity offerings in the future.
We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the
availability of these securities for future sale will have on the market price of our ordinary shares. In addition, if we issue additional
ordinary shares, either through private transactions or in the public markets in the United States or other jurisdiction, your ownership
interests in our company would be diluted and this, in turn, would have an adverse effect on the price of our ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Because
we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ordinary shares for return on
your investment.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our
business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment
in our ordinary shares as a source for any future dividend income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and
pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations
and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial
condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment
in our ordinary shares will likely depend entirely upon any future price appreciation of our ordinary shares. There is no guarantee that
our ordinary shares will appreciate in value or even maintain the price at which you purchased the ordinary shares. You may not realize
a return on your investment in our ordinary shares and you may even lose your entire investment in our ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>There
can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable
year, which could subject U.S. investors in our ordinary shares or ordinary shares to significant adverse U.S. federal income tax consequences.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
non-U.S. corporation, such as our company, will generally be classified as a &#8220;passive foreign investment company,&#8221; or &#8220;PFIC,&#8221;
for U.S. federal income tax purposes, for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain
types of &#8220;passive&#8221; income or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly
average) during such year is attributable to assets that produce or are held for the production of passive income. Passive income generally
includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of property producing such income and
net foreign currency gains. For this purpose, cash and assets readily convertible into cash are categorized as passive assets and the
company&#8217;s goodwill and other unbooked intangibles are generally taken into account when determining the value of its assets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
upon our current and projected income and assets and the market price of our ordinary shares, we do not believe that we were a PFIC for
the taxable year ended December 31, 2023 and we do not presently expect to be a PFIC for the current taxable year or the foreseeable
future. However, no assurance can be given in this regard because the determination of whether we will be or become a PFIC is a factual
determination made annually that will depend, in part, upon the composition of our income and assets and the value of our assets. Fluctuations
in the market price of the ordinary shares may cause us to be or become a PFIC for the current or future taxable years because the value
of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference
to the market price of the ordinary shares from time to time (which may be volatile). If our market capitalization subsequently declines,
we may be or become a PFIC for the current taxable year or future taxable years. Furthermore, the composition of our income and assets
may also be affected by how, and how quickly, we use our liquid assets. Under circumstances where our revenue from activities that produce
passive income significantly increases relative to our revenue from activities that produce non-passive income, or where we determine
not to deploy significant amounts of cash for active purposes, our risk of becoming a PFIC may substantially increase.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are classified as a PFIC for any taxable year during which a U.S. Holder (as defined in &#8220;Item 10. Additional Information &#8212;
E. Taxation &#8212; U.S. Federal Income Tax Considerations&#8221;) holds our ordinary shares, the PFIC tax rules discussed under &#8220;Item
10. Additional Information &#8212; E. Taxation &#8212; U.S. Federal Income Tax Considerations&#8212;PFIC Rules&#8221; will generally
apply to such U.S. Holder for such taxable year and, unless the U.S. Holder makes a &#8220;mark-to-market&#8221; election, will apply
in future years even if we cease to be a PFIC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>You
may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because
we are incorporated under Cayman Islands law.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our <span style="background-color: white">amended
and restated</span> memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law
of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the
fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the
Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman
Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding,
on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman
Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United
States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states,
such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition,
Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United
States.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shareholders
of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other
than our <span style="background-color: white">amended and restated</span> memorandum and articles of association, our register of
mortgages and charges and special resolutions of our shareholders) or to obtain copies of lists of shareholders of these companies.
Under Cayman Islands law, the names of our current directors can be obtained from a search conducted at the Registrar of Companies.
Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our
corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may
make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to
solicit proxies from other shareholders in connection with a proxy contest.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies
incorporated in other jurisdictions such as the United States. <span style="background-color: white">We are permitted to elect to rely
on home country practice to be exempted from the corporate governance requirements. We have relied on home country practice exemption
with respect to the requirement that a majority of the nominating and corporate governance committee members must be independent directors
within 90 days of listing. We may choose to follow additional home country practice in the future.&#160;</span>As a result, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable
to U.S. domestic issuers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions
taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a
company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act
(As Revised) of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders,
see &#8220;Item 10. Additional Information &#8212; Differences in Corporate Law.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Certain
judgments obtained against us by our shareholders may not be enforceable.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. Substantially all
of our current operations are conducted in China. In addition, a majority of our current directors and officers are nationals and residents
of countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As
a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in
the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are
successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment
against our assets or the assets of our directors and officers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are a &#8220;controlled company&#8221; within the meaning of the Nasdaq Stock Market listing rules and, as a result, may rely on exemptions
from certain corporate governance requirements that provide protection to shareholders of other companies.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a &#8220;controlled company&#8221; as defined under the Nasdaq Stock Market listing rules because Mr. Howard Lee, our founder, chairman
of the Board and CEO, controls more than 50% of our total voting power. For so long as we remain a controlled company under that definition,
we are permitted to elect to rely on, and may rely on, certain exemptions from corporate governance rules, including an exemption from
the rule that a majority of our board of directors must be independent directors. As a result, you will not have the same protection
afforded to shareholders of companies that are subject to these corporate governance requirements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies may make our ordinary
shares less attractive to investors.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an emerging growth company, as defined in the JOBS Act, and may remain an emerging growth company until the last day of the fiscal
year following the fifth anniversary of the completion of our initial public offering. However, if certain events occur prior to the
end of such five-year period, including if we become a &#8220;large accelerated filer,&#8221; our annual gross net revenues exceed $1.235
billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company
prior to the end of such five-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on
exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies.
We cannot predict whether investors will find our ordinary shares less attractive if we rely on these exemptions. If some investors find
our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and the trading price
of our ordinary shares may be reduced or more volatile.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with
new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until
they would otherwise apply to private companies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions
applicable to United States domestic public companies.</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations
in the United States that are applicable to U.S. domestic issuers, including:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current
                                            reports on Form 8-K with the SEC;</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 39.3pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations
                                            in respect of a security registered under the Exchange Act;</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            sections of the Exchange Act requiring insiders to file public reports of their stock ownership
                                            and trading activities and liability for insiders who profit from trades made in a short
                                            period of time; and</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 39.3pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            selective disclosure rules by issuers of material nonpublic information under Regulation
                                            FD.</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 39.3pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 32.7pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish
our results on a semi-annual basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq. Press releases
relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required
to file with or furnish to the SEC will be less extensive and less timely than that required to be filed with the SEC by U.S. domestic
issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing
in a U.S. domestic issuer.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Su_007"></span>ITEM
4. INFORMATION ON THE COMPANY</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">

    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">History
    and Development of the Company</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 17, 2011, we established Lucas Group China Limited, formerly known as Luokeshi Management Consulting Co., Ltd., and commenced our
commercial operations. In April 2016 and May 2016, the Hohhot branch and the Guangzhou branch of Lucas Group China Limited were established,
respectively, to expand our business and research and development. On August 15, 2022, we incorporated Lucas Star Group Limited under
the laws of the Cayman Islands as our offshore holding company to facilitate offshore financing, and later renamed it as Lucas GC Limited
on October 14, 2022. On August 4, 2022, we established Lucas Star Holding Limited, our wholly owned BVI subsidiary and on October 21,
2022, we established Lucas Star Global Limited, the wholly owned Hong Kong subsidiary of Lucas Star Holding Limited.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
March 2024, we completed our initial public offering and listed our ordinary shares on the Nasdaq Capital Market under the symbol &#8220;LGCL.&#8221;
We raised approximately US$4.0 million of net proceeds from the initial public offering after deducting
underwriting discounts, commissions and expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
principal executive offices are located at Room 5A01, 4th Floor, Air China Building, Xiaoyun Road, Sanyuanqiao, Chaoyang District, Beijing
100027, China. Our telephone number at this address is (86) 18500976532. Our registered office is located at ICS Corporate Services (Cayman)
Limited, 3-212 Governors Square, 23 Lime Tree Bay Avenue, P.O. Box 30746, Seven Mile Beach, Grand Cayman KY1-1203, Cayman Islands. Our
agent for service of process in the United States is Cogency Global Inc. located at 122 East 42nd Street, 18th Floor, New York, NY 10168.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">SEC
maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC on <i>www.sec.gov</i>. You can also find information on our website https://www.lucasgchr.com/. The information
contained on our website is not a part of this annual report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">

    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Business
    Overview</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Overview</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are the largest technology-driven online agent-centric human capital management service provider targeting professionals based on PaaS
in China in terms of the number of active users in the human resources industry as of June 30, 2022 and total net revenues for the year
ended December 31, 2021. As a company empowered by AI, data analytics, and blockchain technologies, we are committed to digitalizing
and intellectualizing the entire human capital management process. We provide a platform to support trusted and private social networks
of professionals, through which we provide services consisting of recruitment services, outsourcing services, and other services such
as information technology services and training services. Our users are primarily professionals who work in human resources related functions.
Our corporate customers are corporations with recruitment, training, sales leads generation and outsourcing demands. As of December 31,
2023, we had approximately 638,020 active registered users on our proprietary platforms, Star Career and Columbus, through which the
users of our platforms will receive customized job recommendations and work as talent scouts to source suitable candidates for our corporate
customers through their own trusted and private social network, as well as receive trainings and other value-added services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the years ended December 31, 2021, 2022 and 2023, our total revenue amounted to RMB652.2 million, RMB766.6 million and RMB1,474.0
million (US$207.6 million), respectively, representing a year-over-year increase of 17.5% and 92.3%, respectively. For the years
ended December 31, 2021, 2022 and 2023, our gross profit amounted to RMB179.1 million, RMB215.2 million and RMB418.6 million
(US$59.0 million), respectively, representing a year-over-year increase of 20.2% and 94.5%, respectively. </span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Our Business Model</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in">Our major business segments consist
of (i) recruitment services, (ii) outsourcing services and (iii) other services which include information technology services and training
services.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Recruitment
Services</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Equipped
with a well-established talent scout network and comprehensive technology infrastructure, our platforms <i>Columbus</i> and <i>Star Career
</i>alleviate our corporate customers from the burden associated with discovering, training, managing and maintaining a sufficient number
of skilled workers, allowing them to better focus on their core businesses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have experienced rapid growth of active registered users. As of December 31, 2021, 2022 and 2023, we had approximately 318,970, 431,220
and 638,020 active registered users, respectively. We define active registered users as those who login to the application at least
once within a 30-day period and who may engage in such activities as recommending job opportunities to their friends, providing us
with information on which companies may have job openings that may potentially be our clients, or commenting or forwarding videos or
articles generated on our network to their friends. Our business model is to help our clients who pay us the recruitment fees to
look for qualified candidates who mostly are currently employed but are open to new job opportunities. As such, we do not approach
active job seekers directly. When compared to those traditional recruitment firms who rely on their own in-house consultants to look
for qualified candidates which will normally take an average of 30 to 60 days to close a job assignment, we only need less than half
of the time required, since we use our patented technology and leverage big data to push the client&#8217;s job assignments only to
those users who are also talent scouts acting as consultants and have suitable candidates in their networks. In addition, since the
users already know the candidates in their friendship networks, it is normally much easier to convince the candidates to consider
the job opportunities and be more active and cooperative in participating in the interview processes whereas a traditional
recruitment firm uses in-house consultants to cold-call candidates who do not know each other, the efficiency is much lower than
ours. Over 80% of our users remain active in a twelve-month period as of December 31, 2023, because our platform is useful for them
to both make money by acting as a part-time talent scout or providing information to us on potential clients, and forward useful
career development related contents developed by our platform to their friends via their social networks so that they can maintain
an active linkage with their friends in a positive way, rather than posting rudimentary information or daily routines, many of which
are uninteresting to their friends. Therefore, our users have high incentives to continue to use our platform in an active
way.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
recruitment services we provide are based on our profound industry knowledge and in-depth understanding of the unmet demands of both
our corporate customers and the professionals. For instance, our corporate customers want to be at the forefront of business development,
but they do not enjoy the support from high-skilled professionals and sometimes do not have the budget to expand their internal HR department.
Meanwhile, because of the relative scarcity of professional full-time talent scouts and the high costs of money and time in extensive
research for the right talents, HRs have devoted most of their time scanning through resumes that do not match the demands of the hiring
companies. Sometimes, they do not have the supporting infrastructure to manage the hiring process. Thus, to empower HRs and hiring companies,
we provide coordination and execution assistance via our talent scouts in the candidate sourcing and hiring process in daily recruitment
practice to free HRs from the burdensome researching and administrative work.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
agent-centric recruitment services are mainly carried out by means of permanent employment recruitment services and flexible
employment recruitment services. For the years ended December 31, 2021, 2022 and 2023, net revenues from our recruitment services
amounted to RMB497.5 million, RMB413.0 million and RMB659.0 million (US$92.8 million), respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Permanent
Employment Recruitment Services</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
unique deep machine learning algorithm ensures that our users are recommended with job opportunities that they are likely to be interested
by their acquaintances in their private social networks. For example, users who are a senior executive will usually not be recommended
with some entry-level positions because they are more likely to have contacts with veteran professionals looking for higher salaries
while young users will receive recommendations of job openings that are more related to new graduates. This allows us to simultaneously
achieve two seemingly competing goals of being able to offer tailored and focused experience while achieving a full spectrum of user
coverage mainly through one platform.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Besides
the user portraits based on their profiles, our platform also generates and aggregates massive unique data points based on their interests,
behaviors, profiles and historical transaction records within the network to enrich the portrait of their interests, in order to improve
the accuracy of the delivery of job opportunities. Such data points include user feedback, reach-outs, messaging, and scrolling time.
Informed by this rich and growing dataset, we leverage machine learning technologies to build and refine our advanced proprietary algorithms
that enable customized job recommendations for our users at a massive scale. For example, every action and inaction by each user to either
review or ignore a recommendation delivers feedback to our data system. These feedbacks, conveying each individual&#8217;s current likings
and preferences, are instantly processed by our AI models and immediately reflected in the new job openings or candidates recommended
to the users. Customized matching significantly improves the efficiency of job hunting and recruitment and enhances user experience which
in turn elevates user engagement.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Flexible
Employment Recruitment Services</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
flexible employment function is a synergetic supplement to our permanent employment recruitment business. The recruitment process for
flexible employment is in large similar to the process for permanent employment recruitment. For flexible employment recruitment services,
in additional to receiving a service fee, we also receive the whole salary package on behalf of the candidate and serve as the delegating
company to pay the candidate who performed the work for our corporate customers. As such, we bear the obligations of paying salaries
and deducting the taxes in due course for the candidate who is most likely a freelancer. Our corporate customers thus have more flexibility
in terms of fulfilling their temporary business needs which may not be stable.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Outsourcing
Services</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
provide outsourcing services, mostly in technology-related projects, to our corporate customers who need a &#8220;turnkey solution&#8221;
and rely on us to design, develop and deliver the projects within budget and on time with acceptable quality. We were designated as a
&#8220;Technologically Advanced Small and Medium-sized Enterprises&#8221; by the MIIT of China. We leverage our qualifications, vast
industry knowledge, and expert networks to offer cost-effective solutions to our corporate customers who rely on us to deliver the expected
solutions on time, within budget and of acceptable quality. Our corporate customer will perform acceptance tests on the project which
we will normally only get paid after the client signs off. Our outsourcing services help us build a close partnership with large corporations,
differentiating us from traditional human capital management companies. Attributable to our network of high-skilled freelancers and specialized
companies, our corporate customers are able to delegate certain tasks to third-party contractors through us and focus on developing their
businesses in a more cost-efficient way.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For the years ended December 31, 2021, 2022 and 2023, net revenues from
our outsourcing services amounted to RMB113.8 million, RMB301.9 million and RMB714.0 million (US$100.6 million), respectively, representing
a year-over-year growth of 165.3% and 136.5%, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
service fees and the forms of the outsourcing service agreement are usually determined on a case-by-case basis and are subject to market
conditions and mutual negotiations each time an order is placed. Pursuant to the outsourcing service agreement that we sign with the
corporate customers, we will receive scheduled payments upon project acceptance and satisfaction of key performance indicators.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
Services</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
launched other services as value-added services in August 2021, which include information technology services and training services.
For the years ended December 31, 2021, 2022 and 2023, net revenues from our other services amounted to RMB41.0 million, RMB51.6
million and RMB101.0 million (US$14.2 million), respectively. </span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Information
Technology Services</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
information technology services are aimed at generating sales leads for our corporate customers who offer products and services that
our users and their acquaintances may find interesting. In the information technology services, we leverage our patented technologies
in AI and data analytics by pushing our clients&#8217; products or services information accurately to suitable prospects by analyzing
their behaviors and profiles using our proprietary algorithm. The information collected from the prospects will be sent directly to our
corporate customers and we charge our corporate customers service fees for providing such services while we do not directly act as a
selling agent. Currently, the majority of our clients are selling insurance products and healthcare related services on our platforms.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Training
Services</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
empower our users to help their acquaintances develop professional skills that can enhance their career growth by allowing our users
to recommend suitable training courses and certification programs to their acquaintances. In addition to offering our own career-related
certification programs, we partner with leading industry experts, organizations, institutes, and professional training academies to provide
training courses and certification programs that can help professionals realize developments in their careers. We have developed industry-focused
training programs, some of which are developed in-house and others are developed by third-party developers. We charge those who enroll
in training classes enrollment fees that are determined by us based upon our training material development costs or the costs of training
courses sourced from the third-party providers.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Taking
the CCRP certificate training program that is self-developed by us as an example. Users who are interested in taking the courses and
receiving the certificate will enter into a CCRP certification service agreement with us, pursuant to which the user will pay a lump
sum enrollment fee to us, which covers three stages of CCRP certification services, including but not limited to course material fees
(profession and business related certification course materials, law and business related certification course materials, and finance
and business related certification course materials), video classes, official account and enterprise WeChat one-on-one exclusive certification
supervision services, examination and certification.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the future, we intend to expand our training portfolio by offering courses in the areas of Industry Digitalization, Applied Artificial
Intelligence in various industries, and Carbon-Neutral Initiatives and Carbon Emission Reduction Programs.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Our Technology</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
platform is empowered by our AI, machine learning, data analytics and blockchain technologies. Leveraging our extensive access to big
data assets and AI tools, we are able to continuously optimize our products and services recommendation capabilities, personalize our
user experience, refine our matching algorithm and monitor our service quality. Our patented technologies enable us to optimize the matching
accuracy of services among providers and requestors, and to increase the transactions&#8217; closing rates. As of the date of this annual
report, we hold ten patents registered in the U.S. and seven patents registered in China, 68 registered trademarks, 74 registered copyrights,
and ten registered domain names along with nine additional patent applications that are pending in the U.S. and China, all in the areas
of artificial intelligence, data analytics and blockchain technologies.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
technologies are well recognized by industry peers. For example, in January 2022, we were nominated to be one of the &#8220;Technologically
Advanced Small and Medium-sized Enterprises&#8221; in the City of Beijing, an honorable designation awarded by the MIIT of China.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to Frost &amp; Sullivan, we ranked fourth among the well-known platforms in the human capital management industry in China in terms of
the number of patents we owned as of December 31, 2022. In addition, we ranked first among all these platforms in terms of the total
number of patents registered in the U.S. as of December 31, 2022.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
core pillars that support the foundation of our technologies and platforms are:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Artificial
    intelligence and machine learning. </i>We develop, train, and test our patented machine learning models and AI systems that offer
    industry-specific and actionable insights for our users. Our platforms offer real-time personalized recommendations. Our systems
    match up providers and requestors with the most relevant products and services based on their interests, behaviors, profiles and
    historical transaction records. Our team of human capital management experts and AI/machine learning scientists constantly refine
    the learning models and AI methods. As we process and analyze more data, we uncover more features from data that are used to further
    improve our capabilities.</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Data
    Analytics. </i>Our rich set of proprietary and patented data analytics algorithms collaborate with our AI/machine learning models
    to offer advanced, predictive, and prescriptive analytics to our corporate customers.</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Blockchain.
    </i>Our platforms offer two novel services to our users based on our patented blockchain technology. The first one is a secure, reliable,
    and trusted credentials vault for our users. The second one is a fully distributed referral tracking system that monitors referral
    transactions. Thus, the monetization of referrals is possible because the transaction&#8217;s traceability and transparency foster
    trust among participants. We believe it will have a positive effect on increasing the transaction closing rates.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
invest substantial resources to improve our technology and data infrastructure, strengthen our data processing and analytic capabilities,
develop new solutions that are complementary to existing ones and find ways to better serve our users and corporate customers. Our research
and development personnel primarily consist of computer scientists, cognitive computing engineers, data scientists, software engineers,
user experience experts, technology infrastructure architects, and specialists and consultants. In addition, our technology team leader
has over 15 years of experience in the big data analytics field and our IP portfolio consultant and executive director Dr. Wong is a
tenured professor of computer science at California State University who is a pioneer in the areas of artificial intelligence and data
analytics with over 35 years in academics and industry.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are committed to further developing our expertise in cybersecurity, data security and reliability through research and development in
data infrastructure and utilization of blockchain. We intend to establish a research center in the U.S. to conduct such research and
development activities, to take advantage of the fact that our IP consultant Dr. Wong and our founder, chairman of the Board and CEO,
Mr. Lee, have decades of work and academic experience in the technical field in the U.S.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Sales
and Marketing</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business development initiatives are mainly through referrals among our users and to a lesser extent, through direct cold-calling, third-party
sales agents and tendering processes.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Many
of our new clients are acquired through leads generations through users on our platform. In addition, we also acquire clients through
targeted marketing activities to key opinion leaders and direct business developments. Our sales and marketing team prepares marketing
and pitch materials and presents our services, experience and strengths to potential clients. More importantly, our users may also recommend
and endorse our products and services to their peers within their respective industries. Our extensive experience and quality of service
not only secure long-term clients, but also create a word-of-mouth effect for developing new clients.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Quality
Control</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that our ability to maintain the quality of our services is critical to our growth. Our quality assurance measures include the
following:</span></p>

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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Internal
    quality control regulations and policies</i>. We have formulated relevant quality control and management measures for different business
    segments, requiring our employees to follow standard procedures and comply with management requirements. Appropriate punishments
    will be imposed on employees who conduct business in violation of such quality control and management measures. With the development
    of our business, we will keep pace with leading companies in the human capital management market and update such regulations and
    policies from time to time.</span></td></tr>
  </table>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Quality
    assurance requirements to suppliers and users</i>. We have set up a quality policy for our suppliers, third-party contractors and
    users to assure the quality of services or products from them. We generally make clear stipulations on quality management in the
    agreements with our suppliers, third-party contractors and users. In the course of doing business, we also explicitly pass on our
    quality control principles to third-party contractors and users, in order to expect them to operate with high faith and in a responsible
    manner. If any suppliers, third-party contractors or users fail to meet our quality control standards, we will seek remedies, require
    them to make a correction, or terminate the cooperation.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>User
    feedbacks and process improvement</i>. Our sales and marketing team and operations service team work closely with our users throughout
    each transaction. We constantly seek feedbacks from our users on possible areas of improvement and often make changes to our internal
    processes and data analytic models in order to deliver higher quality services and improve the closing rates.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Competition</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to Frost &amp; Sullivan, as one of the few companies that have built social network targeting professionals based on acquaintances in
China, we believe our business model is unique and our services empower the human capital management value chain. We face competition
in certain aspects of our business. Our ability to compete effectively depends on our unique and holistic platforms to serve and connect
users and corporate customers, empowering them from an integrated perspective. Many factors contribute to our competitiveness, including
an established social network based on acquaintances and linking various users, agent-centric business model to drive the operation of
social networks, low frequency, high price and non-standard services, and continuously improved platform matching efficiency by data
analytics and artificial intelligence technology.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
our business continues to grow rapidly, we face significant competition from a number of online and offline platforms and services to
attract and retain users. According to the Frost &amp; Sullivan report, in the industry of services for professionals market, our main
competitors fall into the following categories:</span></p>

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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">online
    agent-centric service providers;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">online
    HR service providers;</span></td></tr>
  </table>
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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">traditional
    staffing companies; and</span></td></tr>
  </table>
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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; background-color: white; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">traditional
    workforce solutions providers.</span></td></tr>
  </table>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Intellectual Property</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
design, test and update our platforms regularly, and we have both developed our proprietary solutions in-house and outsourced to third
party contractors. We have developed our infrastructure to be highly agile and scalable, allowing us to efficiently expand our platform
and enter new market segments, with patent-compromising quality. As of the date of this annual report, we hold ten patents registered
in the U.S. and seven patents registered in China, 68 registered trademarks, 74 registered copyrights, and ten registered domain names
along with nine additional patent applications that are pending in the U.S. and China. </span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to Frost &amp; Sullivan, we ranked fourth among the well-known platforms in the human capital management industry in China in terms of
the number of patents we owned as of December 31, 2022. In addition, we ranked first among all these platforms in terms of the total
numbers of patents registered in the U.S. as of December 31, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
continued success depends upon our ability to protect our core technology and intellectual property. We rely on a combination of confidentiality
clauses, contractual commitments, trade secret protections, copyrights, trademarks, patents, and other legal rights to protect our intellectual
property and know-how. We enter into confidentiality and proprietary rights agreements with our employees, consultants and business partners,
and we control access to and distribution of our proprietary information. We intend to protect our intellectual properties vigorously,
but there can be no assurance that our efforts will be successful. Even if our efforts are successful, we may incur significant costs
in defending our rights. From time to time, third parties may initiate litigation against us alleging infringement of their proprietary
rights or declaring their non-infringement of our intellectual property rights.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Data Security</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
platform is based on analyzing the behaviors, profiles and interests of our users and their acquaintances in their own private mobile
networks. Unless their acquaintances actively register themselves on our platform, either through our <i>Star Career</i> or <i>Columbus
</i>applications or Tencent&#8217;s mini-program, we do not collect personal information about our users&#8217; acquaintances. We use
our patented technologies in AI, data analytics and blockchain and a proprietary algorithm to analyze users&#8217; and their acquaintances
behaviors, profiles, historical transaction records and interests, in order to recommend products or services suitable for them and within
their areas of interest. The goal is to increase the closing rate of transactions through precision-targeted marketing.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
use third-party cloud-based services to host our platform, striving to run on the latest and most modern cloud technologies. Our research
and development capabilities paired with our development tools allow us to develop and deploy new products reliably without disruptions
to our operations. We have also embedded extensive monitoring and alerting infrastructure into our platform to maintain reliability and
platform performance.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
protect our users&#8217; data through a combination of internal audits, processing procedures and technology tools, and we are focused
on making our platform more trustworthy. We monitor our server infrastructure for external hacking attempts by flagging suspicious activities,
utilize tools that scan site content, and dedicate teams to investigate if any irregularities are detected. In addition, we conduct regular
tests for any internal or external unauthorized access to our systems and correct any known weaknesses in our systems. To ensure confidentiality
and integrity of the personal information and data we collect, we follow the Administrative Measures for the Graded Protection of Information
Security. We have obtained ISO 27001 Information Security Management System Certification, and SOC 1, SOC 2 and SOC 3 reports issued
by independent auditors as in compliance with global industry standards. Meanwhile, we are conducting the evaluation of classified protection
of cybersecurity on our information systems. Furthermore, we have established comprehensive policies for the collection, processing,
sharing, disclosure authorization and other aspects of data and privacy and taken necessary measures to comply with all applicable laws
and regulations regarding cybersecurity, data security and personal information protection.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe our policies and practice with respect to data privacy and security are in compliance with applicable laws and with prevalent
industry practice. As of the date of this annual report, we have not received any claim from any third party against us on the ground
of infringement of such party&#8217;s right to data protection as provided by the PRC Civil Code or any applicable laws and regulations
in the PRC, nor have we been subject to any administrative penalties due to violation of applicable data protection and privacy laws
and regulations in China.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Insurance</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
participate in various government statutory social security plans, including a pension contribution plan, a medical insurance plan, an
unemployment insurance plan, a work-related injury insurance plan, a maternity insurance plan and a housing provident fund. We currently
do not have any business liability or disruption insurance.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
insurance coverage does not violate any mandatory provisions of PRC laws. We believe that such coverage is in line with industry
norms in the PRC and is adequate and sufficient for our current operations. See &#8220;Item 3. Key Information &#8212; D. Risk
Factors &#8212; Risks Related to Our Business and Industry &#8212; Our insurance coverage may not be adequate, which could expose us
to significant costs and business disruptions.&#8221;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Regulations</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
section sets forth a summary of the most significant rules and regulations that affect our business activities in China or the rights
of our shareholders to receive dividends and other distributions from us.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
Relating to Foreign Investment</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Negative
List Relating to Foreign Investment</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investment
activities in the PRC by foreign investors are principally governed by the Guidance Catalogue of Industries for Foreign Investment, or
the Negative List, promulgated and as amended from time to time by the Ministry of Commerce of the PRC, or MOFCOM, and NDRC. The NDRC
and the MOFCOM promulgated the 2021 Negative List on December 27, 2021, which took effect on January 1, 2022 and uniformly set forth
the ownership requirements, requirements for senior executives, and other special administrative measures for the access of foreign investment,
and requires that, any domestic enterprise engaging in businesses prohibited by the 2021 Negative Lists, to issue securities and list
and trade shares overseas must obtain pre-approval consent from relevant competent regulators; overseas investors must not engage in
the operation and management of the enterprise, and the percentage of foreign shareholding is subject to the relevant provisions in the
administrative measures for domestic securities investments by foreign investors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
current business, human resource and other related services, are not included in the current Negative List or other categories that PRC
laws and regulations restricting foreign investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
PRC Foreign Investment Law</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 15, 2019, the National People&#8217;s Congress of the PRC, or the NPC, approved the Foreign Investment Law of the PRC, or the Foreign
Investment Law, which has taken effect on January 1, 2020, and replaced three existing laws on foreign investments in China, namely,
the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested
Enterprise Law, together with their implementation rules and ancillary regulations. The Foreign Investment Law embodies a regulatory
trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts
to unify the corporate legal requirements for foreign and domestic invested enterprises in China. The Foreign Investment Law establishes
the basic framework for the access to and the promotion, protection, and administration of foreign investments in view of investment
protection and fair competition.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Foreign Investment Law, &#8220;foreign investment&#8221; refers to investment activities directly or indirectly conducted by one
or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as &#8220;foreign
investor&#8221;) within China, and the investment activities include the following situations: (i) a foreign investor, individually or
collectively with other investors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares,
equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually
or collectively with other investors, invests in a new project within China; and (iv) investments in other means as provided by laws,
administrative regulations, or the State Council.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Foreign Investment Law, the State Council will publish or approve to publish a catalogue for special administrative measures,
or the &#8220;negative list.&#8221; The Foreign Investment Law grants national treatment to foreign- invested entities, except for those
foreign-invested entities that operate in industries deemed to be either &#8220;restricted&#8221; or &#8220;prohibited&#8221; in the
&#8220;negative list&#8221;. Because the &#8220;negative list&#8221; has yet to be published, it is unclear whether it will differ from
the Negative List as currently in effect. The Foreign Investment Law provides that foreign invested entities shall not operate foreign
prohibited industries and foreign invested entities operating in foreign restricted industries shall meet the investment conditions stipulated
under the negative list.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments
in the PRC, including, among others, that local governments shall abide by their commitments to the foreign investors; foreign-invested
enterprises are allowed to issue stocks and corporate bonds; except for special circumstances, in which case statutory procedures shall
be followed, and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of
foreign investors is prohibited; mandatory technology transfer is prohibited; and the capital contributions, profits, capital gains,
proceeds out of asset disposal, licensing fees of intellectual property rights, indemnity or compensation legally obtained, or proceeds
received upon settlement by foreign investors within China, may be freely remitted inward and outward in RMB or a foreign currency.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 26, 2019, the State Council promulgated the Implementation Regulations on the Foreign Investment Law which came into effect
on January 1, 2020. It further requires that foreign-invested enterprises and domestic enterprises shall be treated equally with respect
to policy making and implementation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Foreign Investment Law, foreign investors or foreign-invested enterprises shall submit investment information to the competent
commerce departments. On December 30, 2019, MOFCOM and SAMR, jointly issued the Measures for Reporting of Foreign Investment Information,
or the Foreign Investment Information Measures, which came into effect on January 1, 2020 and replaced the Interim Administrative Measures
for the Record-filing of the Establishment and Modification of Foreign-invested Enterprises. Starting from January 1, 2020, for foreign
investors carrying out investment activities directly or indirectly in the PRC, foreign investors or foreign-invested enterprises shall
submit investment information through the Enterprise Registration System and the National Enterprise Credit Information Publicity System
operated by SAMR. Foreign investors or foreign-invested enterprises shall disclose their investment information by submitting reports
for their establishments, modifications and cancellations and their annual reports in accordance with the Foreign Investment Information
Measures. If a foreign-invested enterprise investing in the PRC has submitted reports for its establishment, modification and cancellation,
as well as its annual reports, the relevant information will be shared by the competent market regulation department with the competent
commercial department, and such foreign-invested enterprise is not required to submit the reports separately.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
Relating to Talent Intermediary Services</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Employment Promotion Law of the People&#8217;s Republic of China, or the Employment Promotion Law, promulgated by SCNPC, on August 30,
2007 and latest amended on April 24, 2015 stipulates that employment intermediary agencies shall register and seek approval from the
competent labor administrative department after their corporation. Any entity that has not obtained a license and registered in accordance
with the law shall be prohibited from engaging in employment intermediary activities. No employment agency shall provide false employment
information or provide recruitment services to any institution that is not legally incorporated or licensed (if applicable). Any unlicensed
and unregistered institution that, in violation of the provisions aforementioned, engages in unauthorized employment intermediary services,
may be subject to the closure of business. Any illegal gains shall be confiscated and a fine from RMB10,000 to RMB50,000 may be imposed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Talent
intermediary services agencies including us in China are mainly regulated by the Ministry of Human Resources and Social Security of the
PRC, or the MOHRSS. Pursuant to the Provisions on Talent Market Administration, jointly promulgated by the PRC Ministry of Personnel
and the PRC State Administration for Industry and Commerce on September 11, 2001 and latest amended on December 31, 2019, any entity
providing talent intermediary services in China must obtain a human resource services license from the local branch of MOHRSS. In addition,
this regulation also reiterates the requirements under the Employment Promotion Law that as a talent intermediary service agency, we
are prohibited from providing fake information, making false promises and publishing fake recruitment advertisement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
June 29, 2018, the State Council issued the Interim Regulations for the Human Resources Market, effective on October 1, 2018, according
to which, the human resources services (the &#8220;HR services&#8221;) providers include public HR service providers established by the
relevant PRC governmental authorities and commercial HR service providers. Commercial HR service providers engaging in employment agency
activities are required to obtain a human resource services license, when such HR services are provided through the Internet, laws and
regulations relating to network security and the management of Internet information services shall also be complied. For any commercial
HR service providers engaging in the services such as collection and release of HR supply and demand information, HR management consulting,
HR assessment, HR training, or HR outsourcing services, it shall file with the competent department of MOHRSS within 15 days of the date
it starts the operation. The HR service providers providing recruitment or other HR services as entrusted by an employer shall not resort
to fraud, violence, coercion or other improper means, shall not seek improper interests in the name of recruitment or introduce entities
or individuals to engage in illegal activities. Commercial HR service providers shall expressly specify certain matters, among others,
including the business license, charging standards, and human resource services licenses in their premises, which are subject to the
supervision and inspection by the PRC governmental authorities such as the SAMR.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Contract Law of the PRC, or the Contract Law, promulgated on March 15, 1999 and nullified since January 1, 2021, and the Civil
Code of the PRC, or the Civil Code, promulgated on May 28, 2020 and effective on January 1, 2021, an intermediation contract is defined
as a contract whereby an intermediary presents to its client an opportunity for entering into a contract or provides the client with
other intermediary services in connection with the conclusion of a contract, and the client pays the intermediary service fees. Pursuant
to the Contract Law and the Civil Code, an intermediary must provide authentic information relating to the proposed contract. If an intermediary
intentionally conceals any material fact or provides false information in connection with the performance of the proposed contract, which
results in harm to the client&#8217;s interests, the intermediary may not claim service fees and is liable for the damages caused. Our
business of connecting individual users with business customers constitutes an intermediary service, and our contracts with business
customers are intermediation contracts under the Contract Law and the Civil Code, as a result, the performances, explanation and disputes
under such contacts shall be regulated by the Contract Law and the Civil Code.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have obtained such human resource services licenses which remain in full force and effect as of the date of this annual report.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Regulations
Relating to Mobile Internet Apps</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Provisions on the Administration of Information Services of Mobile Internet Apps (2022 Revision) which was promulgated in 2022
and came into effect on August 1, 2022, the term &#8220;information services of Apps&#8221; means the activities of providing users with
production, copying, publishing, spreading and other services of text, picture, voice, video and other information through Apps, including
instant messaging, news, knowledge Q&amp;A, forums, online live broadcast, e-commerce, online audio and video, life services and other
types. In addition, Apps providers shall not use Apps to carry out activities prohibited by laws and regulations, such as those endangering
national security, disrupting social order, and infringing upon the legitimate rights and interests of others. And an App provider providing
internet information services that must be subject to examination and approval of the competent authority or have obtained relevant permit
in accordance with the law may only provide services upon examination and approval of the competent authority or with the relevant permit.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
Relating to Internet Information Security and Privacy Protection</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Internet
content in China is regulated and restricted from a state security standpoint. The SCNPC enacted the Decisions on the Maintenance of
Internet Security on December 28, 2000, which was latest amended on August 27, 2009, providing that the following activities conducted
through the internet are subject to criminal liabilities: (i) gaining improper entry into any of the computer information networks relating
to state affairs, national defensive affairs, or cutting-edge science and technology; (ii) violation of relevant provisions of the State
in the form of unauthorized interruption of any computer network or communication service, as a result of which the computer network
or communication system cannot function normally; (iii) spreading rumor, slander or other harmful information via the internet for the
purpose of inciting subversion of the state political power; (iv) stealing or divulging state secrets, intelligence or military secrets
via internet; (v) spreading false or inappropriate commercial information; or (vi) infringing on the intellectual property.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 7, 2016, the SCNPC promulgated the Cyber Security Law of the PRC, which became effective on June 1, 2017, pursuant to which,
network operators shall comply with laws and regulations and fulfill their obligations to safeguard security of the network when conducting
business and providing services. Those who provide services through networks including us, as a network operator operating mobile applications
and providing certain internet services mainly through our mobile applications, shall take technical measures and other necessary measures
pursuant to laws, regulations and compulsory national requirements to safeguard the safe and stable operation of the networks, respond
to network security incidents effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality and usability
of network data, and the network operator shall prevent network data from being divulged, stolen or falsified. In addition, any network
operator to collect personal information shall follow the principles of legitimacy, rationality and necessity and shall not collect or
use any personal information without due authorization of the person whose personal information is collected, and network operators of
key information infrastructure shall store within the territory of the PRC all the personal information and important data collected
and produced within the territory of PRC. Any violation of the Cyber Security Law may subject the internet information service provider
to warnings, fines, confiscation of illegal gains, revocation of licenses, shutdown of websites or criminal liabilities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 28, 2021, CAC, NDRC, MIIT and other ten promulgation authorities issued the 2022 Cybersecurity Review Measures, effective on
February 15, 2022, which stipulate that the cybersecurity review shall focus on the evaluation of possible risks to national security
caused by the purchase of the network product or service by a critical information infrastructure operator, or by an online platform
operator conducts data processing, also provide for more detailed rules regarding cybersecurity review requirements. An online platform
operator who has more than a million users&#8217; personal information must report to the Cybersecurity Review Office for cybersecurity
review when going public abroad. If a member entity of the working mechanism for cybersecurity reviews deems that a network product or
service or a data processing activity may affect or potentially affect national security, the Cybersecurity Review Office shall submit
it to the Central Cyberspace Affairs Commission for approval according to the procedures before conducting a review in accordance with
the provisions of above Measures.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Civil Code, the personal information of a natural person shall be protected by the law. Any organization or individual that need
to obtain personal information of others shall obtain such information legally and ensure the safety of such information, and shall not
illegally collect, use, process or transmit personal information of others, or illegally purchase or sell, provide or make public personal
information of others.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC, or the Personal Information Protection Law,
which became effective on November 1, 2021, pursuant to which, personal information processors shall be responsible for their personal
information processing activities, and take necessary measures to guarantee the security of the personal information they process. An
individual&#8217;s consent shall be obtained for processing his or her personal information unless otherwise specified. Where a personal
information processor truly needs to provide personal information to any party outside the territory of the PRC for business or other
needs, it or he shall meet any of the following conditions: (i) it or he has passed the security assessment organized by the national
cyberspace administration in accordance with Personal Information Protection Law; (ii) it or he has been subject to the personal information
protection certification by a specialized institution in accordance with the provisions issued by the national cyberspace administration;
(iii) it or he has entered into a contract with the overseas recipient in accordance with the model contract developed by the national
cyberspace administration, agreeing on both parties&#8217; rights and obligations; and (iv) it or he meets other conditions provided
in laws or administrative regulations or by the national cyberspace administration. Where any international treaty or agreement concluded
or acceded to by the PRC provides for the conditions on the provision of personal information to any party outside the territory of the
People&#8217;s Republic of China, such provisions may apply. Where a personal information processor provides personal information to
any party outside the territory of the PRC, it or he shall notify individuals of the overseas recipient&#8217;s name and contact information,
purposes and methods of processing, categories of personal information, the methods and procedures for individuals&#8217; exercise of
the rights provided in this Law over the overseas recipient, and other matters, and obtain individuals&#8217; separate consent.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Outbound Data Transfer, which became effective on September
1, 2022, pursuant to which, to provide data abroad, including where the data collected and generated by data handlers are stored in China
and can be accessed or invoked by overseas institutions, organizations or individuals, under any of the following circumstances, a data
processor shall apply to the national cyberspace administration for the security assessment of the outbound data transfer through the
local provincial cyberspace administration: (i) the data processor provides important data abroad; (ii) the critical information infrastructure
operator or the data processor that has processed the personal information of over one million people provides personal information abroad;
(iii) the data processor that has provided the personal information of over 100,000 people or the sensitive personal information of over
10,000 people cumulatively since January 1 of the previous year provides personal information abroad; and (iv) any other circumstance
where an application for the security assessment of outbound data transfer is required by the national cyberspace administration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 22,2024, the CAC promulgated the Provisions on Promoting and Regulating Cross-border Data Flows, which stipulate that, if the data
have not been informed or publicly announced as important data by relevant PRC departments or regions, data processors are not required
to apply for security assessment for cross-border provision of the data as important data. Besides, to provide data abroad under any
of the following circumstances, a data processor shall apply to the national cyberspace administration for the security assessment of
the outbound data transfer through the local provincial cyberspace administration: (i) where a critical information infrastructure operator
provides personal information or important data abroad; or (ii) where any data processor other than a critical information infrastructure
operator provides important data abroad or, as of January 1 of the current year, provides personal information (excluding sensitive personal
information) of not less than 1 million people or sensitive personal information of not less than 10,000 people in aggregate to overseas
parties. In case of any discrepancy between the Provisions on Promoting and Regulating Cross-border Data Flows and the relevant provisions
such as the Security Assessment of Outbound Data Transfer, or the Data Transfer Measures promulgated on July 7, 2022 and the Measures
on Standard Contracts for Cross-border Provision of Personal Information promulgated on February 22, 2023, the provisions under the Provisions
on Promoting and Regulating Cross-border Data Flows shall prevail.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
Relating to Intellectual Property Rights</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Trademark</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Trademark Law of the PRC which was promulgated on August 23, 1982 and latest amended on April 23, 2019 and came into effect on
November 1, 2019, the Implementation Regulations of the Trademark Law of PRC which was issued on August 3, 2002 and latest amended on
April 29, 2014, the Trademark Office under the State Administration for Industry and Commerce of the PRC, or the Trademark Office, shall
handle trademark registrations and grant a term of ten years to registered trademarks, which may be renewed for additional ten year period
upon request from the trademark owner. The Trademark Law of the PRC has adopted a &#8220;first-to-file&#8221; principle with respect
to trademark registration. Where an application for trademark for which application for registration has been made is identical or similar
to another trademark which has already been registered or is under preliminary examination and approval for use on the same kind of or
similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration
of a trademark may not prejudice the existing right of others, nor may any person register in advance a trademark that has already been
used by another party and has already gained a &#8220;sufficient degree of reputation&#8221; through such party&#8217;s use.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Patent</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Patent Law of the PRC, or the Patent Law, which was issued by the SCNPC on March 12, 1984, and latest revised on October 17, 2020
and to be effective as of June 1, 2021, a patentable invention, utility model or design must meet three conditions: novelty, inventiveness
and practical applicability. A patent is valid for a twenty-year term in the case of an invention and a ten-year term in the case of
a utility model, starting from the application date. A third-party user must obtain consent or a proper license from the patent owner
to use the patent except for certain specific circumstances provided by law. Otherwise, the use will constitute an infringement of the
patent rights.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Copyright</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Copyright
in the PRC, including software copyright, is principally protected under the Copyright Law of the PRC, or the Copyright Law, promulgated
in December 2001 and latest amended on November 11, 2020, which took effect June 1, 2021, and related rules and regulations. Under the
Copyright Law, the term of protection for software copyright is 50 years.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Domain
Name</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Domain
names are protected under the Administrative Measures for Internet Domain Names, or the Domain Name Measures, promulgated by the MIIT,
effective on November 1, 2017. MIIT is the major regulatory body responsible for the administration of the PRC internet domain names.
The Domain Names Measures has adopted a &#8220;first-to-file&#8221; principle with respect to the registration of domain names.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
Relating to Foreign Exchange</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Regulations
on Foreign Currency Exchange</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, as latest amended
on August 5, 2008, or the Foreign Exchange Regulations. Pursuant to the Foreign Exchange Regulations, international payments in foreign
exchange and the transfer of foreign exchange under the current account items shall not be subject to any state control or restriction
when complying with certain procedural requirements. In contrast, the settlement of foreign currency for the purpose of certain capital
account items, such as direct equity investments, loans and repatriation of investment, requires prior approval from SAFE or its local
branches.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 12, 2017, the PBOC, promulgated the Notice of the People&#8217;s Bank of China on Matters concerning the Macro-Prudential Management
of Full-Covered Cross-Border Financing, which stipulated that, for foreign debts of enterprises, the PBOC or the SAFE shall not adopt
advance approval, but adopt advance recordation of the conclusion of contracts for enterprises. In addition, the limit of foreign debts
for enterprises shall be calculated based on the following formula: the limit of foreign debt, or the Net Assets Limit equals to net assets times
cross-border financing leverage ratio times macro-prudent regulation parameter. &#8220;Net assets&#8221; is calculated as the net assets
value stated in the relevant entity&#8217;s latest audited financial statement. The cross-border financing leverage ratio for enterprises
is two. The macro-prudent regulation parameter is one. A one-year transitional period is set for foreign-funded enterprises and during
such a transitional period, foreign-funded enterprises may apply either the current cross-border financing management mode, that is the
maximum amount of the aggregate of foreign debt of a foreign-invested enterprise shall not exceed the difference between its total investment
and its registered capital, or the Net Assets Limit mode in this Notice. After the end of the transitional period, the cross-border financing
management mode for foreign-funded enterprises will be determined by the PBOC and the SAFE after assessment based on the overall implementation
of this Notice. However, as of the date of this annual report, neither the PBOC nor SAFE has issued any new regulations regarding the
appropriate means of calculating the maximum amount of foreign debt for foreign-invested enterprises. According to the announcement promulgated
by the PBOC and the SAFE on July 20, 2023, the macro-prudent regulation parameter is raised to 1.5.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Circular of the State Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange
Settlement of Capital Accounts, which was promulgated and implemented by the SAFE on June 9, 2016, the tentative percentage of foreign
exchange settlement for foreign currency earnings in capital account of domestic institutions is 100%, subject to adjustment of the SAFE
in due time in accordance with international revenue and expenditure conditions. The use of foreign exchange incomes of capital accounts
by domestic institutions shall follow the principles of authenticity and self-use within the business scope of enterprises. The foreign
exchange incomes of capital accounts and capital in RMB obtained by the domestic institutions from foreign exchange settlement shall
not be used for the following purposes: (i) directly or indirectly used for the payment beyond the business scope of the enterprises
or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities or financial
schemes other than bank guaranteed products unless otherwise provided by relevant laws and regulations; (iii) used for granting loans
to non-connected enterprises, unless otherwise permitted by its business scope; and (iv) used for the construction or purchase of real
estate that is not for self-use (except for the real estate enterprises).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Circular of the State Administration of Foreign Exchange on Further Promoting Cross-Border Trade and Investment Facilitation,
which was promulgated and implemented by the SAFE on October 23, 2019, non-investment foreign-funded enterprises are allowed to lawfully
make domestic equity investments by using their capital on the premise of no violation of the Negative List and the authenticity and
compliance with the regulations of domestic investment projects.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business, or Circular
8 issued by the SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital funds, foreign
credits and the income under capital accounts of overseas listing, with no need to provide the evidentiary materials concerning authenticity
of such capital for banks on a transaction-by-transaction basis in advance, provided that their capital use shall be authentic and in
line with provisions, and conform to the prevailing administrative regulations on the use of income under capital accounts. The concerned
bank shall conduct spot checking in accordance with the relevant requirements.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
on Foreign Exchange Registration of Overseas Investment by PRC Domestic Residents</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Administrative Measures for the Outbound Investment of Enterprises issued by the NDRC on December 26, 2017 and became effective
on March 1, 2018, non-sensitive projects carried out by investors to make direct investment with assets and equities or provide financing
or a guarantee subject to record-filing administration and the authority in charge of record-filing shall be the development and reform
authority under the provincial government at the place where the investor is registered if the investor is a local enterprise and the
amount of investment made by the Chinese investor is less than US$300 million. Where a project is carried out by two or more investors
together, the investor making a larger amount of investment shall be responsible for applying for the approval or record-filing after
obtaining the consent of other investors.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Administrative Measures on Overseas Investment issued by MOFCOM on September 6, 2014 and became effective on October 6, 2014,
where the outbound investment carried out by an enterprise involves sensitive countries and regions and sensitive industries, verification
management shall be implemented, and archive filing management shall be implemented for other circumstances of outbound investment of
an enterprise. For outbound investments subject to archive filing, a central enterprise shall report its outbound investments to the
Ministry of Commerce for filing and a local enterprise to the provincial department in charge of commerce at its locality. Where two
or more enterprises jointly make an outbound investment, the relatively major shareholder shall be responsible for going through the
archive filing or verification procedures after acquiring the written consent of other investors. If investors are not within the same
administrative jurisdiction, the MOFCOM or the department in charge of commerce, which is responsible for handling the verification and
archive filing, shall notify the departments in charge of commerce of the place where other investors are located of the relevant results.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Circular of the State Administration of Foreign Exchange on Relevant Issues concerning Foreign Exchange Administration of Overseas
Investment and Financing and Return Investments Conducted by Domestic Residents through Overseas Special Purpose Vehicles, issued by
SAFE on July 14, 2014, offshore enterprise directly established or indirectly controlled by the PRC resident individuals with their legally
owned onshore or offshore assets and equity, for the purposes of investment and financing shall be subject to foreign exchange registration
for offshore investment with SAFE. In the event of any change of basic information of the registered overseas special purpose companies
such as the individual shareholder, name, operation term, or if <span style="background-color: white">there is a capital increase/decrease,
equity transfer or swap, merge, spin-off or other amendment of the material items, the domestic resident shall complete foreign exchange
alteration of the registration formality for offshore investment with SAFE in a timely manner. Foreign-invested enterprises established
in return investments shall be subject to completion of relevant foreign exchange registration formality in accordance with the effective
provisions on the foreign exchange administration of direct investment of foreign investors, and shall disclose the de facto controller
and other relevant information of the shareholders. After a special purpose company has completed overseas financing, if the funds raised
are repatriated to China for use, relevant Chinese provisions on foreign investment and external debt management shall be complied with.</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Notice of the State Administration of Foreign Exchange on Issuing the Provisions on the Foreign Exchange Administration of the
Overseas Direct Investment of Domestic Institutions promulgated by the SAFE on July 13, 2009, a domestic institution shall, on the basis
of the approval document issued by the competent administrative department of overseas direct investment and the foreign exchange registration
certificate for overseas direct investment, handle the formalities for the outward remittance of funds for overseas direct investment
at a designated foreign exchange bank. The designated foreign exchange bank shall handle the formalities for the domestic institution
after an authenticity check.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign
Exchange Administration Policies, promulgated on February 13, 2015 and implemented on June 1, 2015 and last amended and implemented on
December 30 2019, the SAFE decided to further simplify and improve policies for the foreign exchange administration of direct investment
around the entire nation, by cancelling two administrative approval items: confirmation of foreign exchange registration under domestic
direct investment and confirmation of foreign exchange registration under overseas direct investment and, instead, banks shall directly
examine and handle foreign exchange registration under domestic direct investment and foreign exchange registration under overseas direct
investment, and the SAFE and its branch offices shall indirectly regulate the foreign exchange registration of direct investment through
banks and simplifying the procedures for some foreign exchange transactions under direct investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
on Dividend Distribution</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
principal laws and regulations regulating the dividend distribution of dividends by foreign-invested enterprises in the PRC are the PRC
Company Law as amended in 1999, 2004, 2005, 2013, 2018 and 2023. Under the current regulatory regime in the PRC, foreign-invested enterprises
in the PRC may pay dividends only out of their retained earnings, if any, determined in accordance with PRC accounting standards and
regulations. A PRC company is required to set aside as statutory reserves funds at least 10% of its after-tax profit, until the cumulative
amount of such reserve funds reaches 50% of its registered capital. A PRC company shall not distribute any profits until any losses from
prior fiscal years have been offset and statutory reserves have been set aside. Profits retained from prior fiscal years may be distributed
together with distributable profits from the current fiscal year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
Relating to Tax in the PRC</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Income
Tax</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC Enterprise Income Tax Law, or the EIT Law, imposes a uniform enterprise income tax rate of 25% on all PRC resident enterprises, including
foreign-invested enterprises, unless they qualify for certain exceptions. The enterprise income tax is calculated based on the PRC resident
enterprise&#8217;s global income as determined under PRC tax laws and accounting standards Non-resident enterprises which have established
institutions or places of business in the PRC are subject to enterprise income tax for all incomes generated from such institutions or
places of business in the PRC and all incomes generated outside the PRC which are actually related to the institutions or places of business
established in the PRC at the rate of 25%. The EIT Law and its implementation rules permit certain &#8220;high and new technology enterprises
strongly supported by the state&#8221; that <span style="background-color: white">independently own core intellectual property and meet
statutory criteria, to enjoy a reduced 15% enterprise income tax rate. In January 2016, the State Administration of Taxation, or SAT,
the Ministry of Science and Technology, and the Ministry of Finance, or MOF, jointly issued the Administrative Rules for the Certification
of High and New Technology Enterprises, specifying the criteria and procedures for the certification of High and New Technology Enterprises.</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Regulations
Relating to Dividend Withholding Tax</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the EIT Law and its implementation rules, if a non-resident enterprise has not set up an organization or establishment in the PRC
or has set up an organization or establishment but the income derived has no actual connection with such organization or establishment,
it will be subject to a withholding tax on its PRC-sourced income at a rate of 10%. Pursuant to the Arrangement between the Mainland
of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Tax Evasion
With Respect to Taxes On Income, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise
is reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise. Pursuant
to the Notice of the SAT on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, a Hong Kong resident enterprise
must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it must directly own the required
percentage of equity interests and voting rights in the PRC resident enterprise; and (ii) it must have directly owned such percentage
in the PRC resident enterprise throughout the 12 consecutive months prior to receiving the dividends. There are also other conditions
for enjoying the reduced withholding tax rate according to other relevant tax rules and regulations. And based on the Announcement on
Certain Issues with Respect to the &#8220;Beneficial Owner&#8221; in Tax Treaties issued by the SAT on February 3, 2018 and effective
from April 1, 2018, if an applicant&#8217;s business activities do not constitute substantive business activities, it could result in
the negative determination of the applicant&#8217;s status as a &#8220;beneficial owner&#8221;, and consequently, the applicant could
be precluded from enjoying the above-mentioned reduced income tax rate of 5% under the Double Tax Avoidance Arrangement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Regulations
on PRC Value-Added Tax</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Interim Regulation of PRC on Value Added Tax promulgated by the State Council on December 13, 1993 and last revised on November
19, 2017, the VAT rate to be imposed on HR services shall be 6%.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
Relating to Labor Protection in the PRC</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Labor
Contract Law</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC Labor Contract Law, or the Labor Contract Law, which became effective on January 1, 2008 and was amended on December 28, 2012, is
primarily aimed at regulating rights and obligations of employer and employee relationships, including the establishment, performance
and termination of labor contracts. Pursuant to the Labor Contract Law, labor contracts shall be concluded in writing if labor relationships
are to be or have been established between employers and the employees. Employers are prohibited from forcing employees to work above
certain time limit and employers shall pay employees for overtime work in accordance to national regulations. In addition, employee wages
shall be no lower than local standards on minimum wages and must be paid to employees in a timely manner.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Labor
Law</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Labor Law of the PRC (2018 Amendment) issued by the SCNPC on December 29, 2018, the employing units must establish and improve
the system of labor safety and health, strictly implement the national regulations and standards on labor safety and health, educate
workers on labor <span style="background-color: white">safety and health, prevent accidents in the process of labor and reduce occupational
hazards employers shall develop and improve their rules and regulations to ensure that workers enjoy their labor rights and perform their
labor obligations.</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Social
Insurance and Housing Fund</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
required under the PRC Social Insurance Law implemented on July 1, 2011 and amended on December 29, 2018, employers are required to provide
their employees in the PRC with welfare benefits covering pension insurance, unemployment insurance, maternity insurance, labor injury
insurance and medical insurance. These payments are made to local administrative authorities. Any employer that fails to make social
insurance contributions may be ordered to rectify the non-compliance and pay the required contributions within a prescribed time limit
and be subject to a late fee. If the employer still fails to rectify the failure to make the relevant contributions within the prescribed
time, it may be subject to a fine ranging from one to three times the amount overdue. In accordance with the Regulations on the Management
of Housing Fund which was promulgated by the State Council in 1999 and amended in 2002 and 2019, employers must register at the designated
administrative centers and open bank accounts for depositing employees&#8217; housing funds. Where an employer fails to make deposit
registration of the housing accumulation fund or fails to open a housing accumulation fund account for its employees, it shall be ordered
by the housing accumulation fund management center to make up the procedures within a time limit; if it fails to make up the procedures
within the time limit, it shall be given a fine of RMB10,000 to 50,000. The employer shall make full contribution to the housing provident
fund on time and no delay or under-contribution is allowed. Where an employer fails to pay or fully pay the housing provident fund, the
housing provident fund management center shall order it to make payment within the prescribed period; if it fails to make payment within
such prescribed period, the center may apply to the people&#8217;s court for enforcement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
on Stock Incentive Plans</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">SAFE
promulgated the Notice of Issues Related to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive
Plan of Overseas Listed Company, or SAFE Circular 7, on February 15, 2012. Under SAFE Circular 7, employees, directors, supervisors,
and other senior management who participate in any stock incentive plan of a publicly-listed overseas company and who are PRC citizens
or non-PRC citizens residing in China for a continuous period of no less than one year, subject to a few exceptions, are required to
entrust a qualified domestic agent to register with SAFE through the domestic company, which may be a PRC subsidiary of such overseas
listed company, and complete certain other procedures. In addition, the SAT has issued certain circulars concerning employee stock options
and restricted shares. Under these circulars, employees working in the PRC who exercise stock options will be subject to PRC individual
income tax. The PRC subsidiaries of an overseas listed company are required to file documents related to employee stock options with
relevant tax authorities and to withhold individual income taxes of employees who exercise their stock option. If the employees fail
to pay or the PRC subsidiaries fail to withhold income tax in accordance with relevant laws and regulations, the PRC subsidiaries may
face sanctions imposed by the tax authorities or other PRC governmental authorities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Regulations
on M&amp;A and Overseas Listings</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">MOFCOM,
CSRC, SAFE and three other PRC governmental and regulatory agencies jointly adopted the Regulations on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors, or the M&amp;A Rules, which became effective in September 2006 and was amended in June 2009. The M&amp;A
Rules, among other things, require that if a domestic company, domestic enterprise, or a domestic individual, through an overseas company
established or controlled by it/him/her, acquires a domestic company which is affiliated with it/him/her, an approval from the MOFCOM
is required. The M&amp;A Rules further requires that an offshore special purpose vehicle, or the SPV, that is controlled directly or
indirectly by the PRC companies or individuals and that has been formed for overseas listing purposes through acquisitions of <span style="background-color: white">PRC
domestic interest held by such PRC companies or individuals, shall obtain the approval of CSRC prior to overseas listing and trading
of such SPV&#8217;s securities on an overseas stock exchange.</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies,
or the Trial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated
No. 1 to No. 5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of
Overseas Listings by Domestic Companies and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively,
the Guidance Rules and Notice. Under the Trial Measures and the Guidance Rules and Notice, initial public offerings or listings in overseas
markets by domestic companies, either in direct or indirect form, shall be filed with the CSRC pursuant to the requirements of the Trial
Measures within three working days after the relevant application is submitted overseas. The companies that have already been listed
on overseas stock exchanges prior to March 31, 2023 or the companies that have obtained the approval from overseas supervision administrations
or stock exchanges for its offering and listing prior to March 31, 2023 and will complete their overseas offering and listing prior to
September 30, 2023 are not required to make immediate filings for its listing yet need to make filings for subsequent offerings in accordance
with the Trial Measures. The companies that have already submitted an application for an initial public offering to overseas supervision
administrations but have not yet obtained the approval from overseas supervision administrations or stock exchanges for the offering
and listing prior to March 31, 2023 may arrange for the filing within a reasonable time period and should complete the filing procedure
before such companies&#8217; overseas issuance and listing.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 24, 2023, the CSRC, MOF, National Administration of State Secrets Protection and National Archives Administration of China jointly
revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing which
was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009, or
the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality and Archives Administration
of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023 with the Trial Measures. One
of the major revisions to the revised Provisions is expanding its application to cover indirect overseas offering and listing, as is
consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a) a domestic company that plans
to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including
securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or
working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy
administrative department at the same level; and (b) domestic company that plans to, either directly or through its overseas listed entity,
publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas
regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly
fulfill relevant procedures stipulated by applicable national regulations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
or after March 31, 2023, any failure or perceived failure by the Company or PRC subsidiaries to comply with the above confidentiality
and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in that the relevant
entities would be held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability
if suspected of committing a crime.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Organizational
    Structure</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following diagram illustrates our corporate structure as of the date of this annual report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img src="form20-f_001.jpg" alt="" style="height: 291px; width: 670px"/><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.4in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Note:
    </span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
    founder, chairman of the Board, and CEO, Mr. Howard Lee, owns approximately 61.9% equity interest in our Company through his wholly
    owned company, HTL Lucky Holding Limited, as of the date of this annual report. 51job, Inc. owns approximately 18.2% equity interest
    in our Company and MLT Holding Limited owns approximately 8.1% equity interest in our Company as of the date of this annual report.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    English names of our PRC business entities are directly translated from Chinese and may be different from their names shown on their
    respective records filed with relevant PRC authorities.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in">We do not
currently use, and have not used in the past, a variable interest entity structure. Lucas GC Limited is not a Chinese operation company
but a Cayman Island holding company with operations primarily conducted through its PRC subsidiaries.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center">&#160;</p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>F.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Property, Plant and Equipment</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
corporate headquarters are located in Beijing, China. As of December 31, 2023, the approximate gross floor area of our leased properties
was 612 square meters in aggregate and we did not have self-held properties. We lease our premises from unrelated third parties under operating
lease agreements. We believe that our existing facilities are generally adequate to meet our current needs, but we expect to seek additional
space as needed to accommodate future growth.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_001"></span>ITEM
4A. UNRESOLVED STAFF COMMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_002"></span>ITEM
5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Overview</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are the largest technology-driven online agent-centric human capital management service provider targeting professionals based on PaaS
in China in terms of the number of active users in the human resources industry as of June&#160;30, 2022 and total net revenues for the
year ended December 31, 2021. As a company empowered by AI, data analytics and blockchain technologies, we are committed to digitalizing
and intellectualizing the entire human capital management process. We define active users as those who login to our proprietary platforms,&#160;<i>Star
Career&#160;</i>and&#160;<i>Columbus,&#160;</i>at least once within a&#160;30-day&#160;period. As of December 31, 2022 and December 31,
2023, we had approximately 431,220 and 638,020 active registered users, respectively. Through our proprietary platforms,&#160;<i>Star
Career&#160;</i>and&#160;<i>Columbus,&#160;</i>the active registered users will receive customized job recommendations and work as talent
scouts to source suitable candidates for our corporate customers through their own trusted and private social network, as well as receive
trainings and other value-added services. We have developed into a comprehensive social network platform providing various services targeting
professionals spanning multiple industries in China, including recruitment services, outsourcing services, information technology services
and training services. Please see the section entitled &#8220;Business&#8221; for more details.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
the launch of our platforms, we have experienced rapid growth. Our net revenues surged approximately from RMB766.6&#160;million for the
year ended December 31, 2022 to RMB1,474.0 million (US$207.6 million) for the year ended December 31, 2023 representing a&#160;year-over-year&#160;increase
of 92.3%. Our gross profits increased approximately from RMB215.2&#160;million for the year ended December 31, 2022 to RMB418.6 million
(US$59.0 million) for the year ended December 31, 2023, representing a&#160;year-over-year&#160;increase of 94.5%.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Key
Factors that Affect Operating Results</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>General
Factors Affecting Our Results of Operations</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
results of operations and financial condition are affected by general factors driving the market of services for professionals, including
(i)&#160;economic factors, including global economic conditions which affect our supply and demands, as well as domestic economic growth,
especially in tertiary industry, the fluctuation in Index of Service Production, or ISP, and Services Producer Price Indices, or SPPI,
(ii)&#160;technology factors, such as development of artificial intelligence and data analytics, and the rate of platform penetration
in China, and (iii)&#160;labor factors, such as rising labor costs in China. Unfavorable changes in any of these general factors could
materially and adversely affect our business and results of operations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Specific
Factors Affecting Our Results of Operations</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
our business is influenced by general factors affecting the&#160;on-demand&#160;employment services market and workforce operational
solution market in China generally, our results of operations are also directly affected by certain company-specific factors, including
the following major factors:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
ability to expand our portfolio of users through delivering services with higher efficiency for human capital management</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
core competitive strengths derive from our massive multidimensional data insights, powerful AI algorithm and big data capacity which
enable us to effectively process the data and continuously improve our&#160;two-way&#160;matching accuracy. Accurate matching results
allow us to attract more users and accumulate more data, which in turn improve the matching efficiency and optimize the user experience,
creating a positive feedback loop. Our results of operations have shown that this synergistic and thriving business model allows us to
penetrate the recruitment market at scale without direct salesforce.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
ability to attract, retain and connect potential job seekers cost-effectively</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operational cost is affected by the number of users on our platform and the amount of service fees we paid to flexible workers and third-party
labor service companies. Our continued growth depends in part on our ability to cost-effectively attract, retain and connect potential
users in labor market, especially our ability to cultivate a flexible workforce and deploy the same workers across different industry
settings by having them serve multiple roles offered on our platform to optimize our operational cost. We have focused on offering better
earning opportunities and career prospects and enhancing the social network among the workforce of professionals. Our ability to attract,
retain and connect potential users cost-effectively can be affected by a number of factors, including the quality of our training programs,
the value-added services we provide, the attractiveness of the earning opportunities and career prospects we offer, and other macroeconomic,
social and political factors that may affect labor cost, supply or migration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
ability to diversify service offerings and industry coverage</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have been dedicated to expanding and diversifying our service offerings to cover a comprehensive range of activities in the human capital
management process. By further leveraging our growing database and powerful&#160;AI-enabled&#160;technologies, we are able to analyze
user behavior and intent more precisely, address corporate customers&#8217;&#160;in-depth&#160;needs in a broader array of business scenarios,
and introduce new functions to better serve the entire workforce spectrum. We have made, and will continue to make, significant investments
to improve our technology infrastructure and enhance user experience.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
results of operations have been, and will continue to be, affected by the size and diversity of our service offerings. Since our inception,
we have introduced various value-added services built around our customers&#8217; recruitment needs and have successfully expanded our
service offerings. These efforts have effectively helped us attract more users and broaden revenue channels, thus driving our business
and revenue growth.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
ability to control costs and expenses and enhance operational efficiency</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
results of operations have been, and will continue to be, affected by our ability to control costs and expenses and enhance our operational
efficiency. We take pride in our platforms,&#160;<i>Star Career&#160;</i>and&#160;<i>Columbus</i>, which serve as our proprietary technology
infrastructure that centralizes our operational management and streamlines our solution process. Our capability to constantly innovate
remains an important differentiator as we continue to deliver new functions on our platforms. Thus, research and development expenses
have historically represented a large portion of our total costs and expenses, consisting primarily of services fees paid to third-parties
professional technology developers. General and administrative expenses and selling and marketing expenses are important components of
our costs. We have been always mindful of the balance between rapid business expansion and costs and expenses. We will continue to make
efforts to manage our user acquisition cost and improve our user retention rate. In addition, as our business grows, we will continue
to further improve our operational efficiency by developing technologies and infrastructure across different business functions. We expect
to achieve greater operating leverage and increase the productivity of our personnel, allowing us to acquire customers and suppliers
more cost-effectively and achieve higher operational efficiency.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Continued
investment in our technology infrastructure and professional talents</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
continue to invest in our proprietary platforms, including&#160;<i>Star Career&#160;</i>and&#160;<i>Columbus</i>, to accommodate the
expanded scope and heightened complexity of our operations. An enhanced technology infrastructure based on <i>Star Career </i>and <i>Columbus&#160;</i>will
allow us to continually optimize our operational efficiency, refine our products and services through improved data-driven
analytics, and facilitate our footprints into new geographical markets and industries. We also continue to invest in talents,
particularly experienced marketing personnel, research and development engineers and other tech-related talents to support our
market expansion strategies. Our ability to maintain and improve the functionality of our technology infrastructure in line with our
business scale will be a key driver for our sustainable growth.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Impact
of COVID-19 on Our Operations and Financial Performance</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
COVID-19 pandemic has severely impacted China and the rest of the world, and it has resulted in quarantines, travel
restrictions, and the temporary closure of offices and facilities in China and many other countries. Since the beginning of 2022,
various cities in China, especially the first-tier cities like Beijing and Shanghai, were confronted with the bounce back
of&#160;COVID-19&#160;pandemic. Lockdown policies and travel restrictions hindered the proceeding of recruitment process of many
corporates. In addition, people&#8217;s willingness to change jobs has shown a declined trend over 2022, due to a lack of job
opportunities in the overall downward macroeconomic environment impacted by the&#160;COVID-19&#160;pandemic and other global events.
Our revenue growth, especially in our recruitment services, has been negatively impacted. For the year ended December 31, 2022, net
revenues from recruitment services decreased by approximately RMB84.4&#160;million, or 17.0%, compared to net revenues of
RMB497.5&#160;million for the year ended December 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additionally,
the weakness in the overall financial markets may cause us difficulties in securing additional financing, and the weakened financial
conditions of our clients, suppliers, and business partners may prevent them from honoring their obligations to us. During the
severe pandemic time, some of our customers were confronted with great financial pressure, unable to pay on time and then extended
the payment schedule for the accounts receivable. We considered the collectability based on the cautious estimation, and made credit
losses of RMB0.1&#160;million and RMB11.5 million (US$1.6 million) for the year ended December 31, 2022 and 2023, respectively. We
continued to keep close monitor to the collection of its accounts receivable and manage the credit losses.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2022, Chinese government declared to treat&#160;COVID-19&#160;as Category B disease, and authorities dropped quarantine measures
against people infected with&#160;COVID-19&#160;and stopped designating high-risk and&#160;low-risk&#160;areas. The macroeconomic in
China and the financial performance of our customers are recovering. As a result, our net revenues from recruitment services increased
by approximately RMB246.0 million, or 59.6%, to RMB659.0 million for the year ended December&#160;31, 2023, compared to RMB413.0&#160;million
for the year ended December&#160;31, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
the ultimate impact of&#160;COVID-19&#160;and other global disasters on its business, results of operations, financial condition, and
cash flows is dependent on future developments, including natural forces and government responses which are uncertain and beyond its
prediction at this time. We will pay close attention to the development of these macroeconomic risks, and assess and take measures to
minimize their impacts.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Key
Components of Our Results of Operations</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Net
revenues</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
generate revenues from (i)&#160;recruitment services including flexible employment recruitment services and permanent employment recruitment
services, (ii)&#160;outsourcing services, and (iii)&#160;other services including information technology services and training services.
As a human capital management service provider, we are dedicated to innovating and diversifying our offerings for corporate customers
in the recruitment and employment process based on the PaaS platforms, big data analytics and artificial intelligence technologies. Our
net revenues are presented net of business tax and surcharges. The following table sets forth a breakdown of our net revenues both in
absolute amount and as a percentage of our total net revenues for the periods presented:</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
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    <td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">100.0</span></td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="border-bottom: Black 2.5pt double; font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">100.0</span></td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 2.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Recruitment
services</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Recruitment
services consist of flexible employment recruitment services and permanent employment recruitment services. We derive net revenues from
service fees paid by corporate customers for arranging flexible workers with corresponding abilities and qualifications on demand and
sourcing eligible candidates for opening jobs to fulfill their various operation and employment needs.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Outsourcing
services</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
derive net revenues from service fees paid by corporate customers for providing overall outsourcing solutions, mostly&#160;IT-related&#160;services,
based on their specific requirements.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><i>Other services</i></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">We
launched other services as value-added services in August 2021, which is to provide information technology services and training services
for corporate customers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><b><i>Cost of revenues</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">The
following table sets forth a breakdown of our cost of revenues both in absolute amount and as a percentage of our total net revenues for
the periods presented:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Others</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Total cost of revenues</td><td style="padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">Cost related
to our recruitment services primarily consists of service fees paid to flexible workers, talent scouts, other third-party service providers
involved in the service process.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">Cost
related to our outsourcing services and other services primarily consists of service fees paid to workers and third-party service providers
engaged in the solution process.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><b><i>Gross profit and gross
profit margin</i></b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white">Our
gross profit is primarily affected by our ability to generate revenue and control cost. The following table sets forth the breakdown of
our gross profit and gross profit margin by revenue streams for the periods indicated:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Selling
and marketing expenses</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
selling and marketing expenses mainly consist of advertising expenses and market promotion expenses for promotion activities that directly
contribute to new user growth and acquisition of customer leads. We expect our selling and marketing expenses will also continue to increase
in absolute amount as we diversify, optimize and leverage our marketing channels to expand user community and explore more potential
customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>General
and administrative expenses</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
general and administrative expenses mainly consist of (i) payroll expenses, (ii) users support operation expenses, (iii) rental and depreciation
expenses related to general and administrative functions, (iv) professional service fees including those related to IPO activities,
(v) credit impairment losses and (vi) office and miscellaneous expenses. We expect that our general and administrative expenses will
continue to increase in absolute amount in the foreseeable future as we further grow our existing business lines, and we will incur increased
costs related to complying with our reporting obligations as we became a public company under U.S. securities laws. We also seek to optimize
the cost structure of our company to control the relative level of general and administrative expenses as a percentage of our net revenues.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Research
and development expenses</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
research and development expenses mainly consist of (i) payroll expenses, (ii) technologies service expenses related to platform development
and data analysis to support our business operations, and (iii) other expenses related to research and development functions. We believe
that our continued investment in research and development is critical to our growth and expect that our research and development expenses
will continue to increase in absolute amount as we seek to upgrade our PaaS platform and AI-enabled technologies to support our business
growth.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Other
income, net</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
income, net consists of other non-operating income, net and financial expenses, net. Other non-operating income, net mainly consists
of (i) additional deduction of VAT; and (ii) investment income, proceeds of interest from maturities of short-term investments. Financial
expenses mainly consist of interest income and expense, bank charges and exchange gain or loss.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Results
of Operations</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>For
the years ended December 31, 2022 and 2023</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following tables set forth a summary of our consolidated results of operations, in absolute amount and as a percentage of our net revenues
for the years ended December 31, 2022 and 2023. This information should be read together with our consolidated financial statements and
related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of the
results that may be expected for any future period.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left; background-color: white">&#160;</p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Net
revenues</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
net revenues increased by approximately RMB707.4 million, or 92.3%, from RMB766.6 million for the year ended December 31, 2022 to RMB1,474.0
million (US$207.6 million) for the year ended December 31, 2023, primarily attributable to a surge increase of net revenues from both
outsourcing services and recruitment service. Our net revenues are presented net of business tax and surcharge. The following table sets
forth a breakdown of our net revenues, each expressed in the absolute amount and as a percentage of our total net revenues, for the periods
indicated:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 59 -->
    <div style="border-bottom: Black 1.5pt solid; margin-top: 0pt; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->55<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt; margin-bottom: 0pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
revenues from recruitment services increased by approximately RMB246.0 million, or 59.6%, from RMB413.0 million for the year ended December
31, 2022 to RMB659.0 million (US$92.8 million) for the year ended December 31, 2023. The increase was primarily attributable to that
the Chinese government lifted the control on Covid-19 and economy started to recover. The operation-suspended entities re-commenced their
business and the accumulated labor needs during lock-down were released, leading to the increased net revenues. Industry such as accommodation
and catering, leasing and business services experienced notable growth. The recovery of these industries required a substantial workforce,
thereby increasing the demand for recruitment services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
revenues from outsourcing services increased by approximately RMB412.1 million, or 136.5%, from RMB301.9 million for the year ended December
31, 2022 to RMB714.0 million (US$100.6 million) for the year ended December 31, 2023. The increase was primarily driven by the increase
of our corporate customers, which was attributable to (i) our continuing marketing efforts in business line expansion; (ii) the growing
demands of corporate customers to develop IT system to optimize the business processes and reduce labor cost; and (iii) our diversified
products can meet the needs of different customers.</span></p>

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revenues from other services increased by RMB49.3 million, or 95.5%, from RMB51.6 million for the year ended December 31, 2022 to RMB101.0
million (US$14.2 million) for the year ended December 31, 2023. The increase was mainly because of the business expansion on insurance
data collection and promotion services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Cost
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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cost of revenues increased by approximately RMB504.0 million, or 91.4%, from RMB551.4 million for the year ended December 31, 2022 to
RMB1,055.4 million (US$148.7 million) for the year ended December 31, 2023, primarily attributable to the increase in cost related to
recruitment services and outsourcing services as a result of our business growth. The following table sets forth a breakdown of our cost
of revenues by revenue streams, expressed as an absolute amount and as a percentage of the total cost of revenues, for the periods indicated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
related to recruitment services increased by approximately RMB196.7 million, or 62.1%, from RMB316.7 million for the year ended December
31, 2022 to RMB513.4 million (US$72.3 million) for the year ended December 31, 2023, primarily attributable to the increase in cost paid
to flexible workers, talent scouts and other third-party services providers, generally in line with our revenue growth in recruitment
services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
related to outsourcing services increased by approximately RMB275.5 million, or 137.1%, from RMB201.0 million for the year ended December
31, 2022 to RMB476.5 million (US$67.1 million) for the year ended December 31, 2023, primarily attributable to the increase in cost paid
to workers and third-party services providers engaged in the solution process, generally in line with our revenue growth in outsourcing
services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
related to other services increased by approximately RMB31.9 million, or 94.6%, from RMB33.7 million for the year ended December 31,
2022 to RMB65.5 million (US$9.2 million) for the year ended December 31, 2023, primarily attributable to the increase in cost paid to
workers in preparation of expansion on insurance data collection and promotion services, generally in line with our revenue growth in
other services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Gross
profits and margin</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth a breakdown of our gross profit, margin by revenue streams, expressed as an absolute amount and as a percentage
of the total gross profit for the periods indicated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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a result of the foregoing, we recorded a gross profit of RMB215.2 million and RMB418.6 million (US$59.0 million) for the years ended
December 31, 2022 and 2023, respectively, representing gross profit margin of 28.1% and 28.4% in 2022 and 2023, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Operating
expenses</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operating expenses increased from RMB183.6 million for the year ended December 31, 2022 to RMB350.8 million (US$49.4 million) for the
year ended December 31, 2023, representing a year-over-year increase of 91.1%, primarily due to the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>General
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
general and administrative expenses increased by 127.0% from RMB47.7 million for the year ended December 31, 2022 to RMB108.4 million
(US$15.3 million) for the year ended December 31, 2023, which was primarily attributable to an increase of RMB60.1 million (US$8.5 million)
in Certified Career Resources Planner Certificate user support operation expenses as the user number increased and more experts from
various industries were invited to maintain activity level of users; offset by an increase in productivity of operations resulting
in a decrease of RMB7.9 million (US$1.1 million) in professional service fee.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Research
and development expenses</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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research and development expenses increased by 97.3% from RMB79.9 million for the year ended December 31, 2022 to RMB157.5 million (US$22.2
million) for the year ended December 31, 2023, which was primarily attributable to (i) an increase of RMB74.0 million (US$10.4 million)
in technologies services expenses resulting from the continuous investments in AI-enabled technologies including Generative Pre-trained
Transformer (GPT) and related artificial intelligence generated content technologies (AIGC), and investments in our proprietary
platforms, <i>Star Career and Columbus</i>, which gave us a cutting edge in business expansion and market competition; and (ii) a total
increase of RMB3.4 million (US$0.5 million) in other expenses related to research and development functions.</span></p>

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and marketing expenses</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
selling and marketing expenses increased by 51.7% from RMB56.0 million for the year ended December 31, 2022 to RMB84.9 million (US$12.0
million) for the year ended December 31, 2023, as a result of continuous investment in brand promotion of our proprietary platforms,
<i>Star Career </i>and <i>Columbus </i>for promotion activities that directly contribute to new user growth and acquisition of customer
leads<i>.</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
income, net</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
other income, net decreased by 38.3% from RMB4.2 million for the year ended December 31, 2022 to RMB 2.6 million (US$0.4 million) for
the year ended December 31, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
other non-operating income, net increased from approximately RMB4.1 million for the year ended December 31, 2022 to approximately RMB3.5
million (US$0.5 million) for the year ended December 31, 2023, which was primarily attributable to the increased additional VAT deduction.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial
expenses mainly consist of interest income and expense, bank charges and exchange gain or loss. Our financial expenses, changed from
RMB62,777 for the year ended December 31, 2022 to financial income of RMB0.9 million (US$0.1 million) for the year ended December 31,
2023 primarily due to the increased bank interest expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Income
taxes</i></b></span></p>

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income tax benefits were RMB0.6 million and RMB7.9 million (US$1.1 million) for the years ended December 31, 2022 and 2022, respectively.
This increase was primarily attributable to the increase of recognized of deferred tax assets for net operating loss carry forward due
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Net
income</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of the foregoing, our net income increased by RMB41.8 million, from RMB36.4 million for the year ended December 31, 2022 to
RMB78.2 million (US$11.0 million) for the year ended December 31, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>For
the years ended December 31, 2021 and 2022</i></span></p>

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following tables set forth a summary of our consolidated results of operations, in absolute amount and as a percentage of our net revenues
for the years ended December 31, 2021 and 2022. This information should be read together with our consolidated financial statements and
related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of the
results that may be expected for any future period.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 63 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Net
revenues</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
net revenues increased by approximately RMB114.3 million, or 17.5%, from RMB652.2 million for the year ended December 31, 2021 to RMB766.6
million for the year ended December 31, 2022, primarily attributable to a surge increase of net revenues from outsourcing
services. Our net revenues are presented net of business tax and surcharge. The following table sets forth a breakdown of our net revenues,
each expressed in the absolute amount and as a percentage of our total net revenues, for the periods indicated:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
revenues from recruitment services decreased by approximately RMB84.4 million, or 17.0%, from RMB497.5 million for the year ended December
31, 2021 to RMB413.0 million for the year ended December 31, 2022. The decrease was primarily attributable to that
(i) since the beginning of 2022, a few waves of COVID-19 outbreaks have emerged in various regions of China, and varying levels of travel
restrictions and lock-down policies were reinstated, especially in first-tier cities like Beijing and Shanghai, where our target customers
located. These restrictions and policies hindered the proceeding of recruitment process of many corporates, and thus adversely affected
our recruitment operations in 2022; (ii) in-service group&#8217;s intention of career change had shown a declined trend over 2022, due
to a lack of job opportunities in the overall downward macroeconomic environment impacted by COVID-19 pandemic and other global events.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
revenues from outsourcing services increased by approximately RMB188.1 million, or 165.3%, from RMB113.8 million for the year ended December
31, 2021 to RMB301.9 million for the year ended December 31, 2022. The increase was primarily driven by the increase
of our corporate customers, which was attributable to (i) our marketing efforts in business line expansion; and (ii) the growing demands
of corporate customers to develop IT system to optimize the business processes and reduce labor cost.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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revenues from other services increased by RMB10.6 million, or 26.0%, from RMB41.0 million for the year ended December 31, 2021 to RMB51.6
million for the year ended December 31, 2022. We launched technology information services and training services in August
2021, and continuously tapped into different geographic markets in China to diversify our offerings for corporate customers in the human
capital management process.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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cost of revenues increased by approximately RMB78.2 million, or 16.5%, from RMB473.2 million for the year ended December 31, 2021 to
RMB551.4 million for the year ended December 31, 2022, primarily attributable to the increase in cost related to outsourcing
services and other services as a result of our business growth. The following table sets forth a breakdown of our cost of revenues by
revenue streams, expressed as an absolute amount and as a percentage of the total cost of revenues, for the periods indicated.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 64 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
related to recruitment services decreased by approximately RMB56.5 million, or 15.1%, from RMB373.2 million for the year ended December
31, 2021 to RMB316.7 million for the year ended December 31, 2022, primarily attributable to the decrease in cost paid
to flexible workers, talent scouts and other third-party services providers, generally in line with our revenue decrease in recruitment
services due to travel restrictions and lock-down policies in response to COVID-19 outbreaks.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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related to outsourcing services and other services increased by approximately RMB134.7 million, or 134.8%, from RMB99.9 million for the
year ended December 31, 2021 to RMB234.6 million for the year ended December 31, 2022, primarily attributable to the
increase in cost paid to workers and third-party services providers engaged in the solution process, generally in line with our revenue
growth in outsourcing services and other services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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profits and margin</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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following table sets forth a breakdown of our gross profit, margin by revenue streams, expressed as an absolute amount and as a percentage
of the total gross profit for the periods indicated.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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a result of the foregoing, we recorded a gross profit of RMB179.1 million and RMB215.2 million for the years ended
December 31, 2021 and 2022, respectively, representing gross profit margin of 27.5% and 28.1% in 2021 and 2022, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Operating
expenses</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operating expenses increased from RMB142.0 million for the year ended December 31, 2021 to RMB183.6 million for the
year ended December 31, 2022, representing a year-over-year increase of 29.3%, primarily due to the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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general and administrative expenses increased by 24.2% from RMB38.4 million for the year ended December 31, 2021 to RMB47.7 million for the year ended December 31, 2022, which was primarily attributable to (i) an increase of RMB8.0 million in professional service fees; (ii) an increase of RMB2.5 million in user support operation expenses; and (iii) an increase
of RMB4.2 million in other general and administrative expenses as a result of business expansion; offset by a decrease
of RMB5.2 million in credit impairment losses due to effective receivables collection.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Research
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
research and development expenses increased by 13.7% from RMB70.2 million for the year ended December 31, 2021 to RMB79.9 million for the year ended December 31, 2022, which was primarily attributable to (i) an increase of RMB7.4 million in technologies services expenses resulting from the continuous investment in our proprietary platforms, <i>Star Career </i>and <i>Columbus</i>,
and AI-enabled technologies which gave us cutting edge in business expansion and market competition; and (ii) a total increase of RMB2.0
million in other expenses related to research and development functions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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and marketing expenses</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
selling and marketing expenses increased by 68.1% from RMB33.3 million for the year ended December 31, 2021 to RMB56.0 million for the year ended December 31, 2022, as a result of continuous investment in brand promotion of our proprietary platforms,
<i>Star Career </i>and <i>Columbus </i>for promotion activities that directly contribute to new user growth and acquisition of customer
leads<i>.</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
income, net</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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other income, net increased by 71.4% from RMB2.4 million for the year ended December 31, 2021 to RMB4.2 million for
the year ended December 31, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
other non-operating income, net increased from approximately RMB2.5 million for the year ended December 31, 2021 to approximately RMB4.1
million for the year ended December 31, 2022, which was primarily attributable to the increased additional VAT deduction.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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expenses mainly consist of interest income and expense, bank charges and exchange gain or loss. Our financial expenses, changed from
RMB68,210 for the year ended December 31, 2021 to financial income of RMB62,777 for the year ended December 31, 2022 primarily
due to the increased exchange loss.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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taxes</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
income tax benefits were RMB0.2 million and RMB0.6 million for the years ended December 31, 2021 and 2022, respectively.
This increase was primarily attributable to the increase of recognized of deferred tax assets for net operating loss carry forward due
to the additional deduction of research and development expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Net
income</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of the foregoing, our net income decreased by RMB3.4 million, from RMB39.8 million for the year ended December 31, 2021 to RMB36.4
million for the year ended December 31, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" border="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
  <td style="text-align: justify; width: 0.5in"><b>B.</b></td>
  <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Liquidity and Capital
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</table>





<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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assessing our liquidity, we monitor and analyze our cash on-hand and our operating and capital expenditure commitments. To date, we have
financed our working capital requirements from cash flow from operations, debt financings and capital contributions from our existing
shareholders.</span></p>

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had cash and cash equivalents of RMB48.5 million and RMB30.1 million (US$4.2 million), and restricted cash of RMB0.8 million and RMB0.1
million (US$14) as of December 31, 2022 and 2023, respectively. Our working capital was approximately RMB136.1 million (US$19.2 million)
as of December 31, 2023. The cash and cash equivalents and restricted cash disaggregated by currency denomination are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe our current working capital is sufficient to support our operations for the next twelve months. Our future capital requirements
depend on many factors including our growth rate, the continuing market acceptance of our offerings, the timing and extent of spending
in research and development, our efforts to strengthen our service abilities, the expansion of sales and marketing activities, and the
expansion and penetration of our business into different geographies and markets. We may, however, need additional cash resources in
the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities for
investment, acquisition, capital expenditure or similar actions. If we determine that our cash requirements exceed the amount of cash
and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance
and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased
fixed obligations and could result in operating covenants that would restrict our operations. Our obligation to bear credit risk for
certain financing transactions we facilitate may also strain our operating cash flow.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Current
foreign exchange and other regulations in the PRC may restrict our PRC entities in their ability to transfer their net assets to us and
our subsidiaries in Hong Kong. However, as of the date of this annual report, these restrictions have no impact on the ability of these
PRC entities to transfer funds to us as we do not anticipate declaring or paying any dividends in the foreseeable future, as we plan
to retain our retained earnings to continue to grow our business. In addition, these restrictions have no impact on the ability for us
to meet our cash obligations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
utilize the proceeds, we may make additional capital contributions to our PRC subsidiary, establish new PRC subsidiaries and make capital
contributions to these new PRC subsidiaries, or make loans to the PRC subsidiaries. However, most of these uses are subject to PRC regulations.
Foreign direct investment and loans must be approved by and/or registered with SAFE, or its local branches, or banks. The total amount
of loans we can make to our PRC subsidiary cannot exceed statutory limits and must be registered with the local counterpart of SAFE.
The statutory limit for the total amount of foreign debts of a foreign-invested company, based on its discretionary application, is either
the difference between the amount of total investment and the amount of registered capital or three times of the amount of the net assets
of such foreign- invested company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are permitted under PRC laws and regulations to provide funding to our PRC subsidiary only through loans or capital contributions,
and only if we satisfy the applicable government registration and approval requirements. The relevant filing and registration
processes for capital contributions typically take approximately eight weeks to complete. The filing and registration processes for
loans typically take approximately four weeks or longer to complete. While we currently see no material obstacles to completing the
filing and registration procedures with respect to future capital contributions and loans to our PRC subsidiaries, we cannot assure
you that we will be able to complete these filings and registrations on a timely basis, or at all. See &#8220;Risk Factors &#8212;
Risks Relating to Doing Business in China &#8212; PRC regulation of loans to and direct investment in PRC entities by offshore
holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering
to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity
and our ability to fund and expand our business.&#8221; We are able to use all of the net proceeds from this offering for investment
in our PRC operations by funding our PRC subsidiary through capital contributions, which is not subject to any statutory limit on
the amount under PRC laws and regulations. See &#8220;Regulations &#8212; Regulations Relating to Foreign Exchange.&#8221; We expect
approximately 20% of the net proceeds from this offering to be used to fund operations of our offshore subsidiaries and 80% of the
net proceeds to be used to fund operations of our subsidiaries in the PRC in the form of RMB. Therefore, our PRC subsidiaries will
need to convert any capital contributions or loans from U.S. dollars into Renminbi in accordance with applicable PRC laws and
regulations.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Cash
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>For
the years ended December 31, 2021, 2022 and 2023</i></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Operating
activities</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended December 31, 2023, our net cash used in operating activities was RMB36.4 million (US$5.1 million), which was primarily
attributable to (i) net income of RMB78.2 million (US$11.0 million), adjusted for depreciation of software and equipment of RMB4.3 million
(US$0.6 million), provision for credit losses of RMB11.7 million (US$1.7 million), and amortization of right-of-use assets of RMB0.7 million
(US$0.1 million); (ii) a net increase of advance to supplier of RMB125.4 million (US$17.7 million), and decrease of accounts payable
of RMB51.8 million (US$7.3 million), due to the increase of prepayment for technology outsourcing service, recruitment service and brand
promotion as market demand recovery; (iii) a decrease in contract liabilities of RMB11.2 million (US$1.6 million) due to less recognition
of contract obligation with advance payments; (iv) an increase in deferred tax assets, net of RMB7.9 million (US$1.1 million) as we expanded
R&amp;D investment for new products; offset by a decrease of accounts receivable of RMB63.7million (US$9.0 million) due to collection from
customers.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended December 31, 2022, our net cash used in operating activities was RMB15.1 million, which was primarily
attributable to (i) net income of RMB36.4 million, adjusted for depreciation of software and equipment of RMB3.3 million, and amortization of right-of-use assets of RMB0.6 million; (ii) a net decrease of advance to supplier
of RMB4.5 million, net of the decrease of accounts payable, due to the decrease of prepayment for technology outsourcing
service, recruitment service and brand promotion, and timely payment for accounts payable, offset by (i) an increase of accounts receivable
of RMB44.9 million due to continuously increased corporate customers as a result of business expansion and higher penetration
in market; (ii) a decrease of contract liabilities of RMB9.8 million due to less recognition of contract obligation
with advance payments; and (iii) a decrease of accrued expenses and other current liabilities of RMB2.3 million due
to timely repayment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended December 31, 2021, our net cash provided by operating activities was RMB60.6 million, which was primarily attributable
to (i) net income of RMB39.8 million, adjusted for depreciation of software and equipment of RMB1.5 million, and provision for doubtful
accounts of RMB5.3 million; (ii) an increase of contract liabilities of RMB34.4 million, partially offset by an increase of accounts
receivable of RMB22.9 million due to continuously increased corporate customers as a result of business expansion and higher penetration
in market; and (iii) an increase of accounts payable of RMB60.1 million, offset by an increase of advance to suppliers of RMB59.6 million
due to the increased service procurement from flexible workers, talent scouts and third-party service providers, as well as increased
expenses in platform development and AI-enabled technologies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Investing
activities</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended December 31, 2023, our net cash used in investing activities was RMB12.1 million (US$1.7 million), which was primarily
attributable to purchase of software and equipment of RMB12.1 million (US$1.7 million).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended December 31, 2022, our net cash provided by investing activities was RMB16.8 million, which was primarily
attributable to sales of short-term investments of RMB82.3 million, offset by (i) purchases of short-term investment
of RMB52.2 million and (ii) purchase of software and equipment of RMB13.7 million.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended December 31, 2021, our net cash used in investing activities was RMB47.8 million, which was primarily attributable to
(i) purchase of software and equipment of RMB24.1 million; and (ii) sales of short-term investments of RMB26.8 million and purchases
of short-term investment of RMB50.6 million.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Financing
activities</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended December 31, 2023, our net cash provided by financing activities was RMB29.4 million (US$4.1 million), which was primarily
attributable to proceeds from proceeds from short-term borrowings of RMB63.3 million (US$8.9 million), and offset by repayments of short-term
borrowings of RMB29.8 million (US$4.2 million), and payment for deferred offering cost of RMB4.0 million (US$0.6 million).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended December 31, 2022, our net cash provided by financing activities was RMB3.4 million, which was primarily
attributable to proceeds from proceeds from short-term borrowings of RMB9.1 million, repayments of short-term borrowings
of RMB3.1 million, and payment for deferred offering cost of RMB2.5 million.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the year ended December 31, 2021, our net cash provided by financing activities was RMB26.5 million, which was primarily attributable
to proceeds from issuance of preferred shares issued by our operating subsidiary in the PRC, Lucas Group China Limited, of RMB26.5 million.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Contingencies</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
time to time, we may become involved in litigation relating to claims arising in the ordinary course of the business. There are no claims
or actions pending or threatening against us that, if adversely determined, would in our judgment have a material adverse effect on us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Capital
Expenditures</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
made capital expenditures of RMB24.1 million, RMB13.7 million and RMB12.1 million (US$1.7 million) for the years ended December 31, 2021,2022
and 2023, respectively. Our capital expenditures consisted primarily of expenditures related to software and equipment to support our
platform-based operation. We plan to fund our future capital expenditures with our existing cash balance and proceeds from the Initial
Public Offering. We will continue to make capital expenditures to meet the expected growth of our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Off-Balance
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations
of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder&#8217;s
equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest
in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have
any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages
in leasing, hedging or product development services with us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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Obligations</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 6%; text-align: right">5,547</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than as shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December
31, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Holding
Company Structure</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lucas
GC Limited, a Cayman Islands exempted company, is our holding company and has no material operations of its own. We conduct a substantial
majority of our operations through our operating subsidiaries in China. As a result, our ability to pay dividends depends largely upon
dividends paid by our subsidiaries including our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt
on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition,
our subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance
with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries in China are required to set aside 10% of its
after-tax profits each year, if any, to fund certain statutory reserves funds until such reserve funds reach 50% of its registered capital.
In addition, our subsidiaries in China may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary
common reserve at their discretion. The statutory reserves funds and the discretionary funds are not distributable as cash dividends.
Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our
PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements
for statutory reserves funds. None of our subsidiaries has made any dividend payment or distribution to the holding company as of the
date this annual report, and they have no plans to make any distribution or dividend payment to the holding company in the near future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
utilizing the proceeds of Initial Public Offering, we, as an offshore holding company, are permitted under PRC laws and regulations to
provide funding to our PRC subsidiaries, which are treated as &#8220;foreign-invested enterprises&#8221; under PRC laws, through loans
or capital contributions. However, loans by us to our PRC subsidiaries to finance their activities cannot exceed statutory limits and
must be registered with the local counterpart of SAFE and capital contributions to our PRC subsidiaries are subject to the requirement
of making necessary registration with competent governmental authorities in the PRC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may be unable to use these proceeds to grow our business until our PRC subsidiaries receive such proceeds in the PRC. Any transfer of
funds by us to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by
or registration or filing with relevant governmental authorities in China. Any foreign loans procured by our PRC subsidiaries is required
to be registered with SAFE or its local branches or satisfy relevant requirements, and our PRC subsidiaries may not procure loans which
exceed the difference between their respective total investment amount and registered capital (for a foreign-invested company) or three
times (which may be varied year by year due to the change of PRC&#8217;s national macro-control policy) of the net assets of our PRC
subsidiary. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions to our PRC subsidiaries
are subject to the registration with State Administration for Market Regulation in its local branches, and registration with a local
bank authorized by SAFE.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
remit the proceeds of the offering, we must take the steps legally required under the PRC laws, for example, we will open a special foreign
exchange account for capital account transactions, remit the offering proceeds into such special foreign exchange account and apply for
settlement of the foreign exchange. The timing of the process is difficult to estimate because the efficiencies of different SAFE branches
can vary materially.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
light of the various requirements imposed by PRC regulations on loans to, and direct investment in, PRC entities by offshore holding
companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government
approvals on a timely basis, if at all, with respect to future loans by us to our PRC subsidiary or with respect to future capital contributions
by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds from
this offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely
affect our liquidity, our ability to fund and expand our business and our ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Inflation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
our inception, inflation in China has not materially affected our results of operations. According to the National Bureau of Statistics
of China, the year-over-year percent changes in the consumer price index for 2021, 2022 and 2023, were an increase of 1.5%, 1.8% and
2.0%, respectively. Although we have not been materially affected by inflation in the past, we may be affected if China experiences higher
rates of inflation in the future.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Taxation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Cayman
Islands</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a company incorporated in the Cayman Islands and conduct our primary business operations through the subsidiaries in the PRC.
Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gain arising in the Cayman Islands.
Additionally, upon payments of dividends to our shareholders, no Cayman Islands withholding tax will be imposed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>British
Virgin Islands</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
subsidiary, Lucas Star Holding Limited is incorporated in the British Virgin Islands and conducts its primary business operations through
the subsidiaries in the PRC. Under the current laws of the British Virgin Islands, Lucas Star Holding Limited is not subject to tax on
income or capital gains. Additionally, upon payments of dividends to our shareholders, no BVI withholding tax will be imposed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Hong
Kong</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
subsidiaries, Lucas GC Limited (HK) is incorporated in Hong Kong and is subject to Hong Kong profits tax rate.
Under the two-tiered profits tax rates regime, the first two million Hong Kong Dollar (&#8220;HKD&#8221;) of profits of the qualifying
group entity will be taxed at 8.25%, and profits above HKD2 million will be taxed at 16.5%. Additionally, upon payments of dividends
to our shareholders, no HK withholding tax will be imposed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the PRC Enterprise Income Tax Law (the &#8220;EIT Law&#8221;), the standard enterprise income tax rate for domestic enterprises and
foreign invested enterprises is 25%. EIT grants preferential tax treatment to High and New Technology Enterprises
(&#8220;HNTEs&#8221;) at a rate of 15%, subject to a requirement that they re-apply for HNTE status every three years. For the
Group&#8217;s subsidiaries, Lucas China obtained the high-tech certificate in December 2020 and November 2023, and enjoyed a
preferential income tax rate at 15% from 2020 to 2025. Luogaoshi Technology (Beijing) Co., Ltd. obtained the high-tech certificate
in December 2021, and enjoyed a preferential income tax rate at 15% from 2021 to 2023. </span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white">From January 1, 2021 to December 31, 2021, 12.5% of the first RMB 1.0 million of the assessable profit before tax
is subject to preferential tax rate of 20% and the 50% of the assessable profit before tax exceeding RMB 1.0 million but not exceeding
RMB 3.0 million is subject to preferential tax rate of 20%. From January 1, 2022 to December 31, 2022, 12.5% of the first RMB 1.0 million
of the assessable profit before tax is subject to preferential tax rate of 20% and the 25% of the assessable profit before tax exceeding
RMB 1.0 million but not exceeding RMB 3.0 million is subject to preferential tax rate of 20%. From January 1, 2023 to December 31, 2027,
25% of the first RMB 3.0 million of the assessable profit before tax is subject to the tax rate of 20% for the Company&#8217;s subsidiaries
that are qualified as &#8220;Small Profit Enterprises&#8221;.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white">&#160;</p>

<table cellpadding="0" cellspacing="0" border="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Research
    and Development, Patents and Licenses, etc.</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Item 4. Information on the Company&#8212;B. Business Overview&#8212;Our Technology.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" border="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Trend
    Information</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for
the period from January 1, 2023 to December&#160;31, 2023 that are reasonably likely to have a material and adverse effect on our net
revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily
indicative of future results of operations or financial conditions.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>

<table cellpadding="0" cellspacing="0" border="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
  <td style="text-align: left; width: 0.5in"><b>E.</b></td>
  <td style="text-align: left"><b><span style="text-decoration: underline"> Critical Accounting Policies and Estimates</span></b></td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b></b></span></p>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions.
To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations
would be affected. We base our estimates and assumptions on our own historical data and other assumptions that we believe are reasonable
after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates
and assumptions on an ongoing basis.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
expectations regarding the future are based on available information and assumptions that we believe to be reasonable and accurate, which
together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates
is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting
policies require a higher degree of judgment than others in their application.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
critical accounting policies, judgments and estimates that we believe to have the most significant impact on our consolidated financial
statements are described below, which should be read in conjunction with our consolidated financial statements and accompanying notes
and other disclosures included in this annual report. When reviewing our financial statements, you should consider:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
    selection of critical accounting policies;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    judgments and other uncertainties affecting the application of such policies;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    sensitivity of reported results to changes in conditions and assumptions.</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were
highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from
period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact
on our financial condition or results of operations. We consider our critical accounting estimates include (i) allowance for doubtful
accounts for accounts receivable; (ii) useful lives of software; (iii) valuation allowance of deferred tax assets, and (iv) valuation
of redeemable preferred shares of non-controlling interest.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Accounts
receivable, net</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts
receivable, net are stated at the original amount less allowances for doubtful accounts. Accounts receivable are recognized in the period
when we have provided services to customers and we have an unconditional right to consideration. We review the accounts receivable on
a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. Our estimation
of allowance for doubtful accounts considers factors such as the age of the amounts due, the customer&#8217;s payment history, credit-worthiness
and other specific circumstances related to the accounts. An allowance for doubtful accounts is recorded in the period in which a loss
is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Adoption
of Accounting Standards Update (&#8220;ASU&#8221;) 2016-13</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2016, the FASB issued ASU 2016-13: Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected
credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and
supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial
assets measured at amortized cost. The Group adopted ASU 2016-13 from January 1, 2023 using modified-retrospective transition approach
with a cumulative-effect adjustment to shareholders&#8217; equity amounting to RMB617 recognized as of January 1, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
recognized RMB5.3 million, RMB0.1 million and RMB11.5 million (US$1.6 million) credit losses for accounts receivable for the years ended
December 31, 2021, 2022 and 2023. A 10% increase in our credit losses would have decreased our net income before tax by 1.3%, 0.0% and
1.5% for the years ended December 31, 2021, 2022 and 2023, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Revenue
recognition</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
recognize revenue pursuant to ASC 606, Revenue from Contracts with Customers (&#8220;ASC 606&#8221;). In accordance with ASC 606, we
should recognize revenue to depict the transfer of promised services to customers in an amount that reflects the consideration to we
expect to receive in exchange for those services, reduced by value added tax. Net revenues are presented net of business tax and surcharges.
The following five steps are applied to achieve the core principle of this standard:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: left; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Identification
    of the contract, or contracts, with the customer;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Identification
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Determination
    of the transaction price;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Allocation
    of the transaction price to the performance obligations in the contract; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Recognition
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Recruitment
services</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Recruitment
services consist of flexible employment recruitment services and permanent employment recruitment services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration: underline">Flexible
employment recruitment services</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
enter into contracts with corporate customers to provide flexible employment recruitment services, arranging flexible workers with corresponding
abilities and qualifications on demand to fulfill corporate customers&#8217; various operation needs. We identify only one performance
obligation in flexible employment recruitment services as the contract comprises of a series of distinct services that are substantially
the same and have the same pattern of transfer to the corporate customers, which is to provide flexible workers in accordance with the
demand orders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
contract consideration is determined by the days flexible workers have worked times their workday pay rate. Revenue from flexible employment
services is recognized over time as the customers can simultaneously receive and consume the benefits in the period the flexible workers
provide the service.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
contract payment is not subject to any variable consideration, refund, cancellation, or termination provision. Customers generally make
the payment within one or two months after the monthly reconciliation of service considerations with us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration: underline">Permanent
employment recruitment services</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
enter into contracts with corporate customers to provide permanent employment services. We identify one performance obligation in permanent
employment services, which is to place a qualified and acceptable employee in accordance with customer specifications. The probation
period of the candidate is typically three months, a period for the customer to evaluate and confirm the acceptance of candidate replacement.
During the probation period, the customer is entitled to request candidate replacement if dissatisfaction of the performance of candidate
cannot be resolved after all means implemented, and we also keep close track of the performance of the candidate to see if they meet
the customer&#8217;s defined standard, and deals with the customer&#8217;s feedback or complaint about the performance of candidate.
Upon the completion of the probation period, the customer accepts the qualified candidate and we have fulfilled our obligation of permanent
candidate placement. Hence, revenue from permanent employment services is recognized at a point of time when the candidate passes the
probation period.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
contract consideration is based on a fixed percentage of the candidate&#8217;s pretax annual income agreed upon with the customers in
advance. Customers generally consider the candidates for the full probation period, and we are not entitled to any consideration for
the services provided until the candidates pass the probation period. Except for this, the contract payment is not subject to any variable
consideration, refund, cancellation, or termination provision. Customers generally make the payment within one or two months after the
completion of candidates&#8217; probation period and acceptance of billing from us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Outsourcing
services</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
enter into contracts with corporate customers to provide outsourcing services, mostly IT-related services, including construction of
IT system, development of module or software with specific functions. Although third- party services providers will be involved in the
solution process, we still take on primary responsibility to coordinate project schedule, check the quality of deliverables, conduct
quality testing and handle feedback and complaints from corporate customers. We identify only one performance obligation with a fix total
consideration to deliver the IT project with functions under the agreed-upon specifications with customers. Customers cannot control
the IT projects in progress as the IT projects are not developed in the customers&#8217; location or IT environment, and before the successful
completion of the IT projects, customers cannot simultaneously receive or consume the benefits provided by our service, because the IT
projects in progress are only dispersed computer codes, which neither provide any function for the customer, nor are delivered to customers
until the successful completion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Customers
generally make the payment within one or two months upon the successful delivery of IT projects and acceptance. We do not have an enforcement
right to payment for services provided to date if the projects eventually fail. Except for this, the contract payment is not subject
to any variable consideration, refund, cancellation, or termination provision.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
recognize revenue at a point in time when the outsourcing services, mostly IT projects, are successfully completed, delivered and accepted
by customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
services</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
also provide information technology services to corporate customers and training services to platform users. Information technology services
include data collection and analysis, marketing channel optimization and other information technology services altogether that could
contribute to customers&#8217; business development. Training services are mainly to provide training courses and career-related certification
programs for platform users to help them realize professional developments. We identify only one performance obligation to provide those
services and recognize revenue over time based on the amount of a fixed total price, or a fixed unit price times key performance indicators
or hours charged.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
contract payment is not subject to any variable consideration, refund, cancellation, or termination provision. Customers generally make
the payment within one or two months after monthly reconciliation of service considerations with us.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Principal
versus agent considerations</i></b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
all the services provided, we consider ourselves the principal and recognizes revenue on a gross basis as we control the services through
the following key considerations:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    reserve the right to accept or reject the contracts or orders with the customers without involvement of the third parties, and direct
    the selected third-parties to provide services to the customers on our behalf. There is no direct cooperation relationship between
    third parties and the customers. We assume responsibility for receiving and resolving the complaints over the quality of the services.
    If the third-party service providers fail to deliver their work and thus affect our performance obligation to the corporate customers,
    we should bear the loss of the corporate customers for breach of contract on our own, and then independently claim for compensation
    from third-party service providers for its loss.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    have discretion in setting up the price. The involved third parties are entitled to a fixed service fee agreed upon in advance irrespective
    of the consideration we collect from the customers.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    bear the credit risk as we pay the consideration due to third-parties irrespective of whether the customers have paid the service
    consideration to us.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Useful
lives of software</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
software consists of external purchased technology attached to our proprietary platforms, <i>Columbus and Star Career.</i> We apply judgments
in determining the useful lives of the software, considering technology and competition of the software pursuant to ASC 350-40-35-5.
On an ongoing basis, we assess if the estimated remaining useful lives of software continue to be reasonable based on the remaining expected
benefit and usage. If the remaining useful lives of software are revised, it is accounted for as a change in estimate and the remaining
unamortized cost of the underlying asset is amortized prospectively over the updated remaining useful life.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Valuation
allowance of deferred tax assets</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. We consider positive and negative evidence when determining whether a portion or all
of its deferred tax assets will more likely than not be realized. Our assessment considers, among other matters, the nature, frequency
and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, its
experience with tax attributes expiring unused, and its tax planning strategies. The ultimate realization of deferred tax assets is dependent
upon its ability to generate sufficient future taxable income within the carry-forward periods provided for in the tax law and during
the periods in which the temporary differences become deductible. When assessing the realization of deferred tax assets, we have considered
possible sources of taxable income including (i) future reversals of existing taxable temporary differences, (ii) future taxable income
exclusive of reversing temporary differences and carry-forwards, (iii) future taxable income arising from implementing tax planning strategies,
and (iv) specific known trend of profits expected to be reflected within the industry.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2021, 2022 and 2023, we recognized valuation allowance of deferred tax assets of RMB1.7 million, RMB3.4 million and RMB3.0
million (US$0.4 million), respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Valuation
of redeemable preferred shares of non-controlling interest</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
year 2018 to 2021, Lucas Group China Limited, the operating subsidiary of the Group in the PRC, issued a series of shares to investors.
Share purchase agreement in 2021 (&#8220;2021 SPA&#8221;) modified the redemption rights and corresponding calculation formula of redemption
value, clarified the dividend rights to different investors under share purchase agreement in 2020 (&#8220;2020 SPA&#8221;), See Note
10 &#8220;Redeemable preferred shares of non-controlling interest&#8221; to the consolidated financial statements for more details. We
estimate the fair value of redeemable preferred shares of non- controlling interest immediately before and after the amendment under
2021 SPA to determine whether the amendment constituted a modification or an extinguishment. We made the valuation of fair value of redeemable
preferred shares of non-controlling interest with the assistance from an independent third-party valuation firm. The fair value valuation
of the redeemable preferred shares of non-controlling interest was conducted in accordance with the guidance provided by the American
Institute of Certified Public Accountants &#8211; Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities
Issued as Compensation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
estimate the fair value of the redeemable preferred shares of non-controlling interest immediately before and after the amendment under
2021 SPA, we firstly derived the total equity value of Lucas Group China Limited using market approach. The market approach, specifically
the Backsolve Method, is adopted when preferred share transactions with unrelated parties occurred close to the valuation dates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
then derived the value of each class of shares (including the ordinary shares and redeemable preferred shares) by allocating equity value
to each class of shares under a hybrid framework which includes a probability weighted option pricing model (OPM) and an analysis assuming
an IPO as a possible future event, we considered the following different scenarios under this hybrid framework: (1) liquidation scenario,
(2) redemption scenario and (3) IPO conversion scenario. Under the liquidation and redemption scenarios, since holders of redeemable
preferred shares would have priority over ordinary shares or receive a redemption amount, respectively, the Option Pricing Method was
used to allocate equity value.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Option
Pricing Method treats the preferred and ordinary shares as call options with distinct claims on Lucas Group China Limited&#8217;s total
equity value on liquidation preference or redemption amount of the preferred shares. The option&#8217;s exercise price is based on a
comparison with the total equity value, which is determined based on the liquidation preference or redemption amount under the applicable
scenario. The characteristics of each class of shares, including the redemption provision and any liquidation preference of the preferred
shares, determine the class of share&#8217;s claim on the equity value. Black-Scholes model was used to price the call option. After
deriving the values of the preferred and ordinary shares under each of the scenarios, by the method described above, probabilities of
each scenario were applied to arrive at the probability weighted value of each class of shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
deriving the values of the preferred and ordinary shares under each of the scenarios, by the method described above, probabilities of
each scenario were applied to arrive at the probability weighted value of each class of shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
option-pricing method was used to allocate equity value of Lucas Group China Limited to preferred and ordinary shares, taking into account
the guidance prescribed by the AICPA Audit and Accounting Practice Aid. This method requires making estimates of the anticipated timing
of a potential liquidity event, such as a sale of our company or an initial public offering, and estimates of the volatility of our equity
securities. The anticipated timing is based on the plans of our board and management. The volatility used in calculating the fair value
of preferred and ordinary shares was determined with reference to the volatility of a set of comparable companies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to valuation report, the change of fair value of redeemable preferred shares of non-controlling interest immediately before and after
the amendment was less than 10%. Therefore, the amendment under 2021 SPA should be accounted for as a modification, and the difference
between the fair value of redeemable preferred shares of non-controlling interest immediately before and after the modification should
be recognized as reduction of accumulated deficit as a deemed dividend.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_003"></span>ITEM
6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Directors and Senior Management</span></b></span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth information regarding our directors and executive officers as of the date of this annual report. Unless otherwise stated, the business address for our directors and executive officers is that of our principal executive
offices at Room 5A01, 4th Floor, Air China Building, Xiaoyun Road, Sanyuanqiao, Chaoyang District, Beijing 100027, China.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    and Executive Officers</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center; width: 8%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Age</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: center; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: center; width: 60%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Position</b></span></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Howard
    Lee</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">55</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Founder,
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Brian
    Lin</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Michael
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    Director</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Mr.
Howard Lee </i></b>has been our chairman of the board of directors since 2022. He is also our chairman of the board of directors and
chief executive officer. From 2016 to present, he has been the CEO in our operating subsidiary in China, Lucas Group China Limited. From
2010 to 2016, Mr. Lee worked at Western Digital Corporation, most lately as the vice president of corporate development. From 2008 to
2010, Mr. Lee worked at Sun Microsystems Inc. as the general manager of Asian operations of its SUN Equity Partners Program. From 2003
to 2005, Mr. Lee worked for Alcatel Corporation as the general manager of APAC enterprise data business unit and CEO of one of its joint
ventures in China, and prior to expatriating to Asia, Mr. Lee worked in the U.S. for Alcatel Corporation as Director of Strategy from
2000 to 2002 and in Xylan Corporation (acquired by Alcatel) as Financial Planning Manager from 1997 to 2000. Mr. Lee holds ten U.S. patents
and six Chinese patents, all in the areas of Artificial Intelligence, Data Analytics and Blockchain. Mr. Lee is also a Chartered Financial
Analyst, or CFA, charter holder and received his charter in 2000. Mr. Lee received a bachelor&#8217;s degree in Chemical Engineering
(Systems Process Engineering) in 1991 and a master&#8217;s degree in Civil Engineering (Environmental Modeling and Systems) in 1993,
both from the University of California at Los Angeles (UCLA), and a master&#8217;s degree in Engineering and Management (Strategy in
High Tech Companies) in 1995 from Stanford University.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Mr.
Brian Lin </i></b>has served as our Chief Financial Officer since March 2024. Mr. Lin is a certified public accountant in China with
rich financial and accounting experiences and has served as our head of finance in Lucas Group China Limited since 2022. Prior to joining
us, Mr. Lin was a financial director at G7 Networks Limited from 2021 to 2022, a leading SaaS company using internet of things technology
in the road freight industry. From 2018 to 2021, Mr. Lin served as the vice president at Pure International Cultural Development (Beijing)
Co., Ltd. From 2016 to 2018, he served as the financial director of Beijing Time Limited, a company that is a recommendation system product
based on data mining that recommends valuable, personalized information to users in China. From 2015 to 2016, he worked as the financial
director of Beijing RTMAP Technology Co., Ltd., a company that providing technology for indoor positioning and navigation for shopping
malls and airports. From 2011 to 2015, Mr. Lin worked as the CFO and general manager of the strategic investment department of HNA Culture
Holding Group Co., LTD, a company that has been developing in the fields of airport and aviation media business. He also worked in PricewaterhouseCoopers
Zhong Tian LLP as a junior auditor and later promoted to senior auditor and auditor manager from 2004 to 2011. Mr. Lin is familiar with
SaaS business, media and social technology and has deep involvement of various kinds of investment and financing mergers and acquisitions.
He has been a member of Chinese Institute of Certified Public Accountant since 2010. Mr. Lin received a bachelor&#8217;s degree in Accounting
from Renmin University of China in 2004.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Mr.
Harry Tang </i></b>has served as our Chief Technology Officer since March 2024. Mr. Tang has served as our head of research and development
in Lucas Group China Limited since 2022. Before joining us, Mr. Tang has approximately 17 years of management experience in the research
and development section of the Internet industry. From 2013 to 2022, Mr. Tang was the director of the research and development department
and senior architect of Beijing Facishare Technology Co., Ltd., a company that provides PaaS based Mobile CRM Software and Services.
From 2006 to 2013, he worked as the senior research and development manager and senior engineer in Feinno Communication Tech Co., Ltd,
in charge of developing Fetion, an instant message service product developed by the company. Mr. Tang received a bachelor&#8217;s degree
in Information Technology at Beijing University of Aeronautics and Astronautics in 2005.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-indent: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Dr.
Wang-chan Wong</i></b> has served as our director since March 2024. Dr. Wang-chan Wong has been serving as the IP consultant to Lucas
GC Limited (HK) since August 2020. He has also served as the founder, ex-CEO, chairman, and director of KBQuest Group, a global IT service
provider with offices in Hong Kong, Shanghai and the U.S. He was a technical advisor to Pacific Software Inc., a Canadian company listed
on OTC, focusing on Blockchain-as-a-Service platform to support international trade, and Wearable Health Solutions, another OTC listed
company focusing on healthcare wearable devices and monitoring services. He was an advisor to California Institute of Food and Agricultural
Research at the University of California Davis from 2014 to 2019. He served as an Executive Director of Asia Commercial Holdings, a public
company listed in the Hong Kong Stock Exchange from 2001 to 2005. He also served on the board of ACT 360, a public company listed in
the TSX Venture Toronto from 2005 to 2012. Dr. Wong is a tenured professor of computer science and a tenured professor of information
systems at California State University with over 35 years of teaching and academic research in Computer Science and in Information Systems.
He has published 45 papers in prestigious journals and presented many of them in international conferences. He holds 11 U.S. patents
and six Chinese patents. Dr. Wong received his bachelor&#8217;s degree of Business Administration (with honor) from the Chinese University
of Hong Kong, and his master&#8217;s degree in Business and master&#8217;s degree in Computer Science and Ph.D. in Computer Science from
University of California at Irvine.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Mr.
Jeremy Wegerer </i></b>has been our independent director since 2022. Mr. Wegerer is a certified public account with more than ten years
of financial accounting experience in China and the U.S. Before joining us, Mr. Wegerer spent 15 years working as a pioneer in digital
education and PaaS industry. Since 2007, he has been serving as the managing director in Greater China operations of Reallyenglish, a
certified digital education publisher providing English training courseware and services in the cloud to markets worldwide. From 2006
to 2007, he also worked as the business development director in Bleum Software Development Corp., which is a certified provider of software
services specializing in dedicated offshore development centers. From 2002 to 2003, Mr. Wegerer worked as the vice president on China
operations in KBQuest Group, Inc, a U.S. based IT service provider. He also worked as the director of the product development from 2000
to 2001 and deputy general manager from 2000 to 2000 of Tianjin branch, respectively, in Meetworldtrade, a leading online B2B trading
company based in Shanghai. He served as an accountant in Copyright, Inc. from 1995 to 1997, an accounting analyst in Tran Union from
1994 to 1995, and a senior accountant in PSI, Inc. from 1992 to 1994. Mr. Wegerer has also been actively involved in charitable activities
with a focus on public health and education. Mr. Wegerer received a bachelor&#8217;s degree in Accounting at Northern Illinois University
in 1992. Mr. Wegerer also received a master&#8217;s degree in Classical Chinese Literature at University of Colorado at Boulder in 2006.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Mr.
Stanley Ho</i></b> has served as our independent director since March 2024. Mr. Ho has served as the vice president of Nextech Electronics
Ltd. from 2010 to present. Prior to joining Nextech, he has served as a director of channel operation in Netprinciples Software from
2001 to 2009 and as a business development manager in Digital Ventures Asia from 1999 to 2001. From 1994 to 1999, Mr. Ho served as a
sales engineer in Skynet Electronics. He received his master&#8217;s degree in Civil Engineering in 1993 from University of California,
Los Angeles and his bachelor&#8217;s degree in Civil Engineering in 1991 from University of California, Irvine.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Dr.
Michael Carter</i></b> has served as our independent director since March 2024. Dr. Carter has decades of experience in designing and
developing learning solutions based on emerging technologies, particularly those involving games. He directed education research in Apple&#8217;s
advanced technology group, produced Oxford, Stanford and Yale&#8217;s online offerings to their alumni, and edited and published research
on digital media and <span style="background-color: white">learning with the MIT Press. Dr. Carter has designed and produced learning
games about ecology, conservation, and endangered species and a complete online developmental mathematics curriculum for the Hewlett
and Gates Foundations. He led the design of games for victims of traumatic brain injury for the Program in Rehabilitation Neuroscience
at UCSF/Berkeley and created lessons in Python for Yurok middle schoolers. From 2015 to present, Dr. Carter has been serving as the co-founder
and director of Textgenome.org, a non-profit literacy initiative that helps over five million students master key vocabulary on every
school day in partnership with Gates Ventures and Readworks.org. Dr. Carter served as a director of special projects of Monterey Institute
for Technology and Education from 2006 to 2009. From 1983 to 1993, he served as director of education research and advanced technology
group of Apple Computer, Inc. and served as a special advisor to Steve Jobs. From 1988 to 1991, he worked as a consulting associate professor
at Stanford University School of Education. He worked as the director of instruction and research information systems of Stanford University
from 1980 to 1989 and as the assistant professor of history at Dartmouth College from 1973 to 1980. Dr. Carter received his bachelor&#8217;s
degree of History in 1968, master&#8217;s degree of History in 1971 and doctoral degree of History in 1974, all from Stanford University.</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Board
Diversity</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 50%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Country
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<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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the year ended December 31, 2023, we paid an aggregate of approximately RMB1.0 million (US$0.1 million) in cash and benefits to our directors
and executive officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive
officers and directors. Our PRC subsidiaries are required by law to make contributions equal to certain percentages of each employee&#8217;s
salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident
fund.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><b>Employment Agreements
and Indemnification Agreements</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">We have
entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed
for a specified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts
of the executive officer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest
acts to our detriment, or misconduct or a failure to perform agreed duties. We may also terminate an executive officer&#8217;s employment
without cause upon advance written notice. In such case of termination by us, we will provide severance payments to the executive officer
as expressly required by applicable law of the jurisdiction where the executive officer is based. The executive officer may resign at
any time with an advance written notice.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">Each
executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence
and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable
law, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective
clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive,
develop or reduce to practice during the executive officer&#8217;s employment with us and to assign all right, title and interest in them
to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">In addition,
each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment
and typically for two years following the last date of employment. Specifically, each executive officer has agreed not to (i) approach
our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity
as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with
these persons or entities; (ii) assume employment with or provide services to any of our competitors, or engage, whether as principal,
partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seek directly or indirectly, to solicit
the services of any of our employees who is employed by us on or after the date of the executive officer&#8217;s termination, or in the
year preceding such termination, without our express consent.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt; background-color: white">We have
also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify
our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made
by reason of their being a director or officer of our Company.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Clawback
Policy</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
April 2024,  we adopted a clawback policy in compliance with the SEC rules and the Nasdaq Stock Market listing standards to recover any
excess incentive-based compensation from current and former executive officers after an accounting restatement. See Exhibit 97.1.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Board
of Directors</b></span></p>

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board of directors consists of five directors. A director is not required to hold any shares in our company to qualify to serve as a
director. A director may vote with respect to any contract, proposed contract, or arrangement in which he or she is materially
interested <span style="background-color: white">subject to the </span>Nasdaq Stock Market Listing R<span style="background-color: white">ules
and disqualification by the chairperson of the relevant board meeting</span>. The directors may exercise all the powers of the company to borrow money, mortgage or charge its assets, property and
uncalled capital and issue debentures or other securities whenever money is borrowed or as security for any obligation of the
company or of any third party.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Committees
of the Board of Directors</b></span></p>

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have established an audit committee, a compensation committee and a nominating and corporate governance committee under the board of
directors. We have adopted a charter for each of the three committees. Each committee&#8217;s members and functions are described below.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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Committee</i>. </b>Our audit committee consists of Jeremy Wegerer, Stanley Ho, and Michael Carter, and is chaired by Jeremy Wegerer.
Jeremy Wegerer, Stanley Ho, and Michael Carter satisfy the &#8220;independence&#8221; requirements of Rule 5605(c)(2) of the Listing
Rules of the Nasdaq and meet the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended. We have
determined that Jeremy Wegerer qualifies as an &#8220;audit committee financial expert.&#8221; The audit committee oversees our accounting
and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for,
among other things:</span></p>

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services permitted to be performed by the independent registered public accounting firm;</span></td></tr>

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<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Compensation
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Stanley Ho, Jeremy Wegerer and Michael Carter satisfy the &#8220;independence&#8221; requirements of Rule 5605(a)(2) of the Listing Rules
of the Nasdaq. The compensation committee assists the board of directors in reviewing and approving the compensation structure, including
all forms of compensation, relating to our directors and executive officers. Our executive officers may not be present at any committee
meeting during which their compensation is deliberated upon. The compensation committee is responsible for, among other things:</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

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requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq. The nominating and corporate governance committee assists the board
of directors in selecting individuals qualified to become our directors and in determining the composition of the board of directors
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<tr style="font: 10pt Times New Roman, Times, Serif">
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    skills, experience and availability of service to us;</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">selecting and recommending
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Duties
of Directors</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Directors
and officers generally owe fiduciary duties to our Company, and not to our Company&#8217;s individual shareholders. Our shareholders
may not have a direct cause of action against our directors. Under Cayman Islands law, our directors have a fiduciary duty to act
honestly, in good faith and with a view to our best interests. Our directors also owe to our Company a duty to act with skill and
care. It was previously considered that a director needs not exhibit in the performance of his duties a greater degree of skill than
may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved
towards an objective standard with regard to the required skill and care and these authorities are likely to <span style="background-color: white">be
followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our <span style="background-color: white">amended
and restated </span> memorandum and articles of association, as amended and restated from time to time, and the rights vested
thereunder in the holders of the shares. Our Company has the right to seek damages if a duty owed by our directors is
breached.</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Terms
of Directors and Officers</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors has the power from time to time and at any time to appoint any person as a director to fill a casual vacancy on the
board or as an addition to the existing board. Our directors are not subject to a term of office and will hold their offices until such
time as they are removed from office by the affirmative vote of a simple majority of the other directors present and voting at a board
meeting. In addition, the office of any of our directors shall be vacated if the director (a) becomes bankrupt or makes any arrangement
or composition with his creditors; (b) dies or is found to be or becomes of unsound mind; (c) gives notice in writing to our company
that he or she resigns the office of director; (d) without special leave of absence from the board of directors, is absent from meetings
of the board of directors for three consecutive meetings and the board of directors resolves that his or her office be vacated; or (e)
is removed from office pursuant to our amended and restated memorandum and articles of association. An appointment of a director
may be on terms that the director shall automatically retire from office (unless he or she has sooner vacated office) at the next or
a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between the director
and us, if any; but no such term shall be implied in the absence of express provision.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
officers are elected by and serve at the discretion of the board of directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Employees</span></b></span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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of December 31, 2023, we had 361 full time employees, permanent and contractors included, all of whom are based in China. The following
table sets forth the numbers of our employees categorized by function as of December 31, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="width: 64%; text-align: left">Research and Development</td><td style="width: 2%">&#160;</td>
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    <td style="text-align: left">General Administration</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">21</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5.8</td><td style="text-align: left">%</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
required by regulations in China, we participate in various government statutory social security plans, including a pension
contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan, a maternity
insurance plan and a housing provident fund for permanent employees. We are required under PRC law to contribute to social security
plans at specified percentages of the salaries, bonuses and certain allowances of our permanent employees up to a maximum amount
specified by the local government from time to time. For risk in relation to our contribution for employee social security plans,
see &#8220;Item 3. Key Information &#8212; D. Risk Factors &#8212; Risks Related to Doing Business in China &#8212; Our insurance
coverage may not be adequate, which could expose us to significant costs and business disruptions.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
typically enter into standard employment and confidentiality agreements with our senior management and core personnel. These contracts
include a standard non-compete covenant that prohibits the employee from competing with us, directly or indirectly, during his or her
employment and for 12 months after the termination of the employment, provided that we pay compensation equal to half a month&#8217;s
salary.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
maintain a good working relationship with our employees, and we have not experienced any material labor disputes. None of our employees
are represented by labor unions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Share Ownership</span></b></span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth information concerning the beneficial ownership of our ordinary shares as of the date of this annual report
by:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Beneficial
ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of ordinary shares beneficially
owned by a person and the percentage ownership of that person, we have included ordinary shares that the person has the right to acquire
within 60 days, including through the exercise of any option, warrant, or other right or the conversion of any other security. These
ordinary shares, however, are not included in the computation of the percentage ownership of any other person.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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percentage of beneficial ownership of our ordinary is based on 79,563,300 ordinary shares issued and outstanding as of the date of this
annual report. See &#8220;&#8212; B. Compensation&#8221; of this subsection for more details on options and restricted shares granted
to our directors and executive officers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Jeremy Wegerer</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">All Directors and Executive Officers as a Group</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">HTL Lucky Holding Limited <sup>(1)</sup></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">61.9</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">51job, Inc. <sup>(2)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">14,498,220</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">18.2</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">MLT Holding Limited <sup>(3)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">6,418,580</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notes:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For each person and group included in this table, percentage
    ownership is calculated by dividing the number of shares beneficially owned by such person or group by 79,563,300, being the number
    of ordinary shares as of the date of this annual report.</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">**</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For each person or group included in this column, percentage
    of total voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of
    all of our ordinary shares as a single class.</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8224;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Except as otherwise indicated below, the business address
    of our directors and executive officers is Room 5A01, 4th Floor, Air China Building, Xiaoyun Road, Sanyuanqiao, Chaoyang District,
    Beijing 100027, China.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Represents 49,219,966 ordinary shares held by HTL Lucky
    Holding Limited, a British Virgin Islands company, which is a wholly owned subsidiary of HTL Star Holding Limited. HTL Star Holding
    Limited is wholly owned by Mr. Howard Lee. The registered address of HTL Lucky Holding Limited is ICS Corporate Services (BVI) Limited,
    Sea Meadow House, P.O. Box 116, Road Town, Tortola, British Virgin Islands. HTL Lucky Holding Limited acquired 29,284,260 ordinary
    shares from the Company on August 15, 2022 and acquired 19,935,706 ordinary shares from WXS Holding Limited on November 7, 2022.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Represents 14,498,220 ordinary shares held by 51job,
    Inc., a Cayman Islands company. The only natural person who has over 5% voting or dispositive power with respect to the shares held
    by 51job, Inc. is Mr. Rick Yan, who indirectly owns less than 10% in our Company. The registered address of 51job, Inc. is Ogier
    Global (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman, Cayman Islands KY1-9009.</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Represents 6,418,580 ordinary shares held by MLT Holding
    Limited, a British Virgin Islands company. MLT Holding Limited is wholly owned by Ms. Luting Meng. The registered address of MLT
    Holding Limited is ICS Corporate Services (BVI) Limited, Sea Meadow House, P.O. Box 116, Road Town, Tortola, British Virgin Islands.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None
of our shareholders has informed us that it is affiliated with a registered broker-dealer or is in the business of underwriting securities.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
our knowledge, except as disclosed elsewhere in this annual report, we are not directly or indirectly owned or controlled by another
corporation, any foreign government or any other natural or legal person, severally or jointly.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>F.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Disclosure of a Registrant&#8217;s Action to
    Recover Erroneously Awarded Compensation</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_004"></span>ITEM
7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Major Shareholders</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Please
refer to &#8220;Item 6. Directors, Senior Management and Employees&#8212;E. Share Ownership.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Related Party Transactions</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Employment
Agreements and Indemnification Agreements</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Item 6. Directors, Senior Management and Employees &#8212; B. Compensation &#8212; Employment Agreements and Indemnification Agreements.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
Related Party Transactions</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company had the following significant related party transactions for the years ended December 31, 2022 and 2023:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the years ended December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
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    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify; text-indent: -17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b>&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 35.85pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 35.85pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Balances
with related parties:</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Balances
with related parties consisted of the following for the periods indicated:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Total</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
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  </table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
    of December 31, 2022 and 2023, amounts due to Beagledata consisted of technology services fees payable of RMB2,120 and RMB2,120,
    respectively, and contract liabilities of nil and RMB359, respectively.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 35.85pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amounts
    due to Mr. Howard Lee represented expensed paid on behalf of the Company.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Interests of Experts and Counsel</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_005"></span>ITEM
8. FINANCIAL INFORMATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Consolidated Statements and Other Financial Information</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have appended consolidated financial statements filed as part of this annual report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Legal
Proceedings</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than disclosed in this annual report, we are currently not a party to any material legal or administrative proceedings. We may from time
to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or
any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our
resources, including our management&#8217;s time and attention.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Dividend
Policy</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors has discretion on whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely
that our Company may only pay dividends out of profits or share premium, and provided always that we are able to pay our debts as they
become due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency and amount
will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions
and other factors that the board of directors may deem relevant.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
inception, we have not declared or paid any dividends on our ordinary shares. We do not have any present plan to declare any cash dividends
on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future
earnings to operate and grow our business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 40pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiaries in China for our cash
requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC
subsidiaries to pay dividends to us. For example, under PRC laws and regulations, we are permitted to use the net proceeds of our
subsequent offerings to provide funding to our PRC subsidiaries only through loans or capital contributions. Subject to satisfaction
of necessary registrations with government authorities and required governmental approvals, we may extend inter-company loans or
make additional capital contributions to our PRC subsidiaries. We cannot assure you that we will be able to make such registrations
or obtain such approvals in a timely manner, or at all. See &#8220;Item 3. Key Information &#8212; D. Risk Factors &#8212; Risks
Related to Doing Business in China &#8212; PRC regulation of loans to and direct investment in PRC entities by offshore holding
companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our subsequent
offerings to make loans or additional capital contributions to our PRC subsidiaries in China, which could materially and adversely
affect our liquidity and our ability to fund and expand our business.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Significant Changes</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Except
as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated
financial statements included in this annual report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_006"></span>ITEM
9. THE OFFER AND LISTING</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Offering and Listing Details</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;&#8212;Markets.&#8221; of this subsection.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Plan of Distribution</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Markets</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
ordinary shares have been listed on the Nasdaq Capital Market since March 5, 2024 under the symbol &#8220;LGCL.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Selling Shareholders</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Dilution</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>F.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Expenses of the Issue</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_007"></span>ITEM
10. ADDITIONAL INFORMATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Share Capital</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Memorandum and Articles of Association </span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a Cayman Islands exempted company and our affairs are governed by our amended and restated memorandum which took effect <span style="background-color: white">immediately
prior to the completion of our initial public offering</span> and articles of association and the Companies Act (As Revised) of the
Cayman Islands, referred to as the Companies Act below. The following are summaries of material provisions of our amended and
restated memorandum and articles of association, as well as the Companies Act insofar as they relate to the material
terms of our ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Registered
Office and Objects</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
registered office in the Cayman Islands is at ICS Corporate Services (Cayman) Limited, 3-212 Governors Square, 23 Lime Tree Bay Avenue,
P.O. Box 30746, Seven Mile Beach, Grand Cayman KY1-1203, Cayman Islands.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
our amended and restated memorandum and articles of association, the objects of our company are unrestricted, and we have full power
and authority to carry out any object not prohibited by the law of the Cayman Islands.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Board
of Directors</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Item 6. Directors, Senior Management and Employees &#8212; C. Board Practices.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Ordinary
Shares</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>General.
</i></b>All of our issued and outstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares
are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Transfer
Agent and Registrar.</i></b> Our transfer agent and registrar for our ordinary shares is Vstock Transfer, LLC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Dividends. </i></b>The
holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors subject to the Companies
Act and to our <span style="background-color: white">amended and restated</span> memorandum and articles of association. In
addition, our shareholders may declare dividends by ordinary resolution, but no dividend shall exceed the amount recommended by our
directors. Under the laws of the Cayman Islands, our company may pay a dividend out of either profit or share premium account;
provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they
fall due in the ordinary course of business.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><b><i>Voting
Rights. </i></b>Holders of our ordinary shares shall, at all times, vote together as one class on all matters submitted to a vote by
our shareholders at any general meeting of our company. Each ordinary share shall be entitled to one (1) vote on all matters subject
to a vote at general meetings of our company. At any general meeting a resolution put to the vote of the meeting shall be decided on
a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by the chairman of the meeting
or any shareholder present in person or by proxy.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>General
meetings of shareholders.</i></b> A quorum required for a meeting of shareholders consists of at least one or more shareholders
present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative, who hold in
aggregate a majority of the votes attaching to all issued and outstanding shares of our company. We are not obliged by the Companies
Act to call shareholders&#8217; annual general meetings. Our <span style="background-color: white">amended and
restated</span> memorandum and articles of association provide that we may (but are not obliged to) in each year hold a general
meeting as our annual general meeting in which case we shall specify the meeting as such in the notices calling it, and the annual
general meeting shall be held at such time and place as may be determined by our director. Extraordinary general meetings may be
held at such times as may be determined by our board of directors and may be convened by a majority of our board of directors or the
chairman of the board on its/his own initiative or on a requisition by shareholders holding in the aggregate 10% of <span style="background-color: white">all votes attaching to all issued
and outstanding shares of the Company</span>. Advance notice of at least seven (7) calendar days is required for the convening of our annual general meeting and other
shareholders&#8217; meetings. An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple
majority of the votes attaching to the ordinary shares cast in a general meeting, while a special resolution requires the
affirmative vote of no less than two-thirds of the votes attaching to the ordinary shares cast in a general meeting. A special
resolution is required for important matters such as amendments to our memorandum and articles of association and a change of name.
Holders of the ordinary shares may effect certain changes by ordinary resolution, including increasing the amount of our authorized
share capital, consolidating and dividing all or any of our share capital into shares of larger amount than our existing shares, and canceling any unissued shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Transfer
of Shares. </i></b>Subject to the restrictions of our amended and restated memorandum and articles of association set out below,
as applicable, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual
or <span style="background-color: white">common</span> form or any other form approved by our board of directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors may, in its sole discretion, decline to register any transfer of any ordinary share which is not fully paid up or
on which we have a lien. Our directors may also decline to register any transfer of any ordinary share unless (a) the instrument of transfer
is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of
directors may reasonably require to show the right of the transferor to make the transfer; (b) the instrument of transfer is in respect
of only one Class of Shares; (c) the instrument of transfer is properly stamped, if required; (d) in the case of a transfer to joint
holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; or (e) a fee of such maximum
sum as the Nasdaq may determine to be payable, or such lesser sum as our board of directors may from time to time require, is paid to
us in respect thereof.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
our directors refuse to register a transfer they shall, within three calendar months after the date on which the instrument of transfer
was lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, after compliance
with any notice required of the Nasdaq, be suspended and the register closed at such times and for such periods as our board of directors
may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed
for more than 30 calendar days in any calendar year.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Liquidation.
</i></b>On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of shares), if the assets
available for distribution among the holders of ordinary shares shall be more than sufficient to repay the whole of the share capital,
the surplus shall be distributed among the holders of the ordinary shares in proportion to the par value of the shares held by them subject
to a deduction from those shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise.
If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets shall be distributed so that,
as nearly as may be, the losses are borne by our shareholders in proportion to the par value of the shares held by them.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Calls
on Shares and Forfeiture of Shares. </i></b>Our board of directors may from time to time make calls upon shareholders for any amounts
unpaid on their shares in a notice served to such shareholders at least 14 calendar days prior to the specified time and place of payment.
The shares that have been called upon and remain unpaid on the specified time are subject to forfeiture.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Redemption
of Shares</i>. </b>Subject to the provisions of the Companies Act, we may issue shares on terms that are subject to redemption, at
our option or at the option of the holders, on such terms and in such manner, as may be determined before the issue of such shares,
either by our board of directors or by a special resolution of our shareholders. Our company may also repurchase any of our shares
(including any redeemable shares) provided that the manner and terms of such repurchase have been approved by our board of directors
or by ordinary resolution of our shareholders, or are otherwise authorized by our <span style="background-color: white">amended
and restated</span> memorandum and articles of association. Under the Companies Act, the redemption or repurchase of any share may
be paid out of our company&#8217;s profits or out of the proceeds of a fresh issue of shares made for the purpose of such redemption
or repurchase, or out of capital (including share premium account and capital redemption reserve) if the company can, immediately
following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no
such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there
being no shares outstanding, or (c) if the company has commenced liquidation. In addition, our company may accept the surrender of
any fully paid share for no consideration.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Variations
of Rights of Shares. </i></b>Whenever the capital of our company is divided into different classes of shares, the rights attached to
any such class may, subject to any rights or restrictions for the time being attached to any class, only be materially adversely
varied either with the written consent of the holders of a simple majority of the issued shares of that class or with the sanction of
a resolution passed at a separate meeting of the holders of the shares of that class by the holders of a simple majority of the issued
shares of that class.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Inspection
of Books and Records. </i></b>Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or
obtain copies of our list of shareholders or our corporate records (other than our <span style="background-color: white">amended
and restated</span> memorandum and articles of association, special resolutions of our shareholders, and our register of mortgages
and charges).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Changes
in Capital. </i></b>Our company may from time to time by ordinary resolution:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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    our existing shares, or any of them into shares of an amount smaller than that fixed by our <span style="background-color: white">amended
    and restated</span> memorandum of association, provided that in the subdivision the proportion between the amount paid and the
    amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is
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<tr style="font: 10pt Times New Roman, Times, Serif">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the Companies Act and our amended and restated memorandum and articles of association we may, by special resolution, reduce
our share capital and any capital redemption reserve in any manner authorized by the Companies Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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of Additional Shares. </i></b>Our <span style="background-color: white">amended and restated</span> memorandum and articles
of association authorizes our board of directors to issue additional ordinary shares from time to time as our board of directors
shall determine, to the extent there are available authorized but unissued shares, without the need for any approval or consent from
our shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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of directors, without the need for any approval or consent from our shareholders, to establish from time to time one or more series
of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series,
including:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<tr style="font: 10pt Times New Roman, Times, Serif">
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
issuance of preferred shares may be used as an anti-takeover device without further action on the part of the shareholders. Issuance
of these preferred shares may dilute the voting power of holders of ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Anti-Takeover
Provisions. </i></b>Some provisions of our <span style="background-color: white">amended and restated</span> memorandum and
articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may
consider favorable, including provisions that:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">authorize our board of
    directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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    to requisition and convene general meetings of shareholders.</span></td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our <span style="background-color: white">amended
and restated</span> memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the
best interests of our company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Exempted
Company. </i></b>We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary
resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside
of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the
same as for an ordinary company except that an exempted company:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
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<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
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<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">may
    register as a segregated portfolio company.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Limited
liability&#8221; means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the
company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper
purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Register
of Members</i>. </b>Under the Companies Act, we must keep a register of members and there should be entered therein:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    names and addresses of our members, together with a statement of the shares held by each member, and such statement shall confirm (i) the amount paid or agreed to be
    considered as paid, on the shares of each member, (ii) the number and category of shares held by a member, and (iii) whether each relevant category of shares held by a member carries voting
    rights under the articles of association of the company, and if so, whether such voting rights are conditional;</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the date on which the name
    of any person was entered on the register as a member; and</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the date on which any person
    ceased to be a member.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out therein (i.e. the register
of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register
of members is deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members.
We will perform the procedure necessary to immediately update the register of members to record and give effect to any issuance of shares
by us. Once our register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal
title to the shares set against their name.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
the name of any person is incorrectly entered in or omitted from our register of members, or if there is any default or unnecessary delay
in entering on the register the fact of any person having ceased to be a member of our company, the person or member aggrieved (or any
member of our company or our company itself) may apply to the Grand Court of the Cayman Islands for an order that the register be rectified,
and the Court may either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification
of the register.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Differences in Corporate Law</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Companies Act is modeled after companies acts of England and Wales but does not follow recent United Kingdom statutory enactments.
In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is
a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies
incorporated in the State of Delaware.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Mergers
and Similar Arrangements</i>. </b>The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman
Islands companies and non-Cayman Islands companies. For these purposes, (a) &#8220;merger&#8221; means the merging of two or more constituent
companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company and (b) a
&#8220;consolidation&#8221; means the combination of two or more constituent companies into a consolidated company and the vesting of
the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation,
the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (i)
a special resolution of the shareholders of each constituent company and (ii) such other authorization, if any, as may be specified in
such constituent company&#8217;s articles of association. The plan of merger or consolidation must be filed with the Registrar of Companies
together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each
constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors
of each constituent company and published in the <span style="background-color: white">Cayman Islands Gazette. Dissenting shareholders
have the right to be paid the fair value of their shares (which, if not agreed between the parties, will be determined by the Cayman
Islands court) if they follow the required procedures, subject to certain exceptions. Court approval is not required for a merger or
consolidation effected in compliance with these statutory procedures.</span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of
arrangement between a company and its members (or any class of them), or between the company and its creditors (or any class
of them), provided that the arrangement is approved by (a) 75% in value of the shareholders or class of shareholders, as the
case may be, or (b) a majority in number representing 75% in value of the creditors or each class of creditors, as the case may be,
with whom the arrangement is to be made, that are, in each case, present and voting either in person or by proxy at a meeting, or
meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand
Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction
ought not to be approved, the Grand Court of the Cayman Islands can be expected to approve the arrangement if it determines that:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the statutory provisions
    as to the required majority vote have been met;</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the shareholders have been
    fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to
    promote interests adverse to those of the class;</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the arrangement is such
    that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the arrangement is not
    one that would more properly be sanctioned under some other provision of the Companies Act.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 89 -->
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    <div style="break-before: page; margin-top: 6pt; margin-bottom: 0pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Companies Act also contains a statutory power of compulsory acquisition which may facilitate the &#8220;squeeze out&#8221; of dissentient
minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90% of the shares affected within four
months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the
remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the
Cayman Islands, but it is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad
faith or collusion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
an arrangement and reconstruction by way of scheme of arrangement is thus approved, or if a tender offer is made and accepted, a
dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover offer may apply to the
Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion to make,
which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive
payment in cash for the judicially determined value of the shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Shareholders&#8217;
Suits. </i></b>In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought
by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the
Cayman Islands, the Cayman Islands courts can be expected to apply and follow common law principles (namely the rule in Foss v.
Harbottle and the exceptions thereto) that permit a minority shareholder to commence a class action against the company or a
derivative action in the name of the company to challenge certain acts, including the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a company acts or proposes
    to act illegally or ultra vires;</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the act complained of,
    although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained;
    and</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Indemnification
of Directors and Executive Officers and Limitation of Liability.</i></b> Cayman Islands law does not limit the extent to which a company&#8217;s
memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision
may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the
consequences of committing a crime.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our <span style="background-color: white">amended and restated</span> memorandum and articles of association permit
indemnification of officers and directors for actions, proceedings, costs, charges, expenses, losses, damages or liabilities
incurred in their capacities as such other than by reason of the dishonesty, fraud or willful default of such directors or officers,
in or about the conduct of our company&#8217;s business or affairs (including as a result of any mistake of judgment) or in the
execution or discharge of such person&#8217;s duties, powers, authorities or discretions, including without prejudice to the
generality of the foregoing, any costs, expenses, losses or liabilities incurred by such Indemnified Person in defending (whether
successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or
elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware
corporation. In addition, we intend to enter into indemnification agreements with our directors and senior executive officers that
will provide such persons with additional indemnification beyond that provided in our <span style="background-color: white">amended
and restated</span> memorandum and articles of association.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us under the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Directors&#8217;
Fiduciary Duties</i>. </b>Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation
and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director
act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director
must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction.
The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation.
He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and
mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer
or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been
made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation.
However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning
a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value
to the corporation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company
and therefore it is considered that he owes the following duties to the company&#8212;a duty to act bona fide in the best interests of
the company, a duty not to make a profit based on his or her position as director (unless the company permits him to do so) and a duty
not to put himself in a position where the interests of the company conflict with his or her personal interest or his or her duty to
a third party. A director of a Cayman Islands company owes to the company a duty to exercise the skill they actually possess and such
care and diligence that a reasonably prudent person would exercise in comparable circumstances. It was previously considered that a director
needs not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of
his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to
the required skill and care and these authorities are likely to be followed in the Cayman Islands.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Shareholder
Action by Written Consent. </i></b>Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders
to act by written consent by amendment to its certificate of incorporation. Cayman Islands law and our amended and restated articles
of association provide that shareholders may approve corporate matters by way of a unanimous written resolution signed by or on
behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being
held.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Shareholder
Proposals. </i></b>Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting
of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board
of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special
meetings.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders
with any right to put any proposal before a general meeting. However, these rights may be provided in a company&#8217;s articles of
association. Our amended and restated articles of association allow our shareholders holding in the aggregate 10% of all votes
attaching to all issued and outstanding shares of our company to requisition an extraordinary general meeting of the shareholders,
in which case the directors are obliged to call such meeting and to put the resolutions so requisitioned to a vote at such meeting.
However, our amended and restated articles do not provide our shareholders with any right to put any proposals before annual general
meetings or extraordinary general meetings not called by such shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
an exempted Cayman company, we are not obliged by the Companies Act to call shareholders&#8217; annual general meetings. Our amended and restated articles
of association provides that we may (but shall not be obliged to) in each year to hold a general meeting as our annual general meeting,
and to specify the meeting as such in the notice calling it.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Cumulative
Voting</i>. </b>Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the
corporation&#8217;s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation
of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder
is entitled on a single director, which increases the shareholder&#8217;s voting power with respect to electing such director. There
are no prohibitions in relation to cumulative voting under Cayman Islands law, but our amended and restated articles of association do
not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders
of a Delaware corporation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Removal
of Directors. </i></b>Under the Delaware General Corporation Law, a director of a corporation with a classified board of directors may
be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation
provides otherwise. Under our amended and restated articles of association, directors may be removed by the affirmative vote of a simple majority of
the other directors present and voting at a board meeting. An appointment of a director may be on terms that the director shall automatically
retire from office (unless he or she has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified
event or after any specified period in a written agreement between the director and us. In addition, a director&#8217;s office shall
be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found to
be or becomes of unsound mind; (iii) resigns his office by notice in writing; (iv) without special leave of absence from our board, is
absent from meetings of our board for three consecutive meetings and our board resolves that his office be vacated; or (v) is removed
from office pursuant to any other provision of our amended and restated articles of association.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Transactions
with Interested Shareholders. </i></b>The Delaware General Corporation Law contains a business combination statute applicable to Delaware
corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate
of incorporation, it is prohibited from engaging in certain business combinations with an &#8220;interested shareholder&#8221; for three
years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group
who or which owns or owned 15% or more of the target&#8217;s outstanding voting stock within the past three years. This has the effect
of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated
equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder,
the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested
shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with
the target&#8217;s board of directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cayman
Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business
combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders,
it does provide that such transactions must be entered into bona fide in the best interests of the company for a proper corporate purpose
and not with the effect of constituting a fraud on the minority shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Restructuring.
</i></b>A company may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on the
grounds that the company:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 24.5pt; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)
is or is likely to become unable to pay its debts; and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 24.5pt; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 24.5pt; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)
intends to present a compromise or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act, the law of
a foreign country or by way of a consensual restructuring.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 24.5pt; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Grand Court may, among other things, make an order appointing a restructuring officer upon hearing of such petition, and any
restructuring officer so appointed shall have such powers and carry out only such functions as the court may order. At any time (i)
after the presentation of a petition for the appointment of a restructuring officer but before an order for the appointment of a
restructuring officer has been made, and (ii) when an order for the appointment of a restructuring officer is made, until such order
has been discharged, no suit, action or other proceedings (other than criminal proceedings) shall be proceeded with or commenced
against the company, no resolution to wind up the company shall be passed, and no winding up petition may be presented against the
company, except with the leave of the court and subject to such terms as the court may impose. However, notwithstanding the presentation of a petition for the appointment of a
restructuring officer or the appointment of a restructuring officer, a creditor who has security over the whole or part of the
assets of the company is entitled to enforce the security without the leave of the court and without reference to the restructuring
officer appointed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Dissolution;
Winding up. </i></b>Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution
must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the
board of directors may it be approved by a simple majority of the corporation&#8217;s outstanding shares. Delaware law allows a Delaware
corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated
by the board of directors.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Companies Act, a Cayman Islands company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution
of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has
authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable
to do so.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Variation
of Rights of Shares. </i></b>Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with
the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise.
Under our <span style="background-color: white">amended and restated</span> memorandum and articles of association, and as
permitted by Cayman Islands law, whenever our share capital is divided into more than one class of shares, we may materially adversely
vary the rights attached to any class either with the written consent of the holders of at least a simple majority of the issued
shares of that class or with the sanction of a resolution passed at a separate meeting of the holders of the shares of that class by
the holders of a simple majority of the issued shares of that class.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Amendment
of Governing Documents. </i></b>Under the Delaware General Corporation Law, a corporation&#8217;s governing documents may be amended
with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides
otherwise. Under Cayman Islands law, our <span style="background-color: white">amended and restated</span> memorandum and
articles of association may only be amended by special resolution of our shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Inspection
of Books and Records. </i></b>Under the Delaware General Corporation Law, any shareholder of a corporation may for any proper purpose
inspect or make copies of the corporation&#8217;s stock ledger, list of shareholders and other books and records.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="background-color: white">Holders of our shares will have no
general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records (save for our
memorandum and articles of association, our register of mortgages and charges and special resolutions of our shareholders).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Anti-takeover
Provisions in Our Memorandum and Articles of Association. </i></b>Some provisions of our amended and restated memorandum and articles of association
may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including
a provision that authorizes our board of directors to issue preference shares in one or more series and to designate the price, rights,
preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Such
shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management
more difficult. If our board of directors decides to issue these preference shares, the price of our ordinary shares may fall and the
voting and other rights of the holders of our ordinary shares may be materially and adversely affected.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our <span style="background-color: white">amended
and restated</span> memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the
best interests of our company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Rights
of Non-resident or Foreign Shareholders. </i></b>There are no limitations imposed by our <span style="background-color: white">amended
and restated</span> memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise
voting rights on our shares. In addition, there are no provisions in our <span style="background-color: white">amended and
restated</span> memorandum and articles of association that require our company to disclose shareholder ownership above any
particular ownership threshold.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Material Contracts</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than in the ordinary course of our business and other than those described under this item, in &#8220;Item 7. Major Shareholders and Related Party Transactions
&#8212; B. Related Party Transactions,&#8221; or elsewhere in this annual report, we have not entered into any material contract during
the two years immediately preceding the date of this annual report.</span></p>

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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Exchange Controls</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Cayman Islands currently has no exchange control restrictions. See also &#8220;Item 4. Information on the Company &#8212; B.
Business Overview &#8212; Regulations &#8212; Regulations on Foreign Currency Exchange.&#8221;</span></p>

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<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Taxation</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following summary of the material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our ordinary shares
is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change.
This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences
under U.S. state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands, PRC and the United States.
To the extent that the discussion relates to matters of Cayman Islands tax law, it represents the opinion of Maples and Calder (Hong
Kong) LLP, our special Cayman Islands counsel.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Cayman
Islands Taxation</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Cayman Islands currently levies no taxes on individuals or corporations based on profits, income, gains or appreciation and there is
no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government
of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within
the jurisdiction or produced before a court of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are
applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman
Islands.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Payments
of dividends and capital in respect of our ordinary shares will not be subject to taxation in the Cayman Islands and no withholding
tax will be required on the payment of a dividend or capital to any holder of our ordinary shares, nor will gains derived from the
disposal of our ordinary shares be subject to Cayman Islands income or corporation tax.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PRC
Taxation</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the EIT Law, which became effective on January 1, 2008 and latest revised in 2018, an enterprise established outside the PRC with &#8220;de
facto management bodies&#8221; within the PRC is considered a &#8220;resident enterprise&#8221; for PRC enterprise income tax purposes
and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. In 2009, the SAT issued SAT Circular 82
(latest revised in 2017), which provides certain specific criteria for determining whether the &#8220;de facto management body&#8221;
of a PRC controlled enterprise that is incorporated offshore is located in China. Further to SAT Circular 82, in 2011, the SAT issued
SAT Bulletin 45 (latest revised in 2018) to provide more guidance on the implementation of SAT Circular 82. In 2014, the SAT issued the
Announcement of the State Administration of Taxation on Issues Concerning the Determination of Resident Enterprises on the Basis of Their
Actual Management Bodies that provides more guidance on the implementation of Circular 82.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered a
PRC resident enterprise by virtue of having its &#8220;de facto management body&#8221; in China and will be subject to PRC enterprise
income tax on its worldwide income only if all of the following conditions are met: (a) the senior management and core management departments
in charge of its daily operations function have their presence mainly in the PRC; (b) its financial and human resources decisions are
subject to determination or approval by persons or bodies in the PRC; (c) its major assets, accounting books, company seals, and minutes
and files of its board and shareholders&#8217; meetings are located or kept in the PRC; and (d) more than half of the enterprise&#8217;s
directors or senior management with voting rights habitually reside in the PRC. Although SAT Circular 82 and SAT Bulletin 45 only apply
to offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups and not those controlled by PRC individuals
or foreigners, the determination criteria set forth therein may reflect the SAT&#8217;s general position on how the term &#8220;de facto
management body&#8221; could be applied in determining the tax resident status of offshore enterprises, regardless of whether they are
controlled by PRC enterprises, individuals or foreigners.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that we do not meet all of the criteria described above. We believe that neither we nor our subsidiaries outside of China are
PRC tax resident enterprises, because neither we nor they are controlled by a PRC enterprise or PRC enterprise group, and because our
records and their records (including the resolutions of the respective boards of directors and the resolutions of shareholders) are maintained
outside the PRC. However, as the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties
remain with respect to the interpretation of the term &#8220;de facto management body&#8221; when applied to our offshore entities, we
may be considered as a resident enterprise and therefore may be subject to PRC enterprise income tax at 25% on our worldwide income.
In addition, if the PRC tax authorities determine that we are a PRC resident enterprise for PRC enterprise income tax purposes, dividends
we pay to non-PRC resident enterprise holders may be subject to PRC withholding tax, and gains realized on the sale or other disposition
of ordinary shares may be subject to PRC tax, at a rate of 10% in the case of non-PRC resident enterprises or 20% in the case of non-PRC
individuals unless a reduced rate is available under an applicable tax treaty, if such dividends or gains are deemed to be from PRC sources.
Any such tax may reduce the returns on your investment in the ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are considered a &#8220;non-resident enterprise&#8221; by the PRC tax authorities, the dividends we receive from our PRC subsidiaries
will be subject to a 10% withholding tax. The EIT Law and its implementation rules also imposes a withholding income tax of 10% on dividends
distributed by a foreign invested enterprise to its immediate holding company outside of China, if such immediate holding company is
considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection
with the establishment or place of such immediate holding company within China, unless such immediate holding company&#8217;s jurisdiction
of incorporation has a tax treaty with China that provides for a different withholding arrangement. Under the Arrangement Between the
PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect
to Taxes on Income, the dividend withholding tax rate may be reduced to 5%, if a Hong Kong resident enterprise that receives a dividend
is considered a non-PRC tax resident enterprise and holds at least 25% of the equity interests in the PRC enterprise distributing the
dividends. However, if the Hong Kong resident enterprise is not considered to be the beneficial owner of such dividends under applicable
PRC tax regulations, such dividends may remain subject to withholding tax at a rate of 10%. Under the Announcement of the State Administration
of Taxation on Issues Concerning &#8220;Beneficial Owners&#8221; in Tax Treaties, some factors are not conducive to the identification
of an applicant as a &#8220;beneficial owner&#8221;, such as its business activities failing to constitute substantive business activities.
Accordingly, Lucas Star Global Limited may be able to enjoy the 5% withholding tax rate for the dividends it receives from its PRC subsidiaries
if it satisfies the relevant conditions under tax rules and regulations.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>U.S.
Federal Income Tax Considerations</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a discussion of the material U.S. federal income tax considerations relevant to the acquisition, ownership, and disposition
of our ordinary shares by U.S. Holders (as defined below) that will hold our ordinary shares as &#8220;capital assets&#8221; (generally,
property held for investment) under the U.S. Internal Revenue Code of 1986, as amended, or the &#8220;Code&#8221;). This discussion is
based upon applicable provisions of the Code, U.S. Treasury regulations promulgated thereunder, pertinent judicial decisions, interpretive
rulings of the U.S. Internal Revenue Service, or the IRS, and such other authorities as we have considered relevant, all of which are
subject to change, possibly with retroactive effect. This discussion does not address all aspects of U.S. federal income taxation that
may be important to particular investors in light of their individual investment circumstances, including investors subject to special
tax and/or reporting rules (for example, certain financial institutions; insurance companies; broker-dealers; pension plans; regulated
investment companies; real estate investment trusts; tax-exempt organizations (including private foundations); holders who are not U.S.
Holders (as defined below); holders who own (directly, indirectly, or constructively) 10% or more of the voting power or value of our
stock; investors that will hold their ordinary shares as part of a straddle, hedge, conversion, constructive sale, or other integrated
transaction for U.S. federal income tax purposes; investors that are traders in securities that have elected the mark-to-market method
of accounting; investors that have a functional currency other than the U.S. dollar), or holders that acquire ordinary shares through
the exercise of options or other convertible instruments or in connection with the provision of services, all of whom may be subject
to tax rules that differ significantly from those discussed below.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, this discussion does not address tax considerations relevant to U.S. Holders under any non-U.S., state or local tax laws, the
Medicare tax on net investment income, the one-percent excise tax on stock repurchases, estate or gift tax, or the alternative minimum
tax. Each U.S. Holder is urged to consult its tax advisors regarding the U.S. federal, state, local, and non-U.S. income and other tax
considerations of an investment in ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
discussion below of U.S. federal income tax consequences applies to you if you are a &#8220;U.S. Holder.&#8221; You are a U.S. Holder
if you are a beneficial owner of our ordinary shares and you are: (i) an individual who is a citizen or resident of the United States
for U.S. federal income tax purposes; (ii) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes,
created in, or organized under the law of any state of the United States, or the District of Columbia; (iii) an estate the income of
which is includible in gross income for U.S. federal income tax purposes regardless of its source; or (iv) a trust (A) the administration
of which is subject to the primary supervision of a U.S. federal or state court and which has one or more U.S. persons who have the authority
to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the
Code.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
you are a partner in a partnership (including any entity or arrangement treated or elects to be treated as a partnership for U.S. federal
income tax purposes) that holds our ordinary shares, your tax treatment generally will depend on your status and the activities of the
partnership (or any such entity or arrangement treated as or elects to be treated as a partnership for U.S. federal income tax purposes).
Partners in a partnership (or any such entity or arrangement treated as or elects to be treated as a partnership for U.S. federal income
tax purposes) holding our ordinary shares should consult their tax advisors regarding the tax consequences of an investment in the ordinary
shares.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Dividends</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the PFIC rules discussed below, any cash distributions (including the amount of any PRC or other tax withheld) paid on our ordinary
shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will generally
be includible in your gross income as dividend income on the day actually or constructively received by you. Because we do not intend
to determine our earnings and profits under U.S. federal income tax principles, any distribution paid will generally be treated as a
dividend for U.S. federal income tax purposes by us. Dividends received by corporations on our ordinary shares may be eligible for the
dividends received deduction allowed to U.S. corporations under the Code.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
non-corporate U.S. Holder generally may be subject to tax at preferential tax rates applicable to &#8220;qualified dividend income,&#8221;
provided that certain conditions are satisfied, including that (1) our stock is readily tradable on an established securities market
in the United States, or, in the event that we are deemed to be a PRC tax resident enterprise under the PRC tax law, we are eligible
for the benefit of the comprehensive United States-PRC income tax treaty, or the &#8220;Treaty&#8221;, (2) we are neither a PFIC nor
treated as such with respect to a U.S. Holder (as discussed below) for the taxable year in which the dividend was paid and the preceding
taxable year, and (3) certain holding period requirements are met. U.S. holders are urged to consult their own tax advisors regarding
the availability of the preferential rate for any dividends paid with respect to our ordinary shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the event that we are deemed to be a PRC tax resident enterprise under PRC tax law, you may be subject to PRC withholding taxes on dividends
paid on our ordinary shares, as described under &#8220;Taxation&#8212; PRC Taxation&#8221;. If we are deemed to be a PRC tax resident
enterprise, you may, however, be eligible for the benefits of the Treaty. If we are eligible for such benefits, dividends we pay on our
ordinary shares may be eligible for the reduced rates of taxation applicable to qualified dividend income, as discussed above.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
U.S. foreign tax credit purposes, dividends generally will be treated as income from foreign sources and generally will constitute &#8220;passive&#8221;
category income. Depending on your particular circumstances, you may be eligible, subject to a number of complex limitations, to claim
a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on our ordinary shares. If you do not
elect to claim a foreign tax credit for foreign tax withheld, you may instead claim a deduction, for U.S. federal income tax purposes,
for the foreign tax withheld, but only for a year in which you elect to do so for all creditable foreign income taxes. The rules governing
the foreign tax credit are complex. You are urged to consult your tax advisor regarding the availability of the foreign tax credit under
your particular circumstances.</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Sale
or Other Disposition of Ordinary Shares</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the PFIC rules discussed below, you generally will recognize capital gain or loss upon the sale or other disposition of our ordinary
shares in an amount equal to the difference, if any, between the amount realized upon the disposition and your adjusted tax basis in
such ordinary shares. Any capital gain or loss will be long-term capital gain or loss if you have held the ordinary shares for more than
one year, and will generally be U.S.-source gain or loss for U.S. foreign tax credit purposes. In the event that we are deemed to be
a PRC tax resident enterprise under PRC tax law, gain from the disposition of the ordinary shares may be subject to tax in the PRC, as
described under &#8220;Taxation&#8212; PRC Taxation&#8221;. If such income were treated as U.S.-source income for foreign tax credit
purposes, you might not be able to use the foreign tax credit arising from any tax imposed on the sale, exchange, or other taxable disposition
of our ordinary shares unless such credit could be applied (subject to applicable limitations) against tax due on other income derived
from foreign sources. However, if PRC tax were to be imposed on any gain from the disposition of our ordinary shares, if you are eligible
for the benefits of the Treaty, you generally may be able to treat such gain as foreign-source income. The deductibility of a capital
loss may be subject to limitations. You are urged to consult your tax advisor regarding the tax consequences if a foreign tax is imposed
on a disposition of our ordinary shares, including the availability of the foreign tax credit under your particular circumstances.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PFIC
Rules</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year, if
either (i) 75% or more of its gross income for such year consists of certain types of &#8220;passive&#8221; income or (ii) 50% or more
of the value of its assets (determined on the basis of a quarterly average) during such year produce or are held for the production of
passive income. Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange
of property producing such income and net foreign currency gains. For this purpose, cash is categorized as a passive asset and the company&#8217;s
goodwill associated with active business activity is taken into account as an active asset. We will be treated as owning our proportionate
share of the assets and income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
on the projected composition of our assets and income, we do not anticipate being classified as a PFIC for our taxable year ending December
31, 2023. While we do not anticipate being classified as a PFIC, because the value of our assets for purposes of the PFIC asset test
will generally be determined by reference to the market price of our ordinary shares, fluctuations in the market price of our ordinary
shares may cause us to become a PFIC for the current or any subsequent taxable year. The determination of whether we will become a PFIC
will also depend, in part, on the composition of our income and assets, which will be affected by how, and how quickly, we use our liquid
assets and the cash raised in our initial public offering. Whether we are a PFIC is a factual determination and we must make a separate
determination each taxable year as to whether we are a PFIC (after the close of each taxable year). Accordingly, we cannot assure you
that we will not be classified as a PFIC for our taxable year ending December 31, 2023 or any future taxable year. If we are classified
as a PFIC for any taxable year during which you hold our ordinary shares, we generally will continue to be treated as a PFIC, unless
you make certain elections, for all succeeding years during which you hold our ordinary shares even if we cease to qualify as a PFIC
under the rules set forth above.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are a PFIC for any taxable year during which you hold our ordinary shares, you will be subject to special tax rules with respect to
any &#8220;excess distribution&#8221; that you receive and any gain you realize from a sale or other disposition (including a pledge)
of our ordinary shares, unless you make a &#8220;mark-to-market&#8221; election as discussed below. Distributions you receive in a taxable
year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years
or your holding period for the ordinary shares will be treated as an excess distribution. Under these special tax rules:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 0.3in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the excess distribution
    or gain will be allocated ratably over your holding period for the ordinary shares;</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">amounts allocated to the
    current taxable year and any taxable years in your holding period prior to the first taxable year in which we are classified as a
    PFIC (a &#8220;pre-PFIC year&#8221;) will be taxable as ordinary income; and</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">amounts allocated to each
    prior taxable year, other than the current taxable year or a pre-PFIC year, will be subject to tax at the highest tax rate in effect
    applicable to you for that year, and such amounts will be increased by an additional tax equal to interest on the resulting tax deemed
    deferred with respect to such years.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are classified as a PFIC for any taxable year during which you hold our ordinary shares and any of our non-U.S. subsidiaries is also
a PFIC, you will be treated as owning a proportionate amount (by value) of the shares of each such non-U.S. subsidiary classified as
a PFIC for purposes of the application of these rules.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Alternatively,
a U.S. Holder of &#8220;marketable stock&#8221; (as defined below) in a PFIC may make a mark-to-market election for such stock of a PFIC
to elect out of the tax treatment discussed in the two preceding paragraphs. If you make a valid mark-to-market election for the ordinary
shares, you will include in income each year an amount equal to the excess, if any, of the fair market value of the ordinary shares as
of the close of your taxable year over your adjusted basis in such ordinary shares. You will be allowed a deduction for the excess, if
any, of the adjusted basis of the ordinary shares over their fair market value as of the close of the taxable year. However, deductions
will be allowable only to the extent of any net mark-to-market gains on the ordinary shares included in your income for prior taxable
years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the
ordinary shares, will be treated as ordinary income. Ordinary loss treatment will also apply to the deductible portion of any mark-to-market
loss on the ordinary shares, as well as to any loss realized on the actual sale or disposition of the ordinary shares, to the extent
that the amount of such loss does not exceed the net mark-to-market gains previously included for such ordinary shares. Your basis in
the ordinary shares will be adjusted to reflect any such income or loss amounts. If you make a mark-to-market election, tax rules that
apply to distributions by corporations which are not PFICs would apply to distributions by us (except that the preferential rates for
qualified dividend income would not apply).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
mark-to-market election is available only for &#8220;marketable stock&#8221; which is stock that is traded in other than de minimis quantities
on at least 15 days during each calendar quarter (&#8220;regularly traded&#8221;) on a qualified exchange or other market, as defined
in applicable U.S. Treasury regulations. We expect that the ordinary shares will be listed on the Nasdaq, which is a qualified exchange
for these purposes. If the ordinary shares are regularly traded, and the ordinary shares qualify as &#8220;marketable stock&#8221; for
purposes of the mark-to-market rules, then the mark-to-market election might be available to you if we were to become a PFIC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because,
as a technical matter, a mark-to-market election cannot be made for any lower-tier PFICs that we may own, you may continue to be subject
to the PFIC rules with respect to your indirect interest in any investments held by us that are treated as an equity interest in a PFIC
for U.S. federal income tax purposes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not currently intend to provide information necessary for U.S. Holders to make qualified electing fund elections, which, if available,
would result in tax treatment different from the general tax treatment for PFICs described above.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
you own our ordinary shares during any taxable year that we are a PFIC, you must file an annual report with the IRS, subject to certain
exceptions based on the value of the ordinary shares held. You are urged to consult your tax advisor concerning the U.S. federal income
tax consequences of purchasing, holding, and disposing of our ordinary shares if we are or become a PFIC, including the possibility of
making a mark-to-market election.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Information
Reporting and Backup Withholding</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You
may be required to submit to the IRS certain information with respect to your beneficial ownership of our ordinary shares, if such ordinary
shares are not held on your behalf by certain financial institutions. Penalties also may be imposed if you are required to submit such
information to the IRS and fail to do so.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dividend
payments with respect to ordinary shares and proceeds from the sale, exchange or redemption of ordinary shares may be subject to information
reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes
a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding.
U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9 or by otherwise
establishing an exemption.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Backup
withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. Federal income tax liability,
and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund
with the IRS and furnishing any required information. You are urged to consult your tax advisors regarding the application of the U.S.
information reporting and backup withholding rules.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
U.S. federal income tax discussion set forth above is included for general information only and may not be applicable depending upon
a holder&#8217;s particular situation. Holders are urged to consult their tax advisors with respect to the tax consequences to them of
the acquisition, ownership and disposition of our ordinary shares and warrants, including the tax consequences under state, local, estate,
foreign and other tax laws and tax treaties and the possible effects of changes in U.S. or other tax laws.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>F.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Dividends and Paying Agents</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>G.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Statement by Experts</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>H.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Documents on Display</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
previously filed a registration statement on Form F-1 (Registration No. 333-270107) with the SEC to register the issuance and sale of
our ordinary shares in our initial public offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers and
are required to file reports and other information with the SEC. Specifically, we are required to file annually an annual report on Form
20-F within four months after the end of each fiscal year, which is December 31.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
information filed with the SEC can be obtained over the internet at the SEC&#8217;s website at <i>www.sec.gov</i>. As a foreign private
issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements,
and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained
in Section 16 of the Exchange Act.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>I.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Subsidiary Information</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>J.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Annual Report to Security Holders</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_008"></span>ITEM
11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Credit
Risk</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial
instruments that potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents, and accounts
receivable. We place substantially all of our cash with financial institutions with high credit ratings and quality in China. In the
event of bankruptcy of one of these financial institutions, we may not be able to claim our cash and demand deposits back in full. We
continue to monitor the financial strength of the financial institutions. There has been no recent history of default in relation to
these financial institutions.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
accounts receivable, credit risk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit
risk through in-house research and analysis of the Chinese economy and the underlying obligors and transaction structures. We identify
credit risk collectively based on industry, geography and customer type. In measuring the credit risk of our sales to our customers,
we mainly reflect the &#8220;probability of default&#8221; by the customer on its contractual obligations and consider the current financial
position of the customer and the exposures to the customer and its likely future development.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Liquidity
Risk</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are also exposed to liquidity risk which is risk that we are unable to provide sufficient capital resources and liquidity to meet our
commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures.
When necessary, we will turn to other financial institutions and related parties to obtain short-term funding to meet the liquidity shortage.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Foreign
Exchange Risk</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operations are primarily in China. Our reporting currency is denominated in RMB. We are exposed to currency risk primarily through capital
transaction which give rise to receivables, payables and cash balances that are denominated in currencies other than the functional currency
of the operations to which the transactions relate. Thus, results of operations may be impacted by exchange rate fluctuations between
RMB and US$. We incurred and recognized foreign currency exchange l<span style="background-color: white">oss of RMB80,273, foreign currency
exchange gain of RMB147,368</span> and RMB1,636
for the years ended December 31, 2021, 2022 and 2023, respectively, as a result of changes in the exchange rate.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 24.5pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_009"></span>ITEM
12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Debt Securities</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Warrants and Rights</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline">Other Securities</span></b></span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_010"></span>PART
II</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_011"></span>ITEM
13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_012"></span>ITEM
14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Material
Modifications to the Rights of Security Holders</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None.
See &#8220;Item 10. Additional Information &#8212; B. Memorandum and Articles of Association &#8212; Ordinary Shares&#8221; for a
description of the rights of securities holders, which remain unchanged.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Use
of Proceeds</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following &#8220;Use of Proceeds&#8221; information relates to the registration statement on Form F-1, as amended (File Number No. 333-270107)
(the &#8220;F-1 Registration Statement&#8221;) in relation to our initial public offering of 1,500,000 ordinary shares, at an initial
offering price of US$4.0 per ordinary share. Our initial public offering was completed in March 2024. Joseph Gunnar &amp; Co., LLC acted
as the sole book-running manager for our initial public offering.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
F-1 Registration Statement was declared effective by the SEC on March 4, 2024. The total expenses incurred for our company&#8217;s account
in connection with our initial public offering was approximately US$2.0 million, which included US$0.4 million in underwriting discounts
and commissions for the initial public offering for our initial public offering. We raised approximately US$4.0 million in net proceeds
from the issuance of new shares from the initial public offering. None of the transaction expenses included payments to directors or
officers of our company or their associates, persons owning more than 10% or more of our equity securities or our affiliates. None of
the net proceeds from the initial public offering were paid, directly or indirectly, to any of our directors or officers or their associates,
persons owning 10% or more of our equity securities or our affiliates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
still intend to use the proceeds from our initial public offering as disclosed in the F-1 Registration Statement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_013"></span>ITEM
15. CONTROLS AND PROCEDURES</b></span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Evaluation
of Disclosure Controls and Procedures</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
required by Rule 13a-15 under the Exchange Act, management, including our chief executive officer and our chief financial officer, has
evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report. Disclosure
controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports
we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules
and forms of the SEC. Disclosure controls and procedures include, without limitations, controls and procedures designed to ensure that
information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated
to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate
to allow timely decisions regarding our required disclosures.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
on the foregoing, our chief executive officer and our chief financial officer have concluded that, as of December 31, 2023, our disclosure
controls and procedures were one material weakness in our internal control over the financial statement reporting process.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Management&#8217;s
Annual Report on Internal Control over Financial Reporting</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act. As required by Rule 13a-15(c) of the Exchange Act, our management conducted an evaluation of our
company&#8217;s internal control over financial reporting as of December 31, 2023 based on the framework in Internal Control&#8212;Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management
concluded that our internal control over financial reporting was not effective due to one material weakness in our internal control over
the financial statement reporting process as of December 31, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risks that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Attestation
Report of the Registered Public Accounting Firm</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
annual report on Form 20-F does not include an attestation report of our independent registered public accounting firm due to rules of
the SEC where domestic and foreign registrants that are &#8220;emerging growth companies&#8221; which we are, are not required to provide
the auditor attestation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Internal
Control Over Financial Reporting</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prior
to the Initial Public Offering, we have been a private company with limited accounting personnel and other resources to address our internal
controls and procedures. Our independent registered public accounting firm had not conducted an audit of our internal control over financial
reporting. However, in connection with the audits of our consolidated financial statements for the years ended and as of December 31,
2021, 2022 and 2023, we and our independent registered public accounting firm identified the following &#8220;material weaknesses&#8221;
in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies.
A &#8220;material weakness&#8221; is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
material weakness that has been identified relates to the lack of accounting staff and resources with appropriate knowledge of the U.S.
GAAP and SEC reporting and compliance requirements to design and implement formal period-end financial reporting policies and procedures
to address complex U.S. GAAP technical accounting issue in accordance with U.S. GAAP and the SEC requirements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
response to the material weaknesses identified, we are in the process of implementing a number of measures to address hiring additional
qualified accounting and financial personnel with appropriate knowledge and experience in U.S. GAAP accounting and SEC reporting, and
organizing regular training for our accounting staffs, especially training related to U.S. GAAP and SEC reporting requirements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have established an audit committee and plan to adopt additional measures to improve our internal control over financial reporting, including,
among others, creating U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed and updated, on a regular
basis, to the latest US GAAP accounting standards, and strengthening corporate governance.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
we cannot assure you that we will remediate our material weaknesses in a timely manner. See &#8220;Risk Factors&#8212;Risks Relating
to Our Business and Industry&#8212;If we fail to implement and maintain an effective system of internal controls, we may be unable to
accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the market
price of our shares may be materially and adversely affected.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white">In
response to this material weakness, we are in the process of implementing a number of measures to address the material weakness identified,
including but not limited to: (i) recruitment of additional qualified accounting and financial personnel with appropriate knowledge and
experience in U.S. GAAP accounting and SEC reporting, and (ii) organization of regular training for our accounting staff, especially
training related to U.S. GAAP and SEC reporting requirements.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 24.5pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white">We have established an audit
committee and plan to adopt additional measures to improve our internal control over financial reporting, including, among others, creating
U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed and updated, on a regular basis, to the latest
U.S. GAAP accounting standards, and strengthening corporate governance. However, we cannot assure you that <span style="background-color: white">these
measures will be sufficient to remediate our material weakness in time, or at all, or that </span>we will not identify additional material
weaknesses or significant deficiencies in the future. In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley
Act, our ordinary shares may not be able to remain listed on the Nasdaq. See &#8220;Item 3. Key Information &#8212; D. Risk Factors &#8212;
Risks Related to Our Business and Industry &#8212; If we fail to implement and maintain an effective system of internal controls, we may
be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and
the market price of our shares may be materially and adversely affected.&#8221;</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a company with less than US$1.235 billion in net revenues for our last fiscal year, we qualify as an &#8220;emerging growth company&#8221;
pursuant to the Jumpstart Our Business Startups Act (&#8220;JOBS Act&#8221;). An emerging growth company may take advantage of specified
reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption
from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth
company&#8217;s internal control over financial reporting.</span></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Changes
in Internal Control over Financial Reporting</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than the remediation of material weaknesses as described above, there has been no change in our internal controls over financial reporting.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_014"></span>ITEM
16. [RESERVED]</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_015"></span>ITEM
16A. AUDIT COMMITTEE FINANCIAL EXPERT</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors has determined that Mr. Jeremy Wegerer, an independent director (under the standards set forth in Nasdaq Stock Market
Rule 5605(a)(2) and Rule 10A-3 under the Exchange Act) and chairman of our audit committee, is an audit committee financial expert.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_016"></span>ITEM
16B. CODE OF ETHICS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors has adopted a code of business conduct and ethics, which is applicable to all of our directors, officers, and employees.
Our code of business conduct and ethics is publicly available on our website at https://ir.lucasgc.com/governance/.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_017"></span>ITEM
16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered
and billed by Marcum Asia CPAs LLP, our independent registered public accountant firm, since 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="14" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the years ended December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">(in thousands)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">RMB</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">RMB</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">RMB</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 44%">Audit fees(1)</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 10%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">-</span></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 10%; text-align: right"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0">3,656</p></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 10%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3,406</span></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 10%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">487</span></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  </table>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Audit fees&#8221; means the aggregate fees incurred
    in each of the fiscal years listed for professional services rendered by our principal auditor for the audit or review of our annual
    financial statements or quarterly financial information and review of documents filed with the SEC.</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
audit committee of the Board of Directors on an annual basis reviews audit and non-audit services performed by the independent auditors.
All audit and non-audit services are pre-approved by the audit committee, which considers, among other things, the possible effect of
the performance of such services on the auditors&#8217; independence.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_018"></span>ITEM
16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_019"></span>ITEM
16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_020"></span>ITEM
16F. CHANGE IN REGISTRANT&#8217;S CERTIFYING ACCOUNTANT</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_021"></span>ITEM
16G. CORPORATE GOVERNANCE</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a Cayman Islands exempted company listed on the Nasdaq Capital Market, we are subject to the Nasdaq Stock Market Rules corporate
governance listing standards. However, Nasdaq Stock Market Rules permit a foreign private issuer like us to follow the corporate
governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country,
may differ significantly from the Nasdaq Stock Market Rules. We have not relied on any home country practice exemption as of the
date of this annual report. However, we may choose to follow certain home country practices in the future, which may cause our
shareholders to be afforded less protection than they would otherwise enjoy under the Nasdaq Stock Market&#8217;s corporate
governance listing standards applicable to U.S. domestic issuers. See &#8220;Item 3. Key Information &#8212; D. Risk Factors
&#8212; Risks Related to our Ordinary Shares &#8212; We are a foreign private issuer within the meaning of the rules under the
Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public
companies.&#8221;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_022"></span>ITEM
16H. MINE SAFETY DISCLOSURE</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_023"></span>ITEM
16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_024"></span>ITEM
16J. INSIDER TRADING POLICIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_025"></span>ITEM
16K. CYBERSECURITY</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have developed and implemented a cybersecurity risk management policy designed to protect the confidentiality, integrity, and availability
of our critical systems and information.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Cybersecurity Risk Management and Strategy</b></p>

<p style="font: 13.5pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in">The audit
committee of the Board of Directors will oversee this policy and will be responsible for the implementation of the Company&#8217;s
oversight, programs, procedures, and policies related to cybersecurity, cybersecurity risks, information security, and data
privacy.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in">Management shall report to the
audit committee on the Company&#8217;s and its subsidiaries&#8217; strategy, risks, metrics and operations relating to cybersecurity and
information security matters, including significant cybersecurity and information security-related projects and initiatives and related
progress, the integration and alignment of such strategy with the Company&#8217;s overall business and strategy, and trends that may affect
such strategy or operations.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in">Team leads from various departments
of the Company have been identified under this Policy to report to the Company&#8217;s Chief Financial Officer and oversee the strategy
of the Company. While these named leaders will oversee the strategy pursuant to this Policy, cybersecurity is the responsibility of all
business stakeholders and requires the cooperation and compliance of all personnel.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in">All employees shall exercise professional
judgement in using computing devices and network resources connected to the cyberspace. All information, physical and intellectual properties
stored on electric and computing devices or existing within the cyberspace remain the sole property of the Company. Therefore, employees
must neither access nor share confidential and proprietary information prior to receiving consent from management or the Company&#8217;s
directors and officers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in">We and certain of our third-party
service providers may be subject to cyberattacks and security due to, for example, computer malware, viruses, computer hacking, credential
stuffing, and phishing attacks. We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity
incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy,
results of operations, or financial condition. However, because of our prominence, we believe that we are a particularly attractive target
for such attacks, and we expect to experience cyberattacks and security incidents in the future.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Cybersecurity Governance</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>&#160;</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in">Our Board of
Directors considers cybersecurity risk as part of its risk oversight function and has delegated to the audit committee oversight of
our cybersecurity and data protection program. The audit committee shall report regularly to the Board concerning its matters
covered under this Policy and advising the Board of any developments that the audit committee believes should have Board of Directors&#8217;
consideration. The audit committee shall also annually review and assess the adequacy of this policy and recommend any proposed
changes to the Board of Directors for approval.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="S1_026"></span><b>PART
III</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="S1_027"></span><b>ITEM
17. FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have elected to provide financial statements pursuant to Item 18.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_028"></span>ITEM
18. FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
consolidated financial statements of Lucas GC Limited and its subsidiaries are included at the end of this annual report.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_029"></span>ITEM
19. EXHIBITS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.6in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibit</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.1in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Number</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Description
    of Document</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1954694/000119312523265046/d411169dex33.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"> Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated herein by reference to Exhibit
    3.3 to the Form F-1 filed on February 15, 2024 (File No. 333-270107))</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1954694/000119312523076246/d411169dex41.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registrant&#8217;s Specimen Certificate for Ordinary Shares (incorporated herein by reference to Exhibit 4.1 to the Form F-1 filed on February 15, 2024 (File No. 333-270107))</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.3*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex2-3.htm">Description of Securities</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1954694/000119312523053981/d411169dex104.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Indemnification Agreement between the Registrant and each of its directors and executive officers (incorporated herein by reference to Exhibit 10.4 to the Form F-1 filed on February 15, 2024 (File No. 333-270107))</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.2</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1954694/000119312523053981/d411169dex101.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Employment Agreement Between the Registrant and its directors and executive officers (incorporated herein by reference to Exhibit 10.1 to the Form F-1 filed on February 15, 2024 (File No. 333-270107))</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">8.1*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex8-1.htm">List of Significant Subsidiaries of the Registrant</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">11.1</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1954694/000119312523053981/d411169dex991.htm" style="-sec-extract: exhibit"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 99.1 to the Form F-1 filed on February 15, 2024 (File No. 333-270107))</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12.1*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex12-1.htm">Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12.2*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex12-2.htm">Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13.1**</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex13-1.htm">Certification by Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13.2**</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex13-2.htm">Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15.1*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="ex15-1.htm">Consent of Maples and Calder (Hong Kong) LLP</a></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif">15.2*</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="ex15-2.htm">Consent of Beijing Dacheng Law Offices, LLP</a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.INS*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Instance Document</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.SCH*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Taxonomy Extension Schema Document</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.CAL*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Taxonomy Extension Calculation Linkbase Document</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.DEF*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Taxonomy Extension Definition Linkbase Document</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.LAB*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Taxonomy Extension Label Linkbase Document</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.PRE*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Taxonomy Extension Presentation Linkbase Document</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">104</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cover
    Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Filed herewith</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif">&#160;</td></tr>
<tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">**</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furnished herewith</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="S1_030"></span>SIGNATURES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused
and authorized the undersigned to sign this annual report on its behalf.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td colspan="2" style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Lucas GC Limited</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 5%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 45%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 50%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Howard Lee</i></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Howard Lee</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Title:</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Executive Officer</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date:
April 29, 2024</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span id="S1_031"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONTENTS</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; vertical-align: top; width: 0.1in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 0.7in; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PAGE(S)</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Ss_001">REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID: <span id="xdx_904_edei--AuditorFirmId_c20230101__20231231_zyixNvFWyFs6"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000055" name="dei:AuditorFirmId">5395</ix:nonNumeric></span>)</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-2</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Ss_002">CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2022 and 2023</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-3</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Ss_003">CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-4</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Ss_004">CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER&#8217;S (DEFICIT)/EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-5</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Ss_005">CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-6</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#Ss_006">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-7</span></td></tr>
  </table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>
<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span id="Ss_001"></span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img src="audit_001.jpg" alt=""/></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID <span id="xdx_904_edei--AuditorFirmId_c20230101__20231231_zfHSY4w12c75"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000056" name="dei:AuditorFirmId">5395</ix:nonNumeric></span>)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the Shareholders and Board of Directors of Lucas GC Limited</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Opinion
on the Financial Statements</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have audited the accompanying consolidated balance sheets of Lucas GC Limited (the &#8220;Company&#8221;) as of December 31, 2022 and
2023, the related consolidated statements of income and comprehensive income<b>,</b> changes in shareholders&#8217; (deficit)/equity
and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as
the &#8220;financial statements&#8221;). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2022 and 2023, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Basis
for Opinion</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These
financial statements are the responsibility of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (&#8220;PCAOB&#8221;) 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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&#8217;s internal control over financial reporting. Accordingly, we express no such opinion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>/s/
</b>Marcum Asia CPAs LLP</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font: small-caps 10pt Times New Roman, Times, Serif">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90D_edei--AuditorName_c20230101__20231231_z2RHh1EV2tkh"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000057" name="dei:AuditorName">Marcum
Asia CPAs LLP</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have served as the Company&#8217;s auditor since 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90E_edei--AuditorLocation_c20230101__20231231_zAZJHsQ2NHc9"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact000058" name="dei:AuditorLocation">New
York, New York</ix:nonNumeric></span></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">April
29, 2024</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">NEW
YORK OFFICE &#9679;  7 Penn Plaza &#9679; Suite 830 &#9679; New York, New York &#9679; 10001</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Phone
646.442.4845 &#9679; Fax 646.349.5200 &#9679; www.marcumasia.com</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Ss_002"></span>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
BALANCE SHEETS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, or otherwise noted)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_406_eus-gaap--LiabilitiesCurrentAbstract_i01B_zsCutxJ6FKT9" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40E_eus-gaap--ShortTermBorrowings_i02I_uRMB_maLCzmPR_zRnRjBp63ub" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_409_eus-gaap--TaxesPayableCurrent_i02I_uRMB_maLCzmPR_zXvLrQpeqh94" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_408_eus-gaap--OperatingLeaseLiabilityCurrent_i02I_uRMB_maLCzmPR_zQiWDrjtjRU8" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Operating lease liabilities, current</td><td>&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_987_eus-gaap--AccruedLiabilitiesCurrent_iI_pn3n3_uUSD_c20231231_zPvTGKrVKwtk" title="Accrued expenses and other current liabilities" style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:AccruedLiabilitiesCurrent" contextRef="AsOf2023-12-31" id="Fact000173" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">530</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
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    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:LiabilitiesCurrent" contextRef="AsOf2023-12-31" id="Fact000176" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">95,230</ix:nonFraction></td><td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_402_eus-gaap--OperatingLeaseLiabilityNoncurrent_i02I_uRMB_maLNz1Dw_zsBa6JhVQ9Mg" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Operating lease liabilities, non-current</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_403_eus-gaap--CommonStockValue_i02I_uRMB_maSEzYRL_zARgt8Vu8vi4" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td id="xdx_98E_eus-gaap--StatutoryAccountingPracticesStatutoryCapitalAndSurplusBalance_iI_pn3n3_uUSD_c20231231_zD8PVodsVHxa" title="Statutory reserve" style="text-align: right"><ix:nonFraction name="us-gaap:StatutoryAccountingPracticesStatutoryCapitalAndSurplusBalance" contextRef="AsOf2023-12-31" id="Fact000237" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="USD">2,755</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*
The shares and per share information are presented on a retroactive basis to reflect the reorganization, as well as the stock split on
May 29, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Ss_003"></span>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, or otherwise noted)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_408_eus-gaap--OperatingExpensesAbstract_iB_zNPgwnmqk3of" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40F_eus-gaap--SellingAndMarketingExpense_i01N_di_uRMB_maOEzB0Q_zirvnHN9nPAg" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40D_eus-gaap--ResearchAndDevelopmentExpense_i01N_di_uRMB_maOEzB0Q_zrNj4Ixsjdvc" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40E_eus-gaap--OperatingExpenses_i01NT_di_uRMB_mtOEzB0Q_msOILzPfP_zIPfV06hXzG8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt">Total operating expenses</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_402_eus-gaap--NonoperatingIncomeExpenseAbstract_iB_zN9gulWipFy6" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Other (expenses) income</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_402_ecustom--FinancialIncomeExpensesNet_i01_uRMB_maNIEzL78_z33iRQIwudy3" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Financial (expenses) income, net</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="LGCL:FinancialIncomeExpensesNet" contextRef="From2021-01-012021-12-31" id="Fact000347" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">68</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="LGCL:FinancialIncomeExpensesNet" contextRef="From2022-01-012022-12-31" id="Fact000348" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">63</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="LGCL:FinancialIncomeExpensesNet" contextRef="From2023-01-01to2023-12-31" id="Fact000349" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">893</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr id="xdx_405_eus-gaap--OtherNonoperatingIncomeExpense_i01_uRMB_maNIEzL78_zXdQSclTlpGk" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Other income, net</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:OtherNonoperatingIncomeExpense" contextRef="From2021-01-012021-12-31" id="Fact000353" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,514</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:OtherNonoperatingIncomeExpense" contextRef="From2022-01-012022-12-31" id="Fact000354" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">4,130</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:OtherNonoperatingIncomeExpense" contextRef="From2023-01-01to2023-12-31" id="Fact000355" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">3,478</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_40D_eus-gaap--NonoperatingIncomeExpense_i01T_uRMB_mtNIEzL78_maILFCOz4Jt_zH1RD2Z8KWp4" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:NetIncomeLoss" contextRef="From2023-01-01to2023-12-31" id="Fact000391" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">77,668</ix:nonFraction></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">Less: Deemed dividend to redeemable preferred shareholders</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0397">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_98B_eus-gaap--RedeemablePreferredStockDividends_iN_pn3n3_di_uUSD_c20230101__20231231_z5JvqsuJ2As" title="Less: Deemed dividend to redeemable preferred shareholders" style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl0399">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--PreferredStockAccretionOfRedemptionDiscount_iN_di_uRMB_msNILATzY8u_zf6JUMeWN1ha" style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_401_eus-gaap--WeightedAverageNumberOfSharesOutstandingBasic_i01_pid_zUAqBrUNEzyj" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*
The shares and per share information are presented on a retroactive basis to reflect the reorganization, as well as the stock split on
May 29, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Ss_004"></span>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS&#8217; (DEFICIT) EQUITY</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, or otherwise noted)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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  <tr id="xdx_435_c20230101__20231231_eus-gaap--StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest_iS_ziYANd5RCX06" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<tr id="xdx_404_eus-gaap--ProfitLoss_uRMB_zolWE0THXJP9" style="vertical-align: bottom; background-color: White">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements, as well as the stock split on May 29, 2023</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.1in; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*
The shares and per share information are presented on a retroactive basis to reflect the reorganization.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<!-- Field: Page; Sequence: 106; Value: 1 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Ss_005"></span>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
STATEMENTS OF CASH FLOWS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, or otherwise noted)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_408_eus-gaap--RepaymentsOfShortTermDebt_i01N_di_uRMB_msNCPBUzyfb_zXrU6H1DJGn8" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--EffectOfExchangeRateOnCashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations_uRMB_maCCERCzi2l_zFEB2r9xlUpg" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_408_eus-gaap--CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect_iT_uRMB_mtCCERCzi2l_zRuchlZcxYI5" style="vertical-align: bottom; background-color: White">
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  <tr id="xdx_40B_eus-gaap--CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsIncludingDisposalGroupAndDiscontinuedOperations_iE_uRMB_zou4Pf038mFj" style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--SupplementalCashFlowInformationAbstract_iB_zNRqEkUmRxn4" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Supplemental disclosure of cash flow information:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--IncomeTaxesPaidNet_i01_uRMB_zm1LLu4WAfsk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Income tax paid</td><td>&#160;</td>
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  <tr id="xdx_400_eus-gaap--InterestPaidNet_i01_uRMB_zQLgo9yRn07b" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Interest paid</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_409_eus-gaap--NoncashInvestingAndFinancingItemsAbstract_iB_z7KS97VaT1Z3" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Supplemental schedule of non-cash investing and financing activities:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_405_eus-gaap--RedeemablePreferredStockDividends_i01_uRMB_zilwOeDNRfil" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Deemed dividend to redeemable preferred shareholders</td><td>&#160;</td>
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  <tr id="xdx_408_eus-gaap--PreferredStockAccretionOfRedemptionDiscount_i01_uRMB_zeTLJTIYfim" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Accretion of subsidiary&#8217; redeemable preferred shares to redemption value</td><td>&#160;</td>
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  <tr id="xdx_409_eus-gaap--ReclassificationsOfTemporaryToPermanentEquity_i01_uRMB_zelAikZwdgF1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Reclassification from mezzanine equity to permanent equity</td><td>&#160;</td>
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    <td style="text-align: left">Obtaining right-of-use assets in exchange for operating lease liabilities and prepaid expenses</td><td>&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="Ss_006"></span>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact000941" name="us-gaap:BusinessDescriptionAndBasisOfPresentationTextBlock"><p id="xdx_804_eus-gaap--BusinessDescriptionAndBasisOfPresentationTextBlock_z84IRKixU4of" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>1.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_827_zuOw1ohvqmxk">Principal activities and organization</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lucas
GC Limited (&#8220;Lucas&#8221;, or the &#8220;Company&#8221;) was incorporated under the laws of the Cayman Islands on August 15, 2022
as an exempted company with limited liability. The Company primarily engages in providing services through its directly owned subsidiaries
(collectively, the &#8220;Group&#8221;) in the People&#8217;s Republic of China (&#8220;PRC&#8221; or &#8220;China&#8221;).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lucas
owns <span id="xdx_901_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_dp_c20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LucasStarHoldingLimitedMember_zeWXUS5GRqtg" title="Equity owner ship percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2023-12-31_custom_LucasStarHoldingLimitedMember" id="Fact000943" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span>% equity interest of Lucas Star Holding Limited (&#8220;Lucas BVI&#8221;), which was incorporated on August 4, 2022 as investment
holding companies in British Virgin Islands. Lucas Star Global Limited (&#8220;Lucas HK&#8221;), a wholly subsidiary of Lucas BVI, was
incorporated under the laws of Hong Kong, China on October 21, 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company commenced its operation through Lucas Group China Limited (&#8220;Lucas China&#8221;) since 2011. Lucas China was incorporated
under the laws of PRC on May 17, 2011.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
preparation for its IPO, the Group conducted a reorganization (the &#8220;Reorganization&#8221;) from August 2022 to November 2022, which
involved the following steps:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; Formation
of Lucas, Lucas BVI and Lucas HK;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; Transfer
of <span id="xdx_90C_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--QingDaoLuogaoshiConsultingCoLtdMember_zhqsvYcHLnRf" title="Equity owner ship percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2023-12-31_custom_QingDaoLuogaoshiConsultingCoLtdMember" id="Fact000945" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span>% equity interests of Qingdao Luogaoshi Consulting Co., Ltd. (&#8220;Qingdao Luogaoshi&#8221;) from Lucas China to Lucas HK at
the consideration of RMB<span id="xdx_902_eus-gaap--PaymentsToAcquireEquityMethodInvestments_pn3n3_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--QingDaoLuogaoshiConsultingCoLtdMember_zzAAUITNcDbh"><ix:nonFraction name="us-gaap:PaymentsToAcquireEquityMethodInvestments" contextRef="From2023-01-012023-12-31_custom_QingDaoLuogaoshiConsultingCoLtdMember" id="Fact000946" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">100</ix:nonFraction></span>;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; Qingdao
Luogaoshi made capital injection of RMB<span id="xdx_904_eus-gaap--PaymentsToAcquireEquityMethodInvestments_pn5n6_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--QingdaoLuogaoshiMember_zW334N5WArHa" title="Consideration to acquire equity investment"><ix:nonFraction name="us-gaap:PaymentsToAcquireEquityMethodInvestments" contextRef="From2023-01-012023-12-31_custom_QingdaoLuogaoshiMember" id="Fact000948" format="ixt:numdotdecimal" decimals="-5" scale="6" unitRef="RMB">386.4</ix:nonFraction></span> million to Lucas China to obtain its <span id="xdx_907_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_dp_c20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--QingdaoLuogaoshiMember_zcoIki3XUuea" title="Equity owner ship percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2023-12-31_custom_QingdaoLuogaoshiMember" id="Fact000950" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">99</ix:nonFraction></span>% equity interest.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
shareholders and their respective equity interests in the entities remain similar immediately before and after the capital injection
in Lucas China. Accordingly, the combination has been treated as a corporate restructuring (reorganization) of entities under common
control and thus the current capital structure has been retroactively presented in prior periods as if such structure existed at that
time, the entities under common control are presented on a combined basis for all periods to which such entities were under common control.
Since all of the subsidiaries were under common control for the entirety of the year ended December 31, 2021, the results of these subsidiaries
are included in the financial statements for both periods, and the equity has been restated to reflect the change as well.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Stock
Split</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 29, 2023, <span id="xdx_901_eus-gaap--StockholdersEquityNoteStockSplit_c20230529__20230529_zm7G3eAWLNA2" title="Stock split descripition"><ix:nonNumeric contextRef="From2023-05-292023-05-29" id="Fact000952" name="us-gaap:StockholdersEquityNoteStockSplit">the Company&#8217;s board of directors approved to effect a one-for-two stock split of its ordinary shares (the &#8220;Stock
Split&#8221;). As a result of the Stock Split, each ordinary share of US$0.00001 was automatically split to two issued and outstanding
ordinary shares with par value of US$0.000005 each without any action on the part of the shareholder.</ix:nonNumeric></span> All historical share numbers and
per share amounts have been retrospectively restated to reflect such Stock Split for all periods presented.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact000954" name="us-gaap:ConsolidationLessThanWhollyOwnedSubsidiaryParentOwnershipInterestEffectsOfChangesNetTextBlock"><p id="xdx_898_eus-gaap--ConsolidationLessThanWhollyOwnedSubsidiaryParentOwnershipInterestEffectsOfChangesNetTextBlock_znM7z5s5fBD" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2023, the Company&#8217;s major subsidiaries are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_8B6_zwconi0m97Yl" style="display: none">Schedule
of consolidation of subsidiaries</span></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 25%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 15%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Date
    of Incorporation</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 14%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Place
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 13%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Percentage
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    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 25%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Principal
    Activities</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif">Lucas China</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: right">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span id="xdx_905_edei--EntityIncorporationDateOfIncorporation_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LucasChinaMember_zraAW0h1I9t6" title="Date of incorporation"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_LucasChinaMember" format="ixt:datemonthdayyearen" id="Fact000956" name="dei:EntityIncorporationDateOfIncorporation">May 17, 2011</ix:nonNumeric></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">&#160;</td>
    <td title="Entity principal Activites" id="xdx_987_ecustom--EntityPlaceOfIncorporation_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LucasChinaMember_z6Ia34Certyc" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_LucasChinaMember" id="Fact000958" name="LGCL:EntityPlaceOfIncorporation">PRC</ix:nonNumeric></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: right">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span id="xdx_903_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LucasChinaMember_z6sSToEHy0m3" title="Equity method investment ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2023-12-31_custom_LucasChinaMember" id="Fact000960" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">99</ix:nonFraction></span>%</td>
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    <td title="Entity principal Activites" id="xdx_98C_ecustom--EntityPrincipalActivities_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LucasChinaMember_zi3AIbPHr63b" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_LucasChinaMember" id="Fact000962" name="LGCL:EntityPrincipalActivities">Recruitment, Consulting and Information Technology</ix:nonNumeric></td></tr>
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Luogaoshi
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_98D_ecustom--EntityPlaceOfIncorporation_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LuogaoshiTechnologyBeijingCoLtdMember_zQKmicOdfVq1" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_LuogaoshiTechnologyBeijingCoLtdMember" id="Fact000966" name="LGCL:EntityPlaceOfIncorporation">PRC</ix:nonNumeric></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_904_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LuogaoshiTechnologyBeijingCoLtdMember_z0qvpqvR7vAe" title="Equity method investment ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2023-12-31_custom_LuogaoshiTechnologyBeijingCoLtdMember" id="Fact000968" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span>% owned by Lucas China</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_983_ecustom--EntityPrincipalActivities_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LuogaoshiTechnologyBeijingCoLtdMember_z5khBDOg8q4f" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_LuogaoshiTechnologyBeijingCoLtdMember" id="Fact000970" name="LGCL:EntityPrincipalActivities">Recruitment,
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  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Qingdao
    Luogaoshi Consulting Co., Ltd.</span></td>
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    <td id="xdx_98D_ecustom--EntityPlaceOfIncorporation_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--QingDaoLuogaoshiConsultingCoLtdMember_zrpDKWCI9z12" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_QingDaoLuogaoshiConsultingCoLtdMember" id="Fact000974" name="LGCL:EntityPlaceOfIncorporation">PRC</ix:nonNumeric></span></td>
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    <td id="xdx_985_ecustom--EntityPlaceOfIncorporation_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--QingDaoEnshiTechnologyCoLtdMember_zpZKKLcXGuA4" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_QingDaoEnshiTechnologyCoLtdMember" id="Fact000982" name="LGCL:EntityPlaceOfIncorporation">PRC</ix:nonNumeric></span></td>
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    <td id="xdx_983_ecustom--EntityPrincipalActivities_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--QingDaoEnshiTechnologyCoLtdMember_z2ksfa6lOM18" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_QingDaoEnshiTechnologyCoLtdMember" id="Fact000986" name="LGCL:EntityPrincipalActivities">Recruitment,
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    <td id="xdx_98F_ecustom--EntityPlaceOfIncorporation_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--JiangxiMagellanTechnologyCoLtdMember_zxY1RpQWwoV1" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_JiangxiMagellanTechnologyCoLtdMember" id="Fact000990" name="LGCL:EntityPlaceOfIncorporation">PRC</ix:nonNumeric></span></td>
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    <td id="xdx_987_ecustom--EntityPrincipalActivities_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--JiangxiMagellanTechnologyCoLtdMember_zDF1RlWpkBCf" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_JiangxiMagellanTechnologyCoLtdMember" id="Fact000994" name="LGCL:EntityPrincipalActivities">Recruitment,
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_983_ecustom--EntityPlaceOfIncorporation_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LucasMediaCoLtdMember_zQu9H0POXtuk" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_LucasMediaCoLtdMember" id="Fact000998" name="LGCL:EntityPlaceOfIncorporation">PRC</ix:nonNumeric></span></td>
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    <td id="xdx_988_ecustom--EntityPrincipalActivities_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LucasMediaCoLtdMember_znCuPobO3h88" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_LucasMediaCoLtdMember" id="Fact001002" name="LGCL:EntityPrincipalActivities">Media
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Luogaoshi
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_983_ecustom--EntityPlaceOfIncorporation_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LuogaoshiEnterpriseConsultingTianjinCoLtdMember_znfbcA15EQd2" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_LuogaoshiEnterpriseConsultingTianjinCoLtdMember" id="Fact001006" name="LGCL:EntityPlaceOfIncorporation">PRC</ix:nonNumeric></span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_904_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LuogaoshiEnterpriseConsultingTianjinCoLtdMember_zFamXvOXcI0a" title="Equity method investment ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2023-12-31_custom_LuogaoshiEnterpriseConsultingTianjinCoLtdMember" id="Fact001008" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span>% owned by Lucas China</span></td>
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    <td id="xdx_987_ecustom--EntityPrincipalActivities_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LuogaoshiEnterpriseConsultingTianjinCoLtdMember_znQANEA5o285" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_LuogaoshiEnterpriseConsultingTianjinCoLtdMember" id="Fact001010" name="LGCL:EntityPrincipalActivities">Recruitment,
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td id="xdx_980_ecustom--EntityPlaceOfIncorporation_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--ShanghaiLuojiashiTechnologyCoLtdMember_zHudKGKRnPrl" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_ShanghaiLuojiashiTechnologyCoLtdMember" id="Fact001014" name="LGCL:EntityPlaceOfIncorporation">PRC</ix:nonNumeric></span></td>
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    <td id="xdx_980_ecustom--EntityPrincipalActivities_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--ShanghaiLuojiashiTechnologyCoLtdMember_zf61q7Dl5bw7" title="Entity principal Activites" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_ShanghaiLuojiashiTechnologyCoLtdMember" id="Fact001018" name="LGCL:EntityPrincipalActivities">Recruitment,
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  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lucas
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    <td id="xdx_984_ecustom--EntityPlaceOfIncorporation_c20230101__20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LucasGCLimitedMember_zFeiKSOiQrfe" title="Place of Incorporation" style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="From2023-01-012023-12-31_custom_LucasGCLimitedMember" id="Fact001022" name="LGCL:EntityPlaceOfIncorporation">Hongkong,
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    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_90F_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--LucasGCLimitedMember_zsknT7bDRQza" title="Equity method investment ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2023-12-31_custom_LucasGCLimitedMember" id="Fact001024" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction></span>% owned by Lucas China</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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</ix:nonNumeric><p id="xdx_8A9_z5VDPabA8dc" style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001028" name="us-gaap:SignificantAccountingPoliciesTextBlock"><p id="xdx_80A_eus-gaap--SignificantAccountingPoliciesTextBlock_zkHK3ljeCyG4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_826_z38jKZye5EQ5">Summary Of Significant Accounting Policies</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001030" name="us-gaap:BasisOfAccountingPolicyPolicyTextBlock"><p id="xdx_840_eus-gaap--BasisOfAccountingPolicyPolicyTextBlock_znPkbfWQdIWl" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(a)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_862_zcvZlu0VXAPh">Basis of presentation and principles of consolidation</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
consolidated financial statements include the financial statements of the Group. The accompanying consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America (&#8220;U.S. GAAP&#8221;) for
information pursuant to the rules and regulations of the Securities Exchange Commission (&#8220;SEC&#8221;).</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001032" name="us-gaap:UseOfEstimates"><p id="xdx_84A_eus-gaap--UseOfEstimates_zfd0pgKO1nne" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(b)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86A_zx4FIHvhczo3">Use of estimates</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet
date, and the reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes.
Significant accounting estimates include, but not limited to, the allowance for doubtful accounts receivable, useful life of software
and equipment, the realization of deferred income tax assets, and valuation of redeemable preferred shares. Changes in facts and circumstances
may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated
financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001034" name="us-gaap:ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock"><p id="xdx_84A_eus-gaap--ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock_zf4ZmuSoYZlf" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(c)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_866_zVOiZjPU2xEg">Foreign currency</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
functional currency of the Company and Lucas BVI is the United States dollar (&#8220;US$&#8221;) and its reporting currency is the Renminbi
(the &#8220;RMB&#8221;). The functional currency of the Company&#8217;s PRC subsidiaries is the RMB as determined based on the criteria
of ASC 830, Foreign Currency Matters.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
financial statements of the Company and Lucas BVI are translated from the functional currency to the reporting currency, the RMB. Transactions
denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Monetary
assets and liabilities denominated in foreign currencies are re-measured at the exchange rates prevailing at the balance sheet date.
Non-monetary items that are measured in terms of historical costs in foreign currency are re-measured using the exchange rates at the
dates of the initial transactions. Exchange gains and losses are included in the consolidated statements of income and comprehensive
income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group uses the average exchange rate for the year and the exchange rate at the balance sheet date to translate the operating results
and financial position, respectively. Equity accounts other than earnings generated in current year are translated into RMB at the appropriate
historical rates. Translation differences are recorded in accumulated other comprehensive income, a component of shareholders&#8217;
(deficit) equity.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001036" name="LGCL:ConvenienceTranslationPolicyTextBlock"><p id="xdx_84B_ecustom--ConvenienceTranslationPolicyTextBlock_zS6NOnPyuV14" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(d)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_867_ziGGERFWH05j">Convenience translation</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amounts
in US$ are presented for the convenience of the reader and are translated at the noon buying rate of US$<span id="xdx_90C_eus-gaap--SharesIssuedPricePerShare_iI_pid_uUSDPShares_c20231231_zXMYxzxwQP4c" title="Shares issued per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2023-12-31" id="Fact001038" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">1.00</ix:nonFraction></span> to RMB<span id="xdx_904_eus-gaap--ForeignCurrencyExchangeRateTranslation1_iI_pid_c20231231_zUadGBhUirhc" title="Convenience translation rate USD to RMD"><ix:nonFraction name="us-gaap:ForeignCurrencyExchangeRateTranslation1" contextRef="AsOf2023-12-31" id="Fact001040" format="ixt:numdotdecimal" decimals="INF" unitRef="Pure">7.0999</ix:nonFraction></span> on December
31, 2023, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation
is made that the RMB amounts could have been, or could be converted, realized or settled into US$ at such rate or at any other rate.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001042" name="us-gaap:CashAndCashEquivalentsPolicyTextBlock"><p id="xdx_84F_eus-gaap--CashAndCashEquivalentsPolicyTextBlock_z03bSAoxSsSa" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(e)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_860_zRtJlOtuxEEa">Cash and cash equivalents</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cash
and cash equivalents consist of cash on hand and demand deposit placed with banks, which have original maturities of less than three
months and unrestricted as to withdrawal and use.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001044" name="us-gaap:CashAndCashEquivalentsRestrictedCashAndCashEquivalentsPolicy"><p id="xdx_840_eus-gaap--CashAndCashEquivalentsRestrictedCashAndCashEquivalentsPolicy_zLLdbY3lXES" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(f)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_860_z8FeytBUXi3a">Restricted cash</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group&#8217;s restricted cash amounted to RMB<span id="xdx_90E_eus-gaap--RestrictedCash_iI_pn3n3_uRMB_c20221231_zldzfiqpwS0a" title="Restricted cash"><ix:nonFraction name="us-gaap:RestrictedCash" contextRef="AsOf2022-12-31" id="Fact001046" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">841</ix:nonFraction></span> and RMB<span id="xdx_90F_eus-gaap--RestrictedCash_iI_pn3n3_uRMB_c20231231_zQkjnAdXeVF5" title="Restricted cash"><ix:nonFraction name="us-gaap:RestrictedCash" contextRef="AsOf2023-12-31" id="Fact001048" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">100</ix:nonFraction></span> as of December 31, 2022 and 2023, respectively. The balance of fiscal year
2022 was mainly due to the lawsuit resulting in the freezing of bank account. However, the lawsuit has been ended on December 28, 2022,
with the unfreezing time of the bank lags behind. The balance of fiscal year 2023 was due to the bank frozen an investment amount injected
by Lucas HK to Lucas China under the supervision of IPO process. As of the date of issuance of these consolidated financial statements,
the bank has initiated unfreeze process.</span></p>

</ix:nonNumeric><p id="xdx_858_zWbpGgNKoRXi" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Summary
                                            of significant accounting policies (cont.)</b></span></td></tr></table>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001050" name="us-gaap:InvestmentPolicyTextBlock"><p id="xdx_845_eus-gaap--InvestmentPolicyTextBlock_zDiOkC00hEo7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(g)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86F_zb8BAr5tqqx1">Short-term investments</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Short-term
investments consist primarily of wealth management products issued by commercial banks and investment banks, which contains variable
interest indexed to the performance of underlying assets and redeemable on demand. These investments are stated at fair value. Changes
in the fair value are reflected in other income in the consolidation statements of income and comprehensive income. For the years ended
December 31, 2021, 2022 and 2023, the Group recognized investment income from its short-term investments of RMB<span id="xdx_904_eus-gaap--GainOnSaleOfInvestments_pn3n3_uRMB_c20210101__20211231_zTVwaVW3FKx4" title="Investment income from short-term investments"><ix:nonFraction name="us-gaap:GainOnSaleOfInvestments" contextRef="From2021-01-012021-12-31" id="Fact001052" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">133</ix:nonFraction></span>, RMB<span id="xdx_905_eus-gaap--GainOnSaleOfInvestments_pn3n3_uRMB_c20220101__20221231_z13zjzOVE4gf" title="Short term borrowings"><ix:nonFraction name="us-gaap:GainOnSaleOfInvestments" contextRef="From2022-01-012022-12-31" id="Fact001054" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">500</ix:nonFraction></span> and <span id="xdx_908_eus-gaap--GainOnSaleOfInvestments_dxL_uRMB_c20230101__20231231_zvPPmMKL14o8" title="Investment income from short-term investments::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1056">nil</span></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001058" name="us-gaap:TradeAndOtherAccountsReceivablePolicy"><p id="xdx_84E_eus-gaap--TradeAndOtherAccountsReceivablePolicy_zwZYwRk07wvj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(h)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86E_zwUPHMAkWMJh">Accounts receivable, net</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts
receivable, net are stated at the original amount less allowances for doubtful accounts. Accounts receivable are recognized in the period
when the Group has provided services to its customers and when its right to consideration is unconditional. The Group reviews the accounts
receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group considers many factors in assessing the collectability of its receivables, such as the age of the amounts due, the customer&#8217;s
payment history, credit-worthiness and other specific circumstances related to the accounts. An allowance for doubtful accounts is recorded
in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts
have been exhausted.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 20pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Adoption
of Accounting Standards Update (&#8220;ASU&#8221;) 2016-13</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 20pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2016, the FASB issued ASU 2016-13: Financial Instruments-Credit Losses (Topic 326), which requires the measurement of all expected
credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and
supportable forecasts. Subsequently, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, to clarify that receivables
arising from operating leases are within the scope of lease accounting standards. Further, the FASB issued ASU 2019-04, ASU 2019-05,
ASU 2019-10, ASU 2019-11 and ASU 2020-02 to provide additional guidance on the credit losses standard. For all other entities, the amendments
for ASU 2016-13 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years,
with early adoption permitted. Adoption of the ASUs is on a modified retrospective basis. The Group adopted ASU 2016-13 from January
1, 2023 using modified-retrospective transition approach with a cumulative-effect adjustment to shareholders&#8217; equity amounting
to RMB<span id="xdx_901_ecustom--CumulativeEffectPeriodOfAdoptionAccountingStandardUpdate_pn3n3_c20230101__20230101__us-gaap--AdjustmentsForNewAccountingPronouncementsAxis__us-gaap--AccountingStandardsUpdate201613Member_zrXpfhxb7JW8" title="Cumulative-effect adjustment to shareholders' equity"><ix:nonFraction name="LGCL:CumulativeEffectPeriodOfAdoptionAccountingStandardUpdate" contextRef="From2023-01-012023-01-01_us-gaap_AccountingStandardsUpdate201613Member" id="Fact001060" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">617</ix:nonFraction></span> gain recognized as of January 1, 2023.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001062" name="LGCL:AdvanceToSuppliersPolicyTextBlock"><p id="xdx_840_ecustom--AdvanceToSuppliersPolicyTextBlock_z06zc8VTb4A8" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(i)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86F_zZQl7cVGd3Ja">Advance to suppliers, net</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advance
to suppliers is prepayment to supplier in the procurement of technology development outsourcing services, accounts recharge for recruitment
services, promotion services and other services. Advance payment depends on specific circumstances, including the industry practice,
negotiations with suppliers, security for steady supply of service, and the delivery time of services received from suppliers after the
advance payment. Advance to suppliers is settled when the services are provided and accepted by the Group. The Group reviews its advance
to suppliers on a periodic basis and determines the adequacy of credit losses when amounts outstanding are not likely to be collected in
cash or utilized against receive of services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001064" name="LGCL:SoftwareEquipmentPolicyTextBlock"><p id="xdx_844_ecustom--SoftwareEquipmentPolicyTextBlock_zgPJ5DXpDHW3" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(j)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_866_zoUZEEIcKxrf">Software and equipment, net</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Software
consists of technology purchased externally. Software and equipment are stated at cost less accumulated depreciation and impairment,
if any, and depreciated on a straight-line basis over the estimated useful lives of the assets. Cost represents the purchase price of
the asset and other costs incurred to bring the asset into its intended use. Estimated useful lives are as follows:</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001066" name="LGCL:ScheduleOfPropertyPlantAndEquipmentUsefulLifeTableTextBlock"><p id="xdx_891_ecustom--ScheduleOfPropertyPlantAndEquipmentUsefulLifeTableTextBlock_z8km1dIhGtR1" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B9_zmEjisPU2VQa" style="display: none">Schedule of estimated
useful life</span></span></p>

<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 96%; border-collapse: collapse; margin-left: 0.25in">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 49%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Category</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 2%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 49%; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Estimated
    useful lives</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Software</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_905_eus-gaap--PropertyPlantAndEquipmentUsefulLife_iI_dtY_c20231231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--SoftwareMember_zIaarkVdQXOl" title="Equipment, useful life (Year)"><ix:nonNumeric contextRef="AsOf2023-12-31_custom_SoftwareMember" format="ixt-sec:duryear" id="Fact001068" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">10</ix:nonNumeric></span>
    years</span></td></tr>
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    and electronic equipment</span></td>
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    years</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Office
    furniture and equipment</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span id="xdx_908_eus-gaap--PropertyPlantAndEquipmentUsefulLife_iI_dtY_c20231231__us-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--OfficeFurnitureandEquipmentMember_zRl9BewUt7j4" title="Equipment, useful life (Year)"><ix:nonNumeric contextRef="AsOf2023-12-31_custom_OfficeFurnitureandEquipmentMember" format="ixt-sec:duryear" id="Fact001072" name="us-gaap:PropertyPlantAndEquipmentUsefulLife">5</ix:nonNumeric></span>
    years</span></td></tr>
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</ix:nonNumeric><p id="xdx_8AA_zrKQCImhd6o4" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Repair
and maintenance costs are charged to expenses as incurred, whereas the cost of renewals and betterment that extends the useful lives
of software and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded
by removing the costs, accumulated depreciation and impairment with any resulting gain or loss recognized in the consolidated statements
of income and comprehensive income.</span></p>

</ix:nonNumeric><p id="xdx_85D_zeJcckFIRnN" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 110; Value: 1 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Summary
                                            of significant accounting policies (cont.)</b></span></td></tr></table>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001074" name="us-gaap:FairValueMeasurementPolicyPolicyTextBlock"><p id="xdx_84F_eus-gaap--FairValueMeasurementPolicyPolicyTextBlock_zF4tvl1ZVBQh" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(k)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86D_zgRjyfWPsoik">Fair value measurement</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounting
guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required
or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and
it considers assumptions that market participants would use when pricing the asset or liability.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounting
guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. A financial instrument&#8217;s categorization within the fair value hierarchy is based
upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs are:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
                                            1&#8212;Observable inputs that reflect quoted prices (unadjusted) for identical assets or
                                            liabilities in active markets.</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 38.85pt; text-align: justify; text-indent: -21pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
                                            2&#8212;Include other inputs that are directly or indirectly observable in the marketplace.</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 38.85pt; text-align: justify; text-indent: -21pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
                                            3&#8212;Unobservable inputs which are supported by little or no market activity.</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 38.85pt; text-align: justify; text-indent: -21pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ASC
820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach;
and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical
or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value
amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach
is based on the amount that would currently be required to replace an asset.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group&#8217;s financial instruments include cash and cash equivalents, short-term investments, accounts receivables, advance to suppliers,
prepaid expenses and other current assets, accounts payable, amount due to related parties, and accrued expenses and other current liabilities.
The carrying values of these financial instruments approximate their fair values due to their short-term maturities. The carrying amount
of the long-term borrowing approximates its fair values since it bears an interest rate which approximates market interest rate.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001076" name="LGCL:ShortTermBorrowingsPolicyTextBlock"><p id="xdx_84A_ecustom--ShortTermBorrowingsPolicyTextBlock_zIqc1QjfsHp2" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>(l) <span id="xdx_867_zbI6dI1TJwBa">Short-term borrowings</span></b></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">Short-term borrowings represent
the Group&#8217;s borrowings from commercial banks for the Group&#8217;s working capital. Short-term borrowings include borrowings with
maturity terms shorter than one year.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001078" name="us-gaap:RevenueFromContractWithCustomerPolicyTextBlock"><p id="xdx_84A_eus-gaap--RevenueFromContractWithCustomerPolicyTextBlock_zwhqVz325dn7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(m)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_863_zPRotnCd5xP1">Revenue recognition</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group recognizes revenues pursuant to ASC 606, Revenue from Contracts with Customers (&#8220;ASC 606&#8221;). In accordance with ASC
606, the Group recognizes revenue to depict the transfer of promised services to customers in an amount that reflects the consideration
to which the Group expects to receive in exchange for those services, reduced by value added tax. Net revenues are presented net of business
tax and surcharges. To achieve the core principle of this standard, the Group applied the following five steps:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1. Identification
of the contract, or contracts, with the customer;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2. Identification
of the performance obligations in the contract;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3. Determination
of the transaction price;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4. Allocation
of the transaction price to the performance obligations in the contract; and</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5. Recognition
of the revenue when, or as, a performance obligation is satisfied.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify; text-indent: 17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group&#8217;s revenues are mainly generated from providing recruitment services, outsourcing services and others.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Summary
                                            Of significant accounting policies (cont.)</b></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Recruitment
services</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Recruitment
services consists of flexible employment services and permanent employment services.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Flexible
employment services</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group enters into contracts with corporate customers to provide flexible employment services, arranging flexible workers with corresponding
abilities and qualifications on demand to fulfill corporate customers&#8217; various operation needs. The Group identifies only one performance
obligation in flexible employment services as the contract comprises of a series of distinct services that are substantially the same
and have the same pattern of transfer to the corporate customers, which is to provide flexible workers in accordance with the demand
orders.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
contract consideration is determined by the days flexible workers have worked times their workday pay rate. Revenue from flexible employment
services is recognized over time as the customers can simultaneously receive and consume the benefits in the period the flexible workers
provide the service.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
contract payment is not subject to any variable consideration, refund, cancellation or termination provision. Customers generally make
the payment within one or two months after monthly reconciliation of service considerations with the Group.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Permanent
employment services</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group enters into contracts with corporate customers to provide permanent employment services. The Group identifies one performance obligation
in permanent employment services, which is to place a qualified and acceptable employee in accordance with customer specifications. The
probation period of the candidate is typically three months, a period for the customers to evaluate and confirm the acceptance of candidate
replacement. During the probation period, the customer is entitled to request candidate replacement if dissatisfaction of the performance
of candidate cannot be resolved after all means implemented, and the Group also keeps close track of the performance of the candidate
to see if they meet the customer&#8217;s defined standard, and deals with the customer&#8217;s feedback or complaint about the performance
of candidate. Upon the completion of the probation period, the customer accepts the qualified candidate and the Company has fulfilled
its obligation of permanent candidate placement. Hence, revenue from permanent employment services is recognized at a point of time when
the candidate passes the probation period.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
contract consideration is based on a fixed percentage of the candidate&#8217;s pretax annual income agreed upon with the customers in
advance. Customers generally consider the candidates for the full probation period, and the Company is not entitled to any consideration
for the services provided until the candidates pass the probation period. Except for this, the contract payment is not subject to any
variable consideration, refund, cancellation or termination provision. Customers generally make the payment within one or two months
after the completion of candidates&#8217; probation period and acceptance of billing from the Group.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Summary
                                            of significant accounting policies (cont.)</b></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Outsourcing
services</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group enters into contracts with corporate customers to provide outsourcing services, mostly IT-related services, including construction
of IT system, development of module or software with specific functions. Although third-party service providers will be involved in the
solution process, the Group still takes on primary responsibility to coordinate project schedule, check the quality of deliverables,
conduct quality testing and handle feedback and complaints from corporate customers. The Group only identifies one performance obligation
with a fix total consideration to deliver the IT projects with functions under the agreed-upon specifications with customers. Customers
cannot control the IT projects in progress as the IT projects are not developed in the customers&#8217; location or IT environment, and
before the successful completion of the IT projects, customers cannot simultaneously receive or consume the benefits provided by the
Group&#8217;s services, because the IT projects in progress are only dispersed computer codes, which neither provide any function for
the customer, nor are delivered to customers before the successful completion.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Customers
generally make the payment within one or two months upon the successful delivery of IT projects and acceptance. The Group does not have
an enforcement right to payment for services provided to date if the projects eventually fail. Except for this, the contract payment
is not subject to any variable consideration, refund, cancellation or termination provision.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group recognizes revenue at a point in time when the outsourcing services, mostly IT projects, are successfully completed, delivered
and accepted by customers.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Others</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group also provides information technology services to corporate customers and training services to platform users. Information technology
services include data collection and analysis, marketing channel optimization and other information technology services altogether that
could contribute to customers&#8217; business development. Training services are mainly to provide training courses and career-related
certification programs for platform users to help them realize professional developments. The Group determines it only has one performance
obligation to provide those services and recognizes revenue over time based on the amount of a fixed total price, or a fixed unit price
times key performance indicators or hours charged.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
contract payment is not subject to any variable consideration, refund, cancellation or termination provision. Customers generally make
the payment within one or two months after the reconciliation of service considerations with the Group.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Principal
versus agent considerations</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
all the services provided, the Group considers itself the principal and recognizes revenue on a gross basis as it controls the services
through the following key considerations:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
                                            Group reserves the right to accept or reject the contracts or orders with the customers without
                                            involvement of the third parties and directs the selected third parties to provide services
                                            to the customers on the Group&#8217;s behalf. There is no direct cooperation relationship
                                            between third parties and the customers. The Group assumes responsibility for receiving and
                                            resolving the complaints over the quality of the services. If the third-party service providers
                                            fail to deliver their work and thus affect the Group&#8217;s performance obligation to the
                                            corporate customers, the Group should bear the loss of the corporate customers for breach
                                            of contract on its own, and then independently claim for compensation from third-party service
                                            providers for its loss.</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 42pt; text-align: justify; text-indent: -21pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
                                            Group has discretion in setting up the price. The involved third parties are entitled to
                                            a fixed services fee agreed upon in advance irrespective of the consideration the Group collects
                                            from the customers.</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 42pt; text-align: justify; text-indent: -21pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
                                            Group bears the credit risk as the Group pays the consideration due to third parties irrespective
                                            of whether the customers have paid the services consideration to the Group.</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Summary
                                            of significant accounting policies (cont.)</b></span></td></tr></table>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Contract
balances</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">When
a revenue contract has performed, the Group presents the contract in the consolidated balance sheet as a contract asset or a contract
liability, depending on the relationship between the Group&#8217;s performance and the customer&#8217;s payment. A contract asset is
the Group&#8217;s right to consideration in exchange for services that the Group has transferred to a customer. A receivable is recorded
when the Group has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is
required before payment of that consideration is due. The Group does not have material contract asset. As of December 31, 2022 and 2023,
balance of accounts receivable, net were RMB<span id="xdx_902_eus-gaap--AccountsReceivableNetCurrent_iI_pn3n3_uRMB_c20221231_zNGSsaNcsr26" title="Accounts receivable"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2022-12-31" id="Fact001080" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">102,762</ix:nonFraction></span> and RMB<span id="xdx_906_eus-gaap--AccountsReceivableNetCurrent_iI_pn3n3_uRMB_c20231231_zQ5TNPUwHyI8" title="Accounts receivable"><ix:nonFraction name="us-gaap:AccountsReceivableNetCurrent" contextRef="AsOf2023-12-31" id="Fact001082" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">28,144</ix:nonFraction></span>, respectively; and allowance for credit losses were RMB<span id="xdx_90B_eus-gaap--AllowanceForDoubtfulAccountsReceivableCurrent_iI_pn3n3_uRMB_c20221231_zyjtTdegRVVa" title="Allowance of doubtful accounts"><ix:nonFraction name="us-gaap:AllowanceForDoubtfulAccountsReceivableCurrent" contextRef="AsOf2022-12-31" id="Fact001084" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">16,842</ix:nonFraction></span> and
RMB<span id="xdx_90B_eus-gaap--AllowanceForDoubtfulAccountsReceivableCurrent_iI_pn3n3_uRMB_c20231231_zOkXXOMQWjr7" title="Allowance of doubtful accounts"><ix:nonFraction name="us-gaap:AllowanceForDoubtfulAccountsReceivableCurrent" contextRef="AsOf2023-12-31" id="Fact001086" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">23,594</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
contract liability represents the billings or cash received for services in advance of revenue recognition which is recognized as revenue
when all of the Group&#8217;s revenue recognition criteria are met. The Group&#8217;s contract liabilities amounted to RMB<span id="xdx_90D_eus-gaap--ContractWithCustomerLiabilityCurrent_iI_pn3n3_uRMB_c20221231_zVaBYgkxur8" title="Contract liabilities"><ix:nonFraction name="us-gaap:ContractWithCustomerLiabilityCurrent" contextRef="AsOf2022-12-31" id="Fact001088" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">24,706</ix:nonFraction></span> and
RMB<span id="xdx_902_eus-gaap--ContractWithCustomerLiabilityCurrent_iI_pn3n3_uRMB_c20231231_zhgKYtlAXd6c" title="Contract liabilities"><ix:nonFraction name="us-gaap:ContractWithCustomerLiabilityCurrent" contextRef="AsOf2023-12-31" id="Fact001090" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">13,552</ix:nonFraction></span> as of December 31, 2022 and 2023, respectively. The Group expects to recognize this balance as revenue over the next 12 months.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001092" name="us-gaap:CostOfSalesPolicyTextBlock"><p id="xdx_84E_eus-gaap--CostOfSalesPolicyTextBlock_ziW3gpkTXON3" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(n)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_864_zpcwQVbE55e">Cost of revenues</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cost
of revenues consists primarily of services fees charged by external services providers relating to revenue from recruitment services
and outsourcing services providers, and other costs directly attributable to the performance of the business operation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001094" name="us-gaap:ResearchAndDevelopmentExpensePolicy"><p id="xdx_84F_eus-gaap--ResearchAndDevelopmentExpensePolicy_zstAClnq1Yoe" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(o)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_863_zK0cCG8hA459">Research and development expenses</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Research
and development expenses mainly consist of (i) payroll expenses, (ii) technologies services expenses related to platform development
and data analysis to support the Group&#8217;s business operations, (iii) other expenses related to research and development functions.
Research and development expenses are expensed as incurred.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001096" name="us-gaap:SellingGeneralAndAdministrativeExpensesPolicyTextBlock"><p id="xdx_842_eus-gaap--SellingGeneralAndAdministrativeExpensesPolicyTextBlock_zbwPYH5DcgJc" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(p)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_868_z2JplT32xOYf">Selling and marketing expenses</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Selling
and marketing expenses mainly consist of advertising expenses and market promotion expenses, which are expensed as incurred.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001098" name="LGCL:GeneralAndAdministrativeExpensesPolicyTextBlock"><p id="xdx_84C_ecustom--GeneralAndAdministrativeExpensesPolicyTextBlock_zqY5uCKipWv7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(q)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_867_zQHn7hSgvYx6">General and administrative expenses</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">General
and administrative expenses mainly consist of (i) payroll expenses, (ii) community operation expenses, (iii) rental and depreciation
expenses related to general and administrative functions, (iv) professional services fees, (v) credit impairment losses and (vi) office
and miscellaneous expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001100" name="LGCL:EmployeeBenefitsPolicyTextBlock"><p id="xdx_849_ecustom--EmployeeBenefitsPolicyTextBlock_zJJXcLwBWj4c" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(r)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86C_zhsfPvia91bg">Employee benefits</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s subsidiaries in PRC participate in a government mandated, multiemployer, defined contribution plan, pursuant to which
certain retirement, medical, housing and other welfare benefits are provided to employees. PRC labor laws require the entities incorporated
in the PRC to pay to the local labor bureau a monthly contribution calculated at a stated contribution rate on the monthly basic compensation
of qualified employees. The Group has no further commitments beyond its monthly contribution. Employee social benefits included as expenses
in the accompanying consolidated statements of income and comprehensive income amounted to RMB<span id="xdx_90C_eus-gaap--EmployeeBenefitsAndShareBasedCompensation_pn3n3_c20210101__20211231_zMYZdFTq0bAh" title="Employee social benefits"><ix:nonFraction name="us-gaap:EmployeeBenefitsAndShareBasedCompensation" contextRef="From2021-01-012021-12-31" id="Fact001102" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">662</ix:nonFraction></span>, RMB<span id="xdx_901_eus-gaap--EmployeeBenefitsAndShareBasedCompensation_pn3n3_c20220101__20221231_z9V2hTsNCcT9" title="Employee social benefits"><ix:nonFraction name="us-gaap:EmployeeBenefitsAndShareBasedCompensation" contextRef="From2022-01-012022-12-31" id="Fact001104" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,021</ix:nonFraction></span> and RMB<span id="xdx_90D_eus-gaap--EmployeeBenefitsAndShareBasedCompensation_pn3n3_c20230101__20231231_z06qU1LBvNY4" title="Employee social benefits"><ix:nonFraction name="us-gaap:EmployeeBenefitsAndShareBasedCompensation" contextRef="From2023-01-01to2023-12-31" id="Fact001106" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,326</ix:nonFraction></span> for the years
ended December 31, 2021, 2022 and 2023, respectively.</span></p>

</ix:nonNumeric><p id="xdx_855_zN4BVrwRghIb" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Summary
                                            of significant accounting policies (cont.)</b></span></td></tr></table>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001108" name="us-gaap:IncomeTaxPolicyTextBlock"><p id="xdx_84B_eus-gaap--IncomeTaxPolicyTextBlock_zmVA48gSCj67" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(s)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_868_zwX1BPyV9Zmc">Income taxes</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective
tax bases.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
provisions of ASC 740-10-25, &#8220;Accounting for Uncertainty in Income Taxes,&#8221; prescribe a more-likely- than-not threshold for
consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This
interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred
income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The
Group&#8217;s operating subsidiaries in PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration
and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the
taxpayer or the withholding agent. <span id="xdx_909_ecustom--IncomeTaxesExaminationDescription_c20230101__20231231_zATl1bUmJATf" title="Statute of limitations description"><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" id="Fact001110" name="LGCL:IncomeTaxesExaminationDescription">The statute of limitations is extended to five years under special circumstances, where the underpayment
of taxes is more than RMB100 ($14.5). In the case of transfer pricing issues, the statute of limitation is ten years.</ix:nonNumeric></span> 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.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line of
its consolidated statements of income for the years ended December 31, 2021, 2022 and 2023, respectively. The Group does not expect that
its assessment regarding unrecognized tax positions will materially change over the next 12 months.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001112" name="LGCL:ValueAddedTaxPolicyTextBlock"><p id="xdx_84E_ecustom--ValueAddedTaxPolicyTextBlock_zsLyHePtIVc3" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(t)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86C_zFsFi5FAdxl6">Value added tax (&#8220;VAT&#8221;)</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group is subject to VAT and related surcharges on revenue generated from sales of products, facilitation services and platform services.
The Group records revenue net of VAT. This VAT may be offset by qualified input VAT paid by the Group to suppliers. Net VAT balance between
input VAT and output VAT is recorded in the line item of other current assets on the consolidated balance sheets.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
revenue generated from services, the VAT rate is <span id="xdx_903_ecustom--ValueAddedTaxPercentageForServices_pid_dp_c20230101__20231231_zufshdDqHhBk" title="VAT percentage for services"><ix:nonFraction name="LGCL:ValueAddedTaxPercentageForServices" contextRef="From2023-01-01to2023-12-31" id="Fact001114" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">6</ix:nonFraction></span>% depending on whether the entity is a general tax payer, and related surcharges on
revenue generated from providing services. Entities that are VAT general taxpayers are allowed to offset qualified input VAT, paid to
suppliers against their output VAT liabilities.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001116" name="us-gaap:LesseeLeasesPolicyTextBlock"><p id="xdx_84E_eus-gaap--LesseeLeasesPolicyTextBlock_zUKWqT7ciIxd" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(u)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_867_zBjApnj62Pb7">Leases</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
January 1, 2022, the Group adopted Accounting Standards Update (&#8220;ASU&#8221;) 2016-02, Lease (FASB ASC Topic 842). The adoption
of Topic 842 resulted in the presentation of operating lease right-of-use (&#8220;ROU&#8221;) assets and operating lease liabilities
on the consolidated balance sheet. The Group has elected the package of practical expedients, which allows the Group 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. Lastly,
the Group elected the short-term lease exemption for all contracts with lease terms of 12 months or less.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At
inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys
the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract
is or contains a lease, the Group assess whether the contract involves the use of an identified asset, whether it has the right to obtain
substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Summary
                                            of significant accounting policies (cont.)</b></span></td></tr></table>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Group recognizes operating lease
expenses on a straight-line basis over the lease term.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Right-of-use
of assets</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
right-of-use of asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Lease
liabilities</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lease
liability is initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the
Group&#8217;s incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed lease payments,
variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee and any exercise
price under a purchase option that the Group is reasonably certain to exercise. Lease liability is measured at amortized cost using the
effective interest rate method. It is re-measured when there is a change in future lease payments, if there is a change in the estimate
of the amount expected to be payable under a residual value guarantee, or if there is any change in the Group assessment of option purchases,
contract extensions or termination options.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001118" name="LGCL:StatutoryReservesPolicyTextBlock"><p id="xdx_842_ecustom--StatutoryReservesPolicyTextBlock_zVkmxfimWqCf" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(v)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_86D_zRONiMZXPSug">Statutory reserves</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with the PRC Company Laws, the Group&#8217;s PRC subsidiaries, VIE and the VIE&#8217;s subsidiary must make appropriations
from their after-tax profits as determined under the generally accepted accounting principles in the PRC (&#8220;PRC GAAP&#8221;) to
non-distributable reserve funds including statutory surplus fund and discretionary surplus fund. The appropriation to the statutory surplus
fund must be 10% of the after-tax profits as determined under PRC GAAP. Appropriation is not required if the statutory surplus fund has
reached 50% of the registered capital of the PRC companies. Appropriation to the discretionary surplus fund is made at the discretion
of the PRC companies.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
statutory surplus fund and discretionary surplus fund are restricted for use. They may only be applied to offset losses or increase the
registered capital of the respective companies. These reserves are not allowed to be transferred to the Company by way of cash dividends,
loans or advances, nor can they be distributed except for liquidation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the years ended December 31, 2021, 2022 and 2023, profit appropriation to general reserve fund and statutory surplus fund for the Group&#8217;s
entities incorporated in the PRC was approximately RMB<span id="xdx_90E_ecustom--ProfitAppropriationToGeneralReserveFundAndStatutorySurplus_pn3n3_uRMB_c20210101__20211231_zZrg5B1Xbj5l" title="Surplus note"><ix:nonFraction name="LGCL:ProfitAppropriationToGeneralReserveFundAndStatutorySurplus" contextRef="From2021-01-012021-12-31" id="Fact001120" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">4,497</ix:nonFraction></span>, RMB<span id="xdx_90E_ecustom--ProfitAppropriationToGeneralReserveFundAndStatutorySurplus_pn3n3_uRMB_c20220101__20221231_zeuGVDOfvFSi" title="Surplus note"><ix:nonFraction name="LGCL:ProfitAppropriationToGeneralReserveFundAndStatutorySurplus" contextRef="From2022-01-012022-12-31" id="Fact001122" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">4,800</ix:nonFraction></span> and RMB <span id="xdx_904_ecustom--ProfitAppropriationToGeneralReserveFundAndStatutorySurplus_pn3n3_uRMB_c20230101__20231231_zdVhGBWrd49" title="Profit appropriation to general reserve fund and statutory surplus"><ix:nonFraction name="LGCL:ProfitAppropriationToGeneralReserveFundAndStatutorySurplus" contextRef="From2023-01-01to2023-12-31" id="Fact001124" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">8,491</ix:nonFraction></span>, respectively. No appropriation to other reserve
funds was made for any of the periods presented.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001126" name="us-gaap:EarningsPerSharePolicyTextBlock"><p id="xdx_840_eus-gaap--EarningsPerSharePolicyTextBlock_zAqOcfs5yrEj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(w)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_863_zhUm9Fxpk9Il">Earnings per share</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Basic
earnings per share is computed by dividing net income attributable to ordinary shareholders, taking into consideration the deemed dividends
to preferred shareholders (if any), by the weighted average number of ordinary shares outstanding during the year using the two-class
method. Under the two-class method, net income is allocated between ordinary shares and other participating securities based on their
participating rights. Shares issuable for little to no consideration upon the satisfaction of certain conditions are considered as outstanding
shares and included in the computation of basic earnings per share as of the date that all necessary conditions have been satisfied.
Net losses are not allocated to other participating securities if based on their contractual terms they are not obligated to share the
losses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Diluted
earnings per share is calculated by dividing net income attributable to ordinary shareholders, as adjusted for the effect of dilutive
ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during
the year. Ordinary equivalent shares consist of ordinary shares issuable upon the conversion of the preferred shares, using the if-converted
method, and shares issuable upon the exercise of share options using the treasury stock method. Ordinary equivalent shares are not included
in the denominator of the diluted earnings per share calculation when inclusion of such share would be anti-dilutive.</span></p>

</ix:nonNumeric><p id="xdx_85B_zKNmSPXcuhe" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Summary
                                            of significant accounting policies (cont.)</b></span></td></tr></table>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001128" name="us-gaap:SegmentReportingPolicyPolicyTextBlock"><p id="xdx_84E_eus-gaap--SegmentReportingPolicyPolicyTextBlock_z9oIYFX91Ouh" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(x)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_862_zoljKfJMan2l">Segment reporting</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
on the criteria established by ASC 280, Segment Reporting, the Group&#8217;s chief operating decision maker has been identified as the
CEO, who reviews consolidated results of the Group when making decisions about allocating resources and assessing performance. As the
Group operates businesses as a whole and does not distinguish business line from its subsidiaries, the Group has only <span id="xdx_903_eus-gaap--NumberOfOperatingSegments_pid_dc_c20230101__20231231_z3DCU8o0GQEl" title="Number of operating segments"><ix:nonFraction name="us-gaap:NumberOfOperatingSegments" contextRef="From2023-01-01to2023-12-31" id="Fact001130" format="ixt-sec:numwordsen" decimals="INF" unitRef="Segment">one</ix:nonFraction></span> operating segment.
The Group does not distinguish between markets or segments for the purpose of internal reporting. The Company is domiciled in the Cayman
Islands while the Group mainly operates its businesses in the PRC and earns majority of the revenues from external customers attributed
to the PRC.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001132" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p id="xdx_84B_eus-gaap--NewAccountingPronouncementsPolicyPolicyTextBlock_zqJ7gW1rupsg" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(y)</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_860_zLhppwpKpv5c">Recent accounting pronouncements</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group is an &#8220;emerging growth company&#8221; (&#8220;EGC&#8221;) as defined in the Jumpstart Our Business Startups Act of 2012 (the
&#8220;JOBS Act&#8221;). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment
of the JOBS Act until such time as those standards apply to private companies. As a result, the Group&#8217;s operating results and financial
statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised
accounting standards.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
November 2023, the FASB issued ASU 2023-07, which modifies the disclosure and presentation requirements of reportable segments. The new
guidance requires the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (&#8220;CODM&#8221;)
and included within each reported measure of segment profit and loss. In addition, the new guidance enhances interim disclosure requirements,
clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure
requirements for entities with a single reportable segment, and contains other disclosure requirements. The update is effective for annual
periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption
permitted. The Group does not expect that the adoption of ASU 2023-07 will have a material impact on its consolidated financial statements
disclosures.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure. This standard requires more transparency about income
tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.
This standard also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective
for public business entities, 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. The Group is in the process of evaluation the impact
of adopting this new guidance on its consolidated financial statement.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material
impact on the consolidated financial statements upon adoption. The Group does not discuss recent standards that are not anticipated to
have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.</span></p>

</ix:nonNumeric></ix:nonNumeric><p id="xdx_812_zB1457gLazua" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page -->
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify; text-indent: -17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001134" name="us-gaap:FairValueMeasurementInputsDisclosureTextBlock"><p id="xdx_807_eus-gaap--FairValueMeasurementInputsDisclosureTextBlock_zhxwFmxnJTNa" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>3.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_823_zbOBvZg2KwMa">Fair value measurements</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2022, information about inputs into the fair value measurement of the Group&#8217;s assets and liabilities that are measured
or disclosed at fair value on a recurring basis in periods subsequent to their initial recognition was as follows:</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001136" name="us-gaap:ScheduleOfFairValueAssetsAndLiabilitiesMeasuredOnRecurringBasisTableTextBlock"><p id="xdx_898_eus-gaap--ScheduleOfFairValueAssetsAndLiabilitiesMeasuredOnRecurringBasisTableTextBlock_zsEwAtSrC56g" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B1_zd7VJDcZvrTd" style="display: none">Schedule
of fair value measurement</span> </span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 96%; margin-left: 0.25in">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">December 31, 2022</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Assets:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_401_eus-gaap--ShortTermInvestments_iI_pn3n3_uRMB_z74frcKeAQV4" style="vertical-align: bottom; background-color: White">
    <td style="width: 36%; text-align: justify; padding-bottom: 2.5pt">Short-term investments &#8211; wealth management products</td><td style="width: 2%; padding-bottom: 2.5pt">&#160;</td>
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  </table>

</ix:nonNumeric><p id="xdx_8A4_zTsES5UqEv23" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2023, there was <span id="xdx_90A_eus-gaap--ShortTermInvestments_iI_dxL_uRMB_c20231231_zu3RIZ4qRuj7" title="Short term investment::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1143">nil</span></span> of short-term investment.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">When
available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not
available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently
sourced market parameters, such as interest rates and currency rates.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Short-term
investment consists of wealth management products issued by commercial banks and are redeemable on demand. For the instruments whose
fair value is provided by banks at the end of each period, the Group classifies the valuation techniques that use these inputs as Level
1 of fair value measurements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the years ended December 31, 2021, 2022 and 2023, the Group recognized investment income from its short-term investments of RMB<span id="xdx_908_eus-gaap--GainOnSaleOfInvestments_pn3n3_uRMB_c20210101__20211231_zskGuwJi9pr1" title="Gain on short-term investments"><ix:nonFraction name="us-gaap:GainOnSaleOfInvestments" contextRef="From2021-01-012021-12-31" id="Fact001145" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">133</ix:nonFraction></span>, RMB<span id="xdx_90E_eus-gaap--GainOnSaleOfInvestments_pn3n3_uRMB_c20220101__20221231_zktaBPYW40m" title="Gain on short-term investments"><ix:nonFraction name="us-gaap:GainOnSaleOfInvestments" contextRef="From2022-01-012022-12-31" id="Fact001147" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">500</ix:nonFraction></span>
and <span id="xdx_902_eus-gaap--GainOnSaleOfInvestments_dxL_uRMB_c20230101__20231231_z9yadrAWfbe9" title="Gain on short-term investments::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1149">nil</span></span>, respectively, in the consolidated statements of income and comprehensive income.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001151" name="us-gaap:AccountsAndNontradeReceivableTextBlock"><p id="xdx_804_eus-gaap--AccountsAndNontradeReceivableTextBlock_z7b4lma9Aop4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>4.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_82F_zHpXi040tBe8">Accounts receivable, net</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001153" name="us-gaap:ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock"><p id="xdx_891_eus-gaap--ScheduleOfAccountsNotesLoansAndFinancingReceivableTextBlock_z9CLFKhnqBA8" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts
receivable, net consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B9_z5wU3xtOx7t4" style="display: none">Schedule
of accounts receivable net</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 96%; margin-left: 0.25in">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49C_20221231_z4W47wWMQDmc" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_499_20231231_zxod9JBaSLX4" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td></tr>
  <tr id="xdx_40E_eus-gaap--AccountsReceivableGrossCurrent_iI_pn3n3_maARNCzDtE_zC5FcsjeFDIb" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Accounts receivables</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:AccountsReceivableGrossCurrent" contextRef="AsOf2022-12-31" id="Fact001155" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">119,604</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_401_eus-gaap--AllowanceForDoubtfulAccountsReceivableCurrent_iNI_pn3n3_di_msARNCzDtE_zf1yOgI61Jk2" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: allowance of credit losses</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_40D_eus-gaap--AccountsReceivableNetCurrent_iTI_pn3n3_mtARNCzDtE_zxsuT9Att1Q9" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Total</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
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  </table>

</ix:nonNumeric><p id="xdx_8A1_zur2pJbsLIuj" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Group recorded allowance for credit losses of RMB<span id="xdx_90F_ecustom--AllowanceForCreditLoss_pn3n3_c20210101__20211231_zFSfonc2pEQb" title="Allowance for credit losses"><ix:nonFraction name="LGCL:AllowanceForCreditLoss" contextRef="From2021-01-012021-12-31" id="Fact001164" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">5,264</ix:nonFraction></span>, RMB<span id="xdx_901_ecustom--AllowanceForCreditLoss_pn3n3_c20220101__20221231_zjJWBUe6o3El" title="Allowance for credit losses"><ix:nonFraction name="LGCL:AllowanceForCreditLoss" contextRef="From2022-01-012022-12-31" id="Fact001166" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">91</ix:nonFraction></span> and RMB<span id="xdx_90F_ecustom--AllowanceForCreditLoss_pn3n3_c20230101__20231231_zvmZIqIRxqt2" title="Allowance for credit loss"><ix:nonFraction name="LGCL:AllowanceForCreditLoss" contextRef="From2023-01-01to2023-12-31" id="Fact001168" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">11,539</ix:nonFraction></span> for the years ended December 31, 2021, 2022 and 2023, respectively.
The Group adopted ASU 2016-13 from January 1, 2023 using modified-retrospective transition approach with a cumulative-effect adjustment
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001174" name="LGCL:AdvancesToSuppliersNetDisclosureTextBlock"><p id="xdx_809_ecustom--AdvancesToSuppliersNetDisclosureTextBlock_z7oLtcvg3fP7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>5.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_82B_zzxQweLgeNI9">Advance to suppliers, net</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advance
to suppliers, net consisted of the following:</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001176" name="LGCL:ScheduleOfAdvancesToSuppliersTableTextBlock"><p id="xdx_890_ecustom--ScheduleOfAdvancesToSuppliersTableTextBlock_za6MidAUM6jf" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B7_zmdJBPcYsIT6" style="display: none">Schedule
of advance to suppliers</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 96%; margin-left: 0.25in">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49B_20221231_zPNJUbB8oXTk" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr id="xdx_40C_eus-gaap--Supplies_iTI_pn3n3_uRMB_mtSzScu_zheAWlAQj2l5" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Total</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.25in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 15pt; text-align: right"><span id="xdx_F01_z8iKbTLXn1W" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td><td style="width: 5pt"/><td style="text-align: justify"><span id="xdx_F17_zfIbwuAiBkng" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001201" xml:lang="en-US">The Group engaged
third-party suppliers to make the payment of compensation to flexible workers in flexible employment services on behalf of the Group.
The Group was required to recharge the accounts in advance before the third-party suppliers make the payment to flexible workers.</ix:footnote></span></td>
</tr></table>

</ix:nonNumeric><p id="xdx_8A4_z6Z5xW4gF2Vl" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 118; Value: 1 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001203" name="LGCL:PrepaidExpensesAndOtherCurrentAssetsDisclosureTextBlock"><p id="xdx_803_ecustom--PrepaidExpensesAndOtherCurrentAssetsDisclosureTextBlock_ztnC4uQ9uNcb" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>6.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_826_zr1kKu87cMy6">Prepaid expenses and other current assets</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prepaid
expenses and other current assets consisted of the following:</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001205" name="LGCL:ScheduleOfPrepaidExpensesAndOtherCurrentAssetsTableTextBlock"><p id="xdx_89D_ecustom--ScheduleOfPrepaidExpensesAndOtherCurrentAssetsTableTextBlock_zRSyfNqyXnX" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B5_ztRCRNP97nVb" style="display: none">Schedule
of prepaid expenses and other current assets </span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_499_20221231_ziF32Zp93iJ8" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_499_20231231_z2O3DzhHAfk5" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--PrepaidTaxes_iI_pn3n3_uRMB_maPECzhhk_zKayRh7fXQfk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 60%; text-align: left">Prepaid input VAT</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:PrepaidTaxes" contextRef="AsOf2022-12-31" id="Fact001207" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,410</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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    <td style="padding-bottom: 1.5pt">Others</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_40A_eus-gaap--PrepaidExpenseAndOtherAssetsCurrent_iTI_pn3n3_uRMB_mtPECzhhk_z15vYCI9Ftni" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</ix:nonNumeric><p id="xdx_8AB_zvaW4Z6eapMa" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001216" name="us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock"><p id="xdx_804_eus-gaap--PropertyPlantAndEquipmentDisclosureTextBlock_zGeGsjj1dRKa" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>7.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_82A_zzbcRuIRBIRf">Software and equipment, net</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001218" name="us-gaap:PropertyPlantAndEquipmentTextBlock"><p id="xdx_89B_eus-gaap--PropertyPlantAndEquipmentTextBlock_z1hwuZSbrun2" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Software
and equipment, net, consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B3_zGcXRxf3Or47" style="display: none">Schedule
of software and equipment</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr id="xdx_40E_eus-gaap--PropertyPlantAndEquipmentGross_iI_pn3n3_uRMB_hus-gaap--PropertyPlantAndEquipmentByTypeAxis__custom--OfficeFurnitureandEquipmentMember_z6zitAy7kTj5" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_401_eus-gaap--PropertyPlantAndEquipmentGross_iI_pn3n3_uRMB_zbaOkd1Muvz6" style="vertical-align: bottom; background-color: White">
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</ix:nonNumeric><p id="xdx_8AC_zU5QapZ0yF8j" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001244" name="us-gaap:ShortTermDebtTextBlock"><p id="xdx_80A_eus-gaap--ShortTermDebtTextBlock_z15PfRTEGz94" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>8.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_82D_zW45l9i75YW4">Short-term borrowings</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001246" name="us-gaap:ScheduleOfShortTermDebtTextBlock"><p id="xdx_89F_eus-gaap--ScheduleOfShortTermDebtTextBlock_z61ywbGYVbjj" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
balance of short-term borrowings consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B5_zHO6syloOKa" style="display: none">Schedule
of short term borrowings</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_490_20221231_zGVj0Bej2qt5" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_498_20231231_zAs8szRjdVtb" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold"> Rate</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold">Maturity</td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr id="xdx_40B_eus-gaap--ShortTermBorrowings_iI_pn3n3_uRMB_hus-gaap--LineOfCreditFacilityAxis__custom--BankOfNingboMember_z6aUB0yT2g1b" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 20%">Bank of Ningbo</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_402_eus-gaap--ShortTermBorrowings_iI_pn3n3_uRMB_hus-gaap--LineOfCreditFacilityAxis__custom--BankOfBeijingMember_z2ejJolZj4Ia" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1257">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_40B_eus-gaap--ShortTermBorrowings_iI_pn3n3_uRMB_hus-gaap--LineOfCreditFacilityAxis__custom--BankOfChinaMember_zFo5ptOPER14" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Bank of China</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1266">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_40C_eus-gaap--ShortTermBorrowings_iI_pn3n3_uRMB_z6ia2ejeTR7k" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</ix:nonNumeric><p id="xdx_8AA_zPrIJtRlDN5" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
expenses were <span id="xdx_904_eus-gaap--InterestExpense_dxL_uRMB_c20210101__20211231_zD1eXp1prSp7" title="Interest expense::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1288">nil</span></span>, RMB<span id="xdx_90B_eus-gaap--InterestExpense_pn3n3_uRMB_c20220101__20221231_zjnO4RylRkfi" title="Interest expense"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2022-01-012022-12-31" id="Fact001290" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">30</ix:nonFraction></span> and RMB<span id="xdx_902_eus-gaap--InterestExpense_pn3n3_uRMB_c20230101__20231231_zaS0rsvvUHhh" title="Interest expense"><ix:nonFraction name="us-gaap:InterestExpense" contextRef="From2023-01-01to2023-12-31" id="Fact001292" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">919</ix:nonFraction></span> for short-term borrowings for the years ended December 31, 2021, 2022 and 2023, respectively. The
weighted average interest rates of short-term borrowings were <span id="xdx_906_eus-gaap--ShortTermDebtWeightedAverageInterestRate_iI_pid_dpxL_uPure_c20211231_zwJBRmQ3GI4h" title="Weighted average interest rates::XDX::-"><span style="-sec-ix-hidden: xdx2ixbrl1294">nil</span></span>, <span id="xdx_908_eus-gaap--ShortTermDebtWeightedAverageInterestRate_iI_pid_dp_uPure_c20221231_zAXwo7SLemHi" title="Weighted average interest rates"><ix:nonFraction name="us-gaap:ShortTermDebtWeightedAverageInterestRate" contextRef="AsOf2022-12-31" id="Fact001296" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">4.27</ix:nonFraction></span>% and <span id="xdx_90B_eus-gaap--ShortTermDebtWeightedAverageInterestRate_iI_pid_dp_uPure_c20231231_zmVwrva3UAZe" title="Weighted average interest rates"><ix:nonFraction name="us-gaap:ShortTermDebtWeightedAverageInterestRate" contextRef="AsOf2023-12-31" id="Fact001298" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3.89</ix:nonFraction></span>% as of December 31, 2021, 2022 and 2023, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Beijing
Yizhuang International Financing Guarantee Co., Ltd provided RMB<span id="xdx_904_eus-gaap--ShortTermBorrowings_iI_pn3n3_uRMB_c20231231__dei--LegalEntityAxis__custom--BeijingYizhuangInternationalFinancingGuaranteeCoLtdMember_z09JsljliSbl" title="Short term borrowings"><ix:nonFraction name="us-gaap:ShortTermBorrowings" contextRef="AsOf2023-12-31_custom_BeijingYizhuangInternationalFinancingGuaranteeCoLtdMember" id="Fact001300" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,000</ix:nonFraction></span> guarantee and Beijing Zhongguancun Technology Financing Guarantee
Co., Ltd provided RMB<span id="xdx_909_eus-gaap--ShortTermBorrowings_iI_pn3n3_uRMB_c20231231__dei--LegalEntityAxis__custom--BeijingZhongguancunTechnologyFinancingGuaranteeCoLtdMember_zyhgISMkb6zc" title="Short term borrowings"><ix:nonFraction name="us-gaap:ShortTermBorrowings" contextRef="AsOf2023-12-31_custom_BeijingZhongguancunTechnologyFinancingGuaranteeCoLtdMember" id="Fact001302" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">3,000</ix:nonFraction></span> guarantee for the borrowing from China Merchants Bank. The corporate counter-guarantee provided by Mr. Howard
Lee and Luogaoshi were equivalent to the amount of credit granted to Lucas China.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">Ms. Luting Meng, owned <span id="xdx_90C_eus-gaap--EquityMethodInvestmentOwnershipPercentage_iI_pid_dp_uPure_c20231231__srt--ScheduleOfEquityMethodInvestmentEquityMethodInvesteeNameAxis__custom--MsLutingMengMember_zyHFXxkdUKf6" title="Equity method investment ownership percentage"><ix:nonFraction name="us-gaap:EquityMethodInvestmentOwnershipPercentage" contextRef="AsOf2023-12-31_custom_MsLutingMengMember" id="Fact001304" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">100</ix:nonFraction>%</span>
equity interests of MLT Holding Limited which has 8.1% beneficial ownership of the Group as of the date, provided RMB<span id="xdx_907_eus-gaap--ProceedsFromBankDebt_uRMB_c20230101__20231231__dei--LegalEntityAxis__custom--MltHoldingsLimitedMember_za9lvw48h1La" title="Proceeds from bank debt"><ix:nonFraction name="us-gaap:ProceedsFromBankDebt" contextRef="From2023-01-012023-12-31_custom_MltHoldingsLimitedMember" id="Fact001306" format="ixt:numdotdecimal" decimals="0" unitRef="RMB">5,000</ix:nonFraction></span>
guarantee for the borrowing from Bank of China.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">The Group repaid an aggregate
total RMB<span id="xdx_90F_eus-gaap--OtherBorrowings_iI_uRMB_c20231231_z99jerMAzFS1" title="Other borrowings"><ix:nonFraction name="us-gaap:OtherBorrowings" contextRef="AsOf2023-12-31" id="Fact001308" format="ixt:numdotdecimal" decimals="0" unitRef="RMB">17,221</ix:nonFraction></span> of
borrowings from January 2024 to April 2024. From January 2024 to April 2024, the Group obtained five short term bank loans from Bank
of Ningbo for an aggregate total of RMB<span id="xdx_907_esrt--BankLoans_iI_uRMB_c20231231_z5HS8gVhYzFg" title="Bank loans"><ix:nonFraction name="srt:BankLoans" contextRef="AsOf2023-12-31" id="Fact001310" format="ixt:numdotdecimal" decimals="0" unitRef="RMB">17,829</ix:nonFraction></span>
and one short term bank loan from China&#8217;s Industrial Bank of RMB<span id="xdx_904_eus-gaap--ProceedsFromBankDebt_pn3n3_uRMB_c20230101__20231231_zJp2O1Bk2rV2" title="Proceeds from bank debt"><ix:nonFraction name="us-gaap:ProceedsFromBankDebt" contextRef="From2023-01-01to2023-12-31" id="Fact001312" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">10,000</ix:nonFraction></span>,
which to be due from July 2024 to March 2025.These bank loans bear interest rate from <span id="xdx_901_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20231231__srt--RangeAxis__srt--MinimumMember_zB5Bco7kdsJh" title="Annual interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2023-12-31_srt_MinimumMember" id="Fact001314" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">3.2</ix:nonFraction></span>%
to <span id="xdx_90A_eus-gaap--DebtInstrumentInterestRateStatedPercentage_iI_pid_dp_uPure_c20231231__srt--RangeAxis__srt--MaximumMember_zR8GUxEC0Dw4" title="Annual interest rate"><ix:nonFraction name="us-gaap:DebtInstrumentInterestRateStatedPercentage" contextRef="AsOf2023-12-31_srt_MaximumMember" id="Fact001316" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">4.5</ix:nonFraction></span>%.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"></p>

</ix:nonNumeric><p id="xdx_81F_zZRiKVncuUs7" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 119; Value: 1 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001318" name="us-gaap:AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock"><p id="xdx_800_eus-gaap--AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock_zcs3Ctt1mHn4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>9.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_823_zu6AT4AYkyQ4">Accrued expenses and other current liabilities</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001320" name="us-gaap:ScheduleOfAccountsPayableAndAccruedLiabilitiesTableTextBlock"><p id="xdx_895_eus-gaap--ScheduleOfAccountsPayableAndAccruedLiabilitiesTableTextBlock_zzuwcgsBTEq7" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accrued
expenses and other current liabilities consisted of the following:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B0_zcvieDLenSsh" style="display: none">Schedule
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<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_49F_20221231_zbkAQLKppJPb" style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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</ix:nonNumeric><p id="xdx_8A7_zdWMeQhi72Q2" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001337" name="LGCL:RedeemablePreferredSharesOfNonControllingInterestTextBlock"><p id="xdx_807_ecustom--RedeemablePreferredSharesOfNonControllingInterestTextBlock_zOhFiGqFLPof" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_82A_z8YJjBY0t7Yk">Redeemable preferred shares of non-controlling interest</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Issuance
of redeemable preferred shares</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">From
year 2018 to 2021, Lucas China issued a series of shares to investors:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 14, 2018, Qianjin Network Information Technology (Shanghai) Co., Ltd. (&#8220;Qianjin Network&#8221;), aka 51 JOB, entered into
a share purchase agreement with Lucas China (&#8220;2018 SPA I&#8221;), to purchase <span id="xdx_905_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_pid_c20180813__20180814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--QianjinNetworkInformationTechnologyCoLtdMember_zeQ3Qou6mVk2" title="Aggregate purchase price of shares"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2018-08-132018-08-14_custom_SharePurchaseAgreementMember_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001339" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">649,519</ix:nonFraction></span> shares with par value RMB<span id="xdx_906_eus-gaap--SharesIssuedPricePerShare_iI_pid_uRMBPShares_c20180814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--QianjinNetworkInformationTechnologyCoLtdMember_zcsK5aZqSR6b" title="Aggregate purchase price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2018-08-14_custom_SharePurchaseAgreementMember_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001341" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">1</ix:nonFraction></span> per share, amounting
to an aggregate purchase price of RMB<span id="xdx_906_eus-gaap--StockIssuedDuringPeriodValueNewIssues_c20180813__20180814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--QianjinNetworkInformationTechnologyCoLtdMember_zICN18zxs1s6" title="Aggregate purchase price amount"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueNewIssues" contextRef="From2018-08-132018-08-14_custom_SharePurchaseAgreementMember_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001343" format="ixt:numdotdecimal" decimals="0" unitRef="RMB">25,000</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
November 12, 2018, Beagledata Technology Co., Ltd. (&#8220;Beagledata&#8221;) entered into a share purchase agreement with Lucas China
(&#8220;2018 SPA II&#8221;), to purchase <span id="xdx_909_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_pid_c20181111__20181112__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--BeagledataTechnologyCoLtdMember_zb9b4DqnkN7b" title="Stock issued during period shares new issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2018-11-112018-11-12_custom_SharePurchaseAgreementMember_custom_BeagledataTechnologyCoLtdMember" id="Fact001345" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">60,313</ix:nonFraction></span> shares with par value RMB<span id="xdx_90B_eus-gaap--SharesIssuedPricePerShare_iI_pid_uRMBPShares_c20181112__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--BeagledataTechnologyCoLtdMember_zASbhG3r0D7d" title="Shares issued price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2018-11-12_custom_SharePurchaseAgreementMember_custom_BeagledataTechnologyCoLtdMember" id="Fact001347" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">1</ix:nonFraction></span> per share, amounting to an aggregate purchase price of RMB<span id="xdx_908_eus-gaap--StockIssuedDuringPeriodValueNewIssues_c20181111__20181112__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--BeagledataTechnologyCoLtdMember_z3elPYOIYsrg" title="Stock issued during period new issues value"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueNewIssues" contextRef="From2018-11-112018-11-12_custom_SharePurchaseAgreementMember_custom_BeagledataTechnologyCoLtdMember" id="Fact001349" format="ixt:numdotdecimal" decimals="0" unitRef="RMB">5,000</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Before
January 1, 2020, Lucas China has collected all proceeds from investment pursuant to 2018 SPA I and 2018 SPA II.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
August 14, 2020, Qianjing Network, Beagledata, Qingdao Haichuanghui Technology Co., Ltd (&#8220;Haichuanghui&#8221;), a corporate venture
capital firm fully owned by the Haier Group, entered into a share purchase agreement with the Group (&#8220;2020 SPA&#8221;), to purchase
<span id="xdx_904_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_pid_c20200813__20200814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--QianjinNetworkInformationTechnologyCoLtdMember_zMh3FZ4iPqql" title="Stock issued during period shares new issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2020-08-132020-08-14_custom_SharePurchaseAgreementMember_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001351" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">75,392</ix:nonFraction></span>, <span id="xdx_90B_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_pid_c20200813__20200814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--BeagledataTechnologyCoLtdMember_zJ0pXPeG0jK8" title="Stock issued during period shares new issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2020-08-132020-08-14_custom_SharePurchaseAgreementMember_custom_BeagledataTechnologyCoLtdMember" id="Fact001353" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">52,271</ix:nonFraction></span> and <span id="xdx_901_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_pid_c20200813__20200814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--QingdaoHaichuanghuiTechnologyCoLtdMember_zkNVQQRhheec" title="Stock issued during period shares new issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2020-08-132020-08-14_custom_SharePurchaseAgreementMember_custom_QingdaoHaichuanghuiTechnologyCoLtdMember" id="Fact001355" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">20,104</ix:nonFraction></span> shares with par value RMB<span id="xdx_90D_eus-gaap--SharePrice_iI_uRMBPShares_c20200814_zpKH4JGwQKW9" title="Share price"><ix:nonFraction name="us-gaap:SharePrice" contextRef="AsOf2020-08-14" id="Fact001357" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">1</ix:nonFraction></span> per share and purchase price of approximately RMB<span id="xdx_906_eus-gaap--SharesIssuedPricePerShare_iI_pid_uRMBPShares_c20200814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--QianjinNetworkInformationTechnologyCoLtdMember_z84Kg5x0Tu0d" title="Shares issued price per share"><span id="xdx_902_eus-gaap--SharesIssuedPricePerShare_iI_pid_uRMBPShares_c20200814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--BeagledataTechnologyCoLtdMember_zWbLrsOuakGc" title="Shares issued price per share"><span id="xdx_905_eus-gaap--SharesIssuedPricePerShare_iI_pid_uRMBPShares_c20200814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--QingdaoHaichuanghuiTechnologyCoLtdMember_zdcb4Bl0XPkg" title="Shares issued price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2020-08-14_custom_SharePurchaseAgreementMember_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001359" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2020-08-14_custom_SharePurchaseAgreementMember_custom_BeagledataTechnologyCoLtdMember" id="Fact001361" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2020-08-14_custom_SharePurchaseAgreementMember_custom_QingdaoHaichuanghuiTechnologyCoLtdMember" id="Fact001363" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">99.48</ix:nonFraction></ix:nonFraction></ix:nonFraction></span></span></span> per share, respectively,
amounting to an aggregate purchase price of RMB<span id="xdx_906_eus-gaap--StockIssuedDuringPeriodValueNewIssues_c20200813__20200814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--QianjinNetworkInformationTechnologyCoLtdMember_zAh55dzSatyh" title="Aggregate purchase price amount"><span id="xdx_904_eus-gaap--StockIssuedDuringPeriodValueNewIssues_c20200813__20200814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--BeagledataTechnologyCoLtdMember_zt2SOSgBEy2c" title="Aggregate purchase price amount"><span id="xdx_909_eus-gaap--StockIssuedDuringPeriodValueNewIssues_c20200813__20200814__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--QingdaoHaichuanghuiTechnologyCoLtdMember_zDawtzrsaBPl" title="Aggregate purchase price amount"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueNewIssues" contextRef="From2020-08-132020-08-14_custom_SharePurchaseAgreementMember_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001365" format="ixt:numdotdecimal" decimals="0" unitRef="RMB"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueNewIssues" contextRef="From2020-08-132020-08-14_custom_SharePurchaseAgreementMember_custom_BeagledataTechnologyCoLtdMember" id="Fact001367" format="ixt:numdotdecimal" decimals="0" unitRef="RMB"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodValueNewIssues" contextRef="From2020-08-132020-08-14_custom_SharePurchaseAgreementMember_custom_QingdaoHaichuanghuiTechnologyCoLtdMember" id="Fact001369" format="ixt:numdotdecimal" decimals="0" unitRef="RMB">14,700</ix:nonFraction></ix:nonFraction></ix:nonFraction></span></span></span>. Pursuant to 2020 SPA, share purchase agreements signed aforementioned, including
2018 SPA I and 2018 SPA II, shall be carried out in accordance with the terms agreed in 2020 SPA. According to 2020 SPA, the major rights,
preferences and privileges of the shares are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Redemption
Rights</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
shares shall be redeemable at the option of holders of the shares if any of the below terms was met:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
                                            investors issue a written notice to require the redemption of all or part of their shares;</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 35.85pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
                                            matters in which the interests of Investors are damage due to the Lucas China&#8217;s actions,
                                            including but not limited to the matters that the result that controlling shareholders lose
                                            control of the Lucas China by transferring their shares without prior consent, primarily
                                            business of the Lucas China changes adversely, transactions without commercial substance,
                                            forgery of accounting documents, etc.</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 35.85pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
redemption price of the Shares is:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Redemption
price = Total Consideration * (1+10%*T) + Accumulated unpaid dividends from the first date which Lucas China received the consideration
of investment</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">T
equals to days, between the date on which Lucas China received the total consideration and the redemption date, divided by 365.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 120; Value: 1 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->19<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Redeemable
                                            preferred shares of non-controlling interest (cont.)</b></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Liquidation
Preferences</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the event of any liquidation, dissolution or winding up of the Lucas China, either voluntary or involuntary, the holders of the shares
shall be entitled to receive, prior to any distribution to the holders of the ordinary shares or any other class or series of shares
then outstanding, an amount equals to the redemption amount mentioned before.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 10, 2021, Jiaxing Anding Equity Investment Partnership (L.P.) (&#8220;Jiaxing Anding&#8221;) entered into a share purchase agreement
with the Group (&#8220;2021 SPA&#8221;), to purchase <span id="xdx_90F_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_pid_c20211009__20211010__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--JiaxingAndingEquityInvestmentPartnershipMember_zvwEgh1M8iJb" title="Stock issued during period shares new issues"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2021-10-092021-10-10_custom_SharePurchaseAgreementMember_custom_JiaxingAndingEquityInvestmentPartnershipMember" id="Fact001371" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">136,611</ix:nonFraction></span> shares with par value RMB<span id="xdx_905_eus-gaap--SharesIssuedPricePerShare_iI_pid_uRMBPShares_c20211010__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--JiaxingAndingEquityInvestmentPartnershipMember_zkUhZiJCtpy9" title="Aggregate purchase price par value"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2021-10-10_custom_SharePurchaseAgreementMember_custom_JiaxingAndingEquityInvestmentPartnershipMember" id="Fact001373" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">1</ix:nonFraction></span> per share and purchase price of approximately
RMB<span id="xdx_906_eus-gaap--PreferredStockParOrStatedValuePerShare_iI_pid_uRMBPShares_c20211010__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--JiaxingAndingEquityInvestmentPartnershipMember_zr5qQBgvY7F5" title="Preferred stock, par value"><ix:nonFraction name="us-gaap:PreferredStockParOrStatedValuePerShare" contextRef="AsOf2021-10-10_custom_SharePurchaseAgreementMember_custom_JiaxingAndingEquityInvestmentPartnershipMember" id="Fact001375" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">179.34</ix:nonFraction></span> per share, respectively, amounting to an aggregate purchase price of RMB<span id="xdx_905_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_pid_c20211009__20211010__us-gaap--TypeOfArrangementAxis__custom--SharePurchaseAgreementMember__dei--LegalEntityAxis__custom--QingdaoHaichuanghuiTechnologyCoLtdMember_zzVFXK0Dh6xb" title="Aggregate purchase price of shares"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2021-10-092021-10-10_custom_SharePurchaseAgreementMember_custom_QingdaoHaichuanghuiTechnologyCoLtdMember" id="Fact001377" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">24,500</ix:nonFraction></span>. As of December 31, 2021, Lucas China received
the total consideration. The major rights, preferences and privileges of the shares in 2021 SPA are applicable to all investors and their
shares (&#8220;Shares&#8221;), including Qianjing Network, Beagledata, Haichuanghui, Jiaxing Anding (collectively &#8220;Investors&#8221;),
which are as below:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Redemption
Rights</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Shares shall be redeemable at the option of holders of the Shares if any of the below terms was met:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lucas
                                            China has not consummated a Qualified Initial Public Offering (&#8220;QIPO&#8221;) within
                                            48 months after the closing of the sales of the Shares;</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 39.95pt; text-align: justify; text-indent: -22.1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
                                            Investors issue a written notice to require the redemption of all or part of their shares;</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 39.95pt; text-align: justify; text-indent: -22.1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"/><td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
                                            matters in which the interests of Investors are damage due to the Lucas China&#8217;s actions,
                                            including but not limited to the matters that the result that controlling shareholders lose
                                            control of the Lucas China by transferring their shares without prior consent, primarily
                                            business of the Lucas China changes adversely, transactions without commercial substance,
                                            forgery of accounting documents, etc.</span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 39.95pt; text-align: justify; text-indent: -22.1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
redemption price of the Shares is:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Redemption
price = Total Consideration * (1+8%*T) + Accumulated unpaid dividends from the first date which Lucas China received the consideration
of investment</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">T
equals to days, between the date on which Lucas China received the total consideration and the redemption date, divided by 365.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Dividend
Rights</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiaxing
Anding and Qianjing Network should be entitled to have priority rights to receive dividends, prior and in preference to any declaration
or payment of any dividend on the ordinary shares or any other class or series of shares of Lucas China, at the rate of <span id="xdx_90C_eus-gaap--SaleOfStockPercentageOfOwnershipBeforeTransaction_pid_dp_uPure_c20230101__20231231_zbGrtwqm9vlj" title="Sale of stock percentage of ownership before transaction"><ix:nonFraction name="us-gaap:SaleOfStockPercentageOfOwnershipBeforeTransaction" contextRef="From2023-01-01to2023-12-31" id="Fact001379" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">8</ix:nonFraction></span>% per annum
of the total consideration of the shares. The distributions shall be cumulative.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
there is any surplus after the payment of the dividend to Jiaxing Anding, dividends or profits shall be declared and distributed to Qianjin
Network in priority, and then to each shareholder (including Jiaxing Anding and Qianjin Network) in accordance with the relative proportion
of the investment amount actually paid by each shareholder in the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Liquidation
Preferences</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the event of any liquidation, dissolution or winding up of Lucas China, either voluntary or involuntary, the holders of the Shares shall
be entitled to receive, prior to any distribution to the holders of the ordinary shares or any other class or series of shares then outstanding,
an amount equals to the redemption amount mentioned before.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Waive
of redemption rights</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October 27, 2022, Lucas China entered into supplemental agreement with investors including Qianjin Network, Beagledata, Haichuanghui
and Jiaxing Anding, under which all investors agreed to waive their privileges including redemption rights, priority rights to receive
dividends, and liquidation preferences under 2021 SPA.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 121; Value: 1 -->
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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Redeemable
                                            preferred shares of non-controlling interest (cont.)</b></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Accounting
for redeemable preferred shares of non-controlling interest and waive of redemption feature</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2021
SPA modified the redemption rights and corresponding calculation formula of redemption price, clarified the dividend rights to different
investors in 2020 SPA. Pursuant to valuation report, the change of fair value of redeemable preferred shares immediately before and after
the amendment was less than <span id="xdx_903_eus-gaap--PreferredStockDividendRatePercentage_pid_dp_uPure_c20230101__20231231_zIlWod9gNh13" title="Preferred stock dividend rate percentage"><ix:nonFraction name="us-gaap:PreferredStockDividendRatePercentage" contextRef="From2023-01-01to2023-12-31" id="Fact001381" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">10</ix:nonFraction></span>%. Therefore, the amendment under 2021 SPA should be accounted for as a modification, and the difference
between the fair value of redeemable preferred shares immediately before and after the modification should be recognized as reduction
of accumulated deficit as a deemed dividend of RMB<span id="xdx_904_ecustom--DeemedDivided_pn3n3_uRMB_c20230101__20231231_zaJvyrSamXph" title="Deemed divided"><ix:nonFraction name="LGCL:DeemedDivided" contextRef="From2023-01-01to2023-12-31" id="Fact001383" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">568</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the years ended December 31, 2021, the Group recognized additional accretion of redeemable preferred shares to redemption value of RMB<span id="xdx_901_ecustom--AccretionOfRedeemablePreferredSharesToRedemptionValue_pn3n3_uRMB_c20210101__20211231_zOrfq6tSOdBe" title="Accretion of redeemable preferred shares to redemption value"><ix:nonFraction name="LGCL:AccretionOfRedeemablePreferredSharesToRedemptionValue" contextRef="From2021-01-012021-12-31" id="Fact001385" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,325</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the supplemental agreement dated October 27, 2022, since the redemption feature lapsed, the mezzanine equity should be reclassified to
permanent equity on the agreement effective date. In 2022 before the waiver of redemption rights of preferred shares, the Group recognized
additional accretion of redeemable preferred shares to redemption value of RMB<span id="xdx_907_ecustom--AccretionOfRedeemablePreferredSharesToRedemptionValue_pn3n3_uRMB_c20220101__20221231_zomybBslSrnk" title="Accretion of redeemable preferred shares to redemption value"><ix:nonFraction name="LGCL:AccretionOfRedeemablePreferredSharesToRedemptionValue" contextRef="From2022-01-012022-12-31" id="Fact001387" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,906</ix:nonFraction></span>.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001389" name="us-gaap:RedeemableNoncontrollingInterestTableTextBlock"><p id="xdx_891_eus-gaap--RedeemableNoncontrollingInterestTableTextBlock_z0uHTJQZCWDl" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
movement in the carrying value of the redeemable preferred shares are as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B5_zwZyEVTF6I6h" style="display: none">Schedule
of redeemable preferred shares</span> </span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_4BE_dei--LegalEntityAxis_custom--QianjinNetworkInformationTechnologyCoLtdMember_zxMCkpwRYlog" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Redeemable preferred shares issued to Qianjin NetWork</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_4B1_dei--LegalEntityAxis_custom--TianyunRongchuangAndHaichuanghuiMember_zFfjTCIxC7Xg" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Redeemable preferred shares issued to Tianyun Rongchuang and Haichuanghui</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr id="xdx_431_c20210101__20211231_eus-gaap--RedeemableNoncontrollingInterestEquityCarryingAmount_iS_z5bivp3fxQY" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 36%; font-weight: bold">Balance as of January 1, 2021</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_408_eus-gaap--TemporaryEquityStockIssuedDuringPeriodValueNewIssues_zqLR9C0E0Ugb" style="vertical-align: bottom; background-color: White">
    <td>Issuance of redeemable preferred shares</td><td style="font-weight: bold">&#160;</td>
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    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1397">-</span></td><td style="font-weight: bold; text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityStockIssuedDuringPeriodValueNewIssues" contextRef="From2021-01-012021-12-31_custom_JiaxingAndingEquityInvestmentPartnershipMember" id="Fact001398" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">24,500</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityStockIssuedDuringPeriodValueNewIssues" contextRef="From2021-01-012021-12-31" id="Fact001399" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">24,500</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40C_eus-gaap--TemporaryEquityOtherChanges_zRqWRCgjwsvc" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Collection of subscription receivables of redeemable preferred shares</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityOtherChanges" contextRef="From2021-01-012021-12-31_custom_TianyunRongchuangAndHaichuanghuiMember" id="Fact001402" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityOtherChanges" contextRef="From2021-01-012021-12-31" id="Fact001404" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,000</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_401_ecustom--TemporaryEquityAccretionOfDividend_zBsRqN0eri5i" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Deemed dividend/(Transfer of value) in connection with preferred shares modification</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="LGCL:TemporaryEquityAccretionOfDividend" contextRef="From2021-01-012021-12-31_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001406" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,001</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="LGCL:TemporaryEquityAccretionOfDividend" contextRef="From2021-01-012021-12-31_custom_TianyunRongchuangAndHaichuanghuiMember" id="Fact001407" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">433</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1408">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="LGCL:TemporaryEquityAccretionOfDividend" contextRef="From2021-01-012021-12-31" id="Fact001409" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">568</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_401_eus-gaap--TemporaryEquityAccretionOfInterest_zsEZp8xHrsof" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Accretion of subsidiary&#8217;s redeemable preferred shares to redemption value</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityAccretionOfInterest" contextRef="From2021-01-012021-12-31_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001411" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">144</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityAccretionOfInterest" contextRef="From2021-01-012021-12-31_custom_TianyunRongchuangAndHaichuanghuiMember" id="Fact001412" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,181</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1413">-</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityAccretionOfInterest" contextRef="From2021-01-012021-12-31" id="Fact001414" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,325</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_436_c20220101__20221231_eus-gaap--RedeemableNoncontrollingInterestEquityCarryingAmount_iS_z8KLA3xhjYv3" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Balance as of December 31, 2021</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:RedeemableNoncontrollingInterestEquityCarryingAmount" contextRef="AsOf2021-12-31_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001416" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">73,535</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:RedeemableNoncontrollingInterestEquityCarryingAmount" contextRef="AsOf2021-12-31_custom_TianyunRongchuangAndHaichuanghuiMember" id="Fact001417" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">13,969</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
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    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:RedeemableNoncontrollingInterestEquityCarryingAmount" contextRef="AsOf2021-12-31" id="Fact001419" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">112,004</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  <tr id="xdx_435_c20220101__20221231_eus-gaap--RedeemableNoncontrollingInterestEquityCarryingAmount_iS_z7UwbZLJUmC4" style="display: none; vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Balance</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:RedeemableNoncontrollingInterestEquityCarryingAmount" contextRef="AsOf2021-12-31_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001421" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">73,535</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:RedeemableNoncontrollingInterestEquityCarryingAmount" contextRef="AsOf2021-12-31_custom_TianyunRongchuangAndHaichuanghuiMember" id="Fact001422" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">13,969</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:RedeemableNoncontrollingInterestEquityCarryingAmount" contextRef="AsOf2021-12-31_custom_JiaxingAndingEquityInvestmentPartnershipMember" id="Fact001423" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">24,500</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:RedeemableNoncontrollingInterestEquityCarryingAmount" contextRef="AsOf2021-12-31" id="Fact001424" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">112,004</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
<tr id="xdx_403_eus-gaap--TemporaryEquityAccretionOfInterest_zvQyKTax4bVl" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accretion of subsidiary&#8217;s redeemable preferred shares to redemption value</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityAccretionOfInterest" contextRef="From2022-01-012022-12-31_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001426" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">493</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityAccretionOfInterest" contextRef="From2022-01-012022-12-31_custom_TianyunRongchuangAndHaichuanghuiMember" id="Fact001427" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">802</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityAccretionOfInterest" contextRef="From2022-01-012022-12-31_custom_JiaxingAndingEquityInvestmentPartnershipMember" id="Fact001428" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,611</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:TemporaryEquityAccretionOfInterest" contextRef="From2022-01-012022-12-31" id="Fact001429" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,906</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_405_eus-gaap--TemporaryEquityAccretionToRedemptionValue_iN_di_za3UZhqD0Djg" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Waive of redemption features</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:TemporaryEquityAccretionToRedemptionValue" contextRef="From2022-01-012022-12-31_custom_QianjinNetworkInformationTechnologyCoLtdMember" id="Fact001431" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">74,028</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:TemporaryEquityAccretionToRedemptionValue" contextRef="From2022-01-012022-12-31_custom_TianyunRongchuangAndHaichuanghuiMember" id="Fact001432" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">14,771</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:TemporaryEquityAccretionToRedemptionValue" contextRef="From2022-01-012022-12-31_custom_JiaxingAndingEquityInvestmentPartnershipMember" id="Fact001433" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">26,111</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:TemporaryEquityAccretionToRedemptionValue" contextRef="From2022-01-012022-12-31" id="Fact001434" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">114,910</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_43D_c20220101__20221231_eus-gaap--RedeemableNoncontrollingInterestEquityCarryingAmount_iE_zO9FbdHT0bZg" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Balance as of December 31, 2022</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1436">-</span></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1437">-</span></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1438">-</span></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1439">-</span></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  <tr id="xdx_434_c20220101__20221231_eus-gaap--RedeemableNoncontrollingInterestEquityCarryingAmount_iE_zXgKaSz9Y0fa" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 2.5pt">Balance</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1441">-</span></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
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    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1443">-</span></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1444">-</span></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
</table>
</ix:nonNumeric><p id="xdx_8A2_zEp6Vdji9F1i" style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 22.1pt; text-align: justify; text-indent: -22.1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001446" name="us-gaap:StockholdersEquityNoteDisclosureTextBlock"><p id="xdx_80E_eus-gaap--StockholdersEquityNoteDisclosureTextBlock_z83seYzGoEzh" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>11.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_823_zw8CZ026Pnmh">Ordinary shares</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 22.1pt; text-align: justify; text-indent: -22.1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
shareholders&#8217; equity structures of the Company as of December 31, 2022 and 2023 were presented after giving retroactive effect
to the Reorganization and Stock Split of the Company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
authorized share capital of the Company is $<span id="xdx_900_eus-gaap--Dividends_c20220815__20220815_zktiOBJxvAta" title="Dividends"><ix:nonFraction name="us-gaap:Dividends" contextRef="From2022-08-152022-08-15" id="Fact001448" format="ixt:numdotdecimal" decimals="0" unitRef="RMB">50,000</ix:nonFraction></span> divided into <span id="xdx_90C_eus-gaap--CommonStockSharesAuthorized_iI_pid_c20220815_z9URu9Eroo6k" title="Ordinary shares, shares authorized"><ix:nonFraction name="us-gaap:CommonStockSharesAuthorized" contextRef="AsOf2022-08-15" id="Fact001450" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">5,000,000,000</ix:nonFraction></span> Ordinary Shares of $<span id="xdx_905_eus-gaap--CommonStockParOrStatedValuePerShare_iI_pid_c20220815_zlRwDysPGCC4" title="Ordinary shares, par value"><ix:nonFraction name="us-gaap:CommonStockParOrStatedValuePerShare" contextRef="AsOf2022-08-15" id="Fact001452" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">0.00001</ix:nonFraction></span> par value per share. On August
15, 2022 and November 15, 2022, the Company issued an aggregate of <span id="xdx_900_eus-gaap--SharesIssued_iI_pid_c20220815_zgw85nEkjJY3" title="Shares issued"><span id="xdx_907_eus-gaap--SharesIssued_iI_pid_c20221115_zhGpQ2nUUljd" title="Shares issued"><ix:nonFraction name="us-gaap:SharesIssued" contextRef="AsOf2022-08-15" id="Fact001454" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:SharesIssued" contextRef="AsOf2022-11-15" id="Fact001456" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">39,031,650</ix:nonFraction></ix:nonFraction></span></span> Ordinary Shares at a price of $<span id="xdx_905_eus-gaap--SharesIssuedPricePerShare_iI_pid_c20220815_z40Ljl9ZnCng" title="Shares issued price per share"><span id="xdx_903_eus-gaap--SharesIssuedPricePerShare_iI_pid_c20221115_zXFLISbvxOKh" title="Shares issued price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2022-08-15" id="Fact001458" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2022-11-15" id="Fact001460" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">0.00001</ix:nonFraction></ix:nonFraction></span></span> per share, with
total consideration of $<span id="xdx_90F_eus-gaap--SaleOfStockConsiderationReceivedOnTransaction_pn2n3_c20220815__20220815_z3S09zYVyDle" title="Sale of stock"><span id="xdx_903_eus-gaap--SaleOfStockConsiderationReceivedOnTransaction_pn2n3_c20221115__20221115_zpqkGU6zsSt5" title="Sale of stock"><ix:nonFraction name="us-gaap:SaleOfStockConsiderationReceivedOnTransaction" contextRef="From2022-08-152022-08-15" id="Fact001462" format="ixt:numdotdecimal" decimals="-2" scale="3" unitRef="RMB"><ix:nonFraction name="us-gaap:SaleOfStockConsiderationReceivedOnTransaction" contextRef="From2022-11-152022-11-15" id="Fact001464" format="ixt:numdotdecimal" decimals="-2" scale="3" unitRef="RMB">0.4</ix:nonFraction></ix:nonFraction></span></span> thousand, pro-rata to the shareholders of the Company as of such date.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
May 29, 2023, <span id="xdx_906_eus-gaap--StockholdersEquityNoteStockSplit_c20230529__20230529_z9npZoq5xUhd" title="Stockholders equity note stock split"><ix:nonNumeric contextRef="From2023-05-292023-05-29" id="Fact001466" name="us-gaap:StockholdersEquityNoteStockSplit">the Company&#8217;s board of directors approved to effect a one-for-two stock split of its ordinary shares (the &#8220;Stock
Split&#8221;). As a result of the Stock Split, each ordinary share of US$0.00001 was automatically split to two issued and outstanding
ordinary shares with par value of US$0.000005 each without any action on the part of the shareholder.</ix:nonNumeric></span> All historical share numbers and
per share amounts have been retrospectively restated to reflect such Stock Split for all periods presented. As of December 31, 2022 and
2023, <span id="xdx_909_eus-gaap--CommonStockSharesIssued_iI_pid_c20221231_zE7jCTnOaUPh" title="Ordinary shares, shares issued"><span id="xdx_90C_eus-gaap--CommonStockSharesOutstanding_iI_pid_c20221231_z4RUOyL6UqFf" title="Ordinary shares, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2022-12-31" id="Fact001468" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2022-12-31" id="Fact001470" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">78,063,300</ix:nonFraction></ix:nonFraction></span></span> and <span id="xdx_902_eus-gaap--CommonStockSharesIssued_iI_pid_c20231231_zPH3pTc8d223" title="Ordinary shares, shares issued"><span id="xdx_90F_eus-gaap--CommonStockSharesOutstanding_iI_pid_c20231231_zr01l1ZkR1q" title="Ordinary shares, shares outstanding"><ix:nonFraction name="us-gaap:CommonStockSharesIssued" contextRef="AsOf2023-12-31" id="Fact001472" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:CommonStockSharesOutstanding" contextRef="AsOf2023-12-31" id="Fact001474" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">78,063,300</ix:nonFraction></ix:nonFraction></span></span> Ordinary Shares were issued and outstanding.</span></p>

</ix:nonNumeric><p id="xdx_815_z33vWvf5tqrg" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<!-- Field: Page; Sequence: 122; Value: 1 -->
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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page -->

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 22.1pt; text-align: justify; text-indent: -22.1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001476" name="us-gaap:RestrictedAssetsDisclosureTextBlock"><p id="xdx_803_eus-gaap--RestrictedAssetsDisclosureTextBlock_z3TAcC9LkSdi" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>12.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_82A_z8jxH6wP5yLb">Restricted net assets</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 22.1pt; text-align: justify; text-indent: -22.1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
significant portion of the Group&#8217;s operations are conducted through its PRC (excluding Hong Kong) subsidiaries, the Group&#8217;s
ability to pay dividends is primarily dependent on receiving distributions of funds from the Company&#8217;s subsidiaries. Relevant PRC
statutory laws and regulations permit payments of dividends by the Company&#8217;s subsidiaries only out of their retained earnings,
if any, as determined in accordance with PRC accounting standards and regulations, and after it has met the PRC requirements for appropriation
to statutory reserves. The Group is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve
and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles
of the PRC (&#8220;PRC GAAP&#8221;). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax
net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity&#8217;s registered capital. Appropriations
to the surplus reserve are made at the discretion of the Board of Directors. Paid-in capital of the Company&#8217;s subsidiaries included
in the Company&#8217;s consolidated net assets are also non-distributable for dividend purposes.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of these PRC laws and regulations, the Company&#8217;s PRC subsidiaries are restricted in their ability to transfer a portion
of their net assets to the Company. As of December 31, 2022 and 2023, net assets restricted in the aggregate, which include paid-in capital
and statutory reserves funds of the Company&#8217;s subsidiaries, that are included in the Company&#8217;s consolidated net assets were
approximately RMB<span id="xdx_90B_eus-gaap--AssetsNet_iI_pn3n3_uRMB_c20221231_zZ2r8Rsrcqbj" title="Assets net"><ix:nonFraction name="us-gaap:AssetsNet" contextRef="AsOf2022-12-31" id="Fact001478" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">82,790</ix:nonFraction></span> and RMB<span id="xdx_902_eus-gaap--AssetsNet_iI_pn3n3_uRMB_c20231231_zqXu6R7we0ii" title="Assets net"><ix:nonFraction name="us-gaap:AssetsNet" contextRef="AsOf2023-12-31" id="Fact001480" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">91,671</ix:nonFraction></span>, respectively.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001482" name="us-gaap:IncomeTaxDisclosureTextBlock"><p id="xdx_80A_eus-gaap--IncomeTaxDisclosureTextBlock_zeCsH7eJnEM5" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>13.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_825_zUyKscY3Qxw5">Taxation</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 22.1pt; text-align: justify; text-indent: -22.1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Cayman
Islands</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company is incorporated in the Cayman Islands and conducts its primary business operations through the subsidiaries
in the PRC. Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain arising in Cayman
Islands. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>British
Virgin Islands</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lucas BVI is incorporated in the British Virgin Islands and conducts its primary business operations through the
subsidiaries in the PRC. Under the current laws of the British Virgin Islands, Lucas BVI is not subject to tax on income or capital gains.
Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Hong
Kong</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">Lucas GC Limited (HK) is incorporated in Hong Kong and is subject to Hong Kong profits tax rate. Under the two-tiered
profits tax rates regime, the first 2,000 Hong Kong Dollar (&#8220;HKD&#8221;) of profits of the qualifying group entity will be taxed
at 8.25%, and profits above HKD2,000 will be taxed at 16.5%. Additionally, upon payments of dividends by the Company to its shareholders,
no HK withholding tax will be imposed.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">Under the PRC Enterprise Income Tax Law
(the &#8220;EIT Law&#8221;), the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises is 25%.
EIT grants preferential tax treatment to High and New Technology Enterprises (&#8220;HNTEs&#8221;) at a rate of 15%, subject to a requirement
that they re-apply for HNTE status every three years. For the Group&#8217;s subsidiaries, Lucas China obtained the high-tech certificate
in December 2020 and November 2023, and enjoyed a preferential income tax rate at 15% from 2020 to 2025. Luogaoshi Technology (Beijing)
Co., Ltd. obtained the high-tech certificate in December 2021, and enjoyed a preferential income tax rate at 15% from 2021 to 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 17.85pt; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span id="xdx_90C_eus-gaap--IncomeTaxExaminationDescription_c20210101__20211231_zEIy3ewrCQS" title="Income tax examination, description"><ix:nonNumeric contextRef="From2021-01-012021-12-31" id="Fact001484" name="us-gaap:IncomeTaxExaminationDescription">From January 1, 2021 to December 31, 2021, 12.5% of the first RMB 1.0 million of the assessable profit before tax
is subject to preferential tax rate of 20% and the 50% of the assessable profit before tax exceeding RMB 1.0 million but not exceeding
RMB 3.0 million is subject to preferential tax rate of 20%. From January 1, 2022 to December 31, 2022, 12.5% of the first RMB 1.0 million
of the assessable profit before tax is subject to preferential tax rate of 20% and the 25% of the assessable profit before tax exceeding
RMB 1.0 million but not exceeding RMB 3.0 million is subject to preferential tax rate of 20%. From January 1, 2023 to December 31, 2027,
25% of the first RMB 3.0 million of the assessable profit before tax is subject to the tax rate of 20% for the Company&#8217;s subsidiaries
that are qualified as &#8220;Small Profit Enterprises</ix:nonNumeric></span>&#8221;.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 123; Value: 1 -->
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    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" border="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0pt; margin-bottom: 0pt">
<tr style="vertical-align: top">
  <td style="text-align: justify; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13.</span></td>
  <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Taxation (cont.)</span></td></tr>
</table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001486" name="us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock"><p id="xdx_899_eus-gaap--ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock_zhkR231U81xk" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth current and deferred portion of income tax benefit of the Company and its consolidated subsidiaries:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B5_z7UOYfteCsql" style="display: none">Schedule
of income tax benefit</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_496_20210101__20211231_zjZgb4KRfCAi" style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_495_20220101__20221231_zDhwF5xObF45" style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td id="xdx_492_20230101__20231231_zzydn2MpqAF9" style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the years ended December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td></tr>
  <tr id="xdx_408_eus-gaap--CurrentIncomeTaxExpenseBenefit_pn3n3_uRMB_maITEBzPPx_z1GVWtgUpqO6" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Current income tax expense</td><td style="width: 2%">&#160;</td>
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    <td style="text-align: left; padding-bottom: 1.5pt">Deferred income tax benefit</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:DeferredIncomeTaxExpenseBenefit" contextRef="From2021-01-012021-12-31" id="Fact001492" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">702</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:DeferredIncomeTaxExpenseBenefit" contextRef="From2022-01-012022-12-31" id="Fact001493" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">616</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction name="us-gaap:DeferredIncomeTaxExpenseBenefit" contextRef="From2023-01-01to2023-12-31" id="Fact001494" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">7,880</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr id="xdx_407_eus-gaap--IncomeTaxExpenseBenefit_iT_pn3n3_uRMB_mtITEBzPPx_zuoU6htqsDWe" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 2.5pt">Total</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2021-01-012021-12-31" id="Fact001496" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">243</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2022-01-012022-12-31" id="Fact001497" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">595</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxExpenseBenefit" contextRef="From2023-01-01to2023-12-31" id="Fact001498" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">7,880</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">)</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AD_ziBnUsyPQ535" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001500" name="us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock"><p id="xdx_89E_eus-gaap--ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock_zDvHCRrv3hy6" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
reconciliation of the Group&#8217;s PRC statutory tax rate to the effective income tax rate during the periods is as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BF_zZi4udFQxj5l" style="display: none">Schedule
of effective income tax rate reconciliation</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom; background-color: White">
    <td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_493_20210101__20211231_zH1FMf1Vw1Y3" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_496_20220101__20221231_zyYVvQ8ye0Kk" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_498_20230101__20231231_z7c91ZXxq3ia" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the years ended December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td></tr>
  <tr id="xdx_40F_eus-gaap--IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest_pn3n3_uRMB_msITEBzfah_zOus5nLKO1M1" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Income before income tax</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 12%; text-align: right"><ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2021-01-012021-12-31" id="Fact001502" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">39,560</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 12%; text-align: right"><ix:nonFraction name="us-gaap:IncomeLossFromContinuingOperationsBeforeIncomeTaxesExtraordinaryItemsNoncontrollingInterest" contextRef="From2022-01-012022-12-31" id="Fact001503" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">35,816</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_40E_eus-gaap--IncomeTaxReconciliationIncomeTaxExpenseBenefitAtFederalStatutoryIncomeTaxRate_pn3n3_uRMB_maITEBzfah_zdgixSwkILKc" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Expected taxation at PRC statutory tax rate</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReconciliationIncomeTaxExpenseBenefitAtFederalStatutoryIncomeTaxRate" contextRef="From2021-01-012021-12-31" id="Fact001506" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">9,890</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReconciliationIncomeTaxExpenseBenefitAtFederalStatutoryIncomeTaxRate" contextRef="From2022-01-012022-12-31" id="Fact001507" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">8,954</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr id="xdx_409_ecustom--IncomeTaxReconciliationImpactOfPreferentialTaxRates_pn3n3_uRMB_msITEBzfah_zuWyNI6Izkkk" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Impact of preferential tax rates</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="LGCL:IncomeTaxReconciliationImpactOfPreferentialTaxRates" contextRef="From2021-01-012021-12-31" id="Fact001510" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">5,255</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="LGCL:IncomeTaxReconciliationImpactOfPreferentialTaxRates" contextRef="From2022-01-012022-12-31" id="Fact001511" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">2,749</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr id="xdx_40D_eus-gaap--IncomeTaxReconciliationTaxCreditsResearch_pn3n3_uRMB_msITEBzfah_zLEEVOMJu1Ah" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Research and development super-deduction</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxReconciliationTaxCreditsResearch" contextRef="From2021-01-012021-12-31" id="Fact001514" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">6,417</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxReconciliationTaxCreditsResearch" contextRef="From2022-01-012022-12-31" id="Fact001515" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">8,534</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxReconciliationTaxCreditsResearch" contextRef="From2023-01-01to2023-12-31" id="Fact001516" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">18,676</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr id="xdx_406_ecustom--IncomeTaxReconciliationEffectOfTrueUpToTaxReturn_iI_pn3n3_maITEBzfah_zxELvZgofYmh" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Effect of True up to Tax Return</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1518">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1519">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">Non-deductible expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReconciliationNondeductibleExpenseOther" contextRef="From2021-01-012021-12-31" id="Fact001522" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,497</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReconciliationNondeductibleExpenseOther" contextRef="From2022-01-012022-12-31" id="Fact001523" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">7</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1524">-</span></td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--IncomeTaxReconciliationForeignIncomeTaxRateDifferential_pn3n3_uRMB_maITEBzfah_z2PUJhRtYVic" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><p style="margin-top: 0; margin-bottom: 0">Effect of income tax rate differences in jurisdictions other
than the PRC</p></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction name="us-gaap:IncomeTaxReconciliationForeignIncomeTaxRateDifferential" contextRef="From2021-01-012021-12-31" id="Fact001526" format="ixt:numdotdecimal" decimals="-3" scale="3" sign="-" unitRef="RMB">6</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:IncomeTaxReconciliationForeignIncomeTaxRateDifferential" contextRef="From2022-01-012022-12-31" id="Fact001527" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">22</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</ix:nonNumeric><p id="xdx_8A2_zV1fqFDEcpN4" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BB_zLN4WTxl1ukg" style="display: none">Schedule
of deferred tax assets</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td style="padding-left: 10pt; text-align: left">&#160;</td><td>&#160;</td>
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</ix:nonNumeric><p id="xdx_8A7_zSSWWrdd2a6j" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B1_zDoRmwskF2l1" style="display: none">Schedule
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  <tr style="display: none; vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_498_20220101__20221231_zV1qZqJyn2t1" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td id="xdx_492_20230101__20231231_z0PEFKFjzxGc" style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
<tr style="vertical-align: bottom">
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</ix:nonNumeric><p id="xdx_8AD_zIVWfuvFJytj" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 124; Value: 1 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->23<!-- Field: /Sequence --></td></tr></table></div>
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    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>13.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Taxation
                                            (cont.)</b></span></td></tr></table>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: -17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">For entities incorporated
in Hong Kong, net loss can be carried forward indefinitely; for entities incorporated in PRC mainland, net loss can be carried forward
for five years, and for entities qualified as HNTE, net loss can be carried forward for ten years. As of December 31, 2022 and 2023, the
Group had net operating loss carryforwards of approximately RMB<span id="xdx_90B_eus-gaap--OperatingLossCarryforwards_iI_pn3n3_uRMB_c20221231_zo8fqt7TNW23" title="Operating loss carryforwards"><ix:nonFraction name="us-gaap:OperatingLossCarryforwards" contextRef="AsOf2022-12-31" id="Fact001569" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">34,358</ix:nonFraction></span> and RMB<span id="xdx_909_eus-gaap--OperatingLossCarryforwards_iI_pn3n3_uRMB_c20231231_zg0dWn2Tg9fc" title="Operating loss carryforwards"><ix:nonFraction name="us-gaap:OperatingLossCarryforwards" contextRef="AsOf2023-12-31" id="Fact001571" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">67,797</ix:nonFraction></span>, respectively, which arose from the Group&#8217;s
subsidiaries established in the PRC, the PRC taxable losses will expire from December 31, 2024 to 2033 if not utilized. The net operating
loss carryforwards of approximately RMB<span id="xdx_909_eus-gaap--OperatingLossCarryforwards_iI_pn3n3_uRMB_c20221231__srt--StatementGeographicalAxis__country--HK_z5E7HRKG740e" title="Operating loss carryforwards"><ix:nonFraction name="us-gaap:OperatingLossCarryforwards" contextRef="AsOf2022-12-31_country_HK" id="Fact001573" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,277</ix:nonFraction></span> and RMB<span id="xdx_909_eus-gaap--OperatingLossCarryforwards_iI_pn3n3_uRMB_c20231231__srt--StatementGeographicalAxis__country--HK_zDKKIcLlaY57" title="Operating loss carryforwards"><ix:nonFraction name="us-gaap:OperatingLossCarryforwards" contextRef="AsOf2023-12-31_country_HK" id="Fact001575" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">195</ix:nonFraction></span>, respectively, for entities incorporated in Hong Kong. As of December 31, 2022
and 2023, deferred tax assets from the net operating loss carryforwards amounted to RMB<span id="xdx_905_eus-gaap--DeferredTaxAssetsOperatingLossCarryforwards_iI_pn3n3_uRMB_c20221231_zUBuchgIHzg6" title="Deferred tax assets operating loss carryforwards"><ix:nonFraction name="us-gaap:DeferredTaxAssetsOperatingLossCarryforwards" contextRef="AsOf2022-12-31" id="Fact001577" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">5,003</ix:nonFraction></span> and RMB<span id="xdx_900_eus-gaap--DeferredTaxAssetsOperatingLossCarryforwards_iI_pn3n3_uRMB_c20231231_zT5Lyzyv74Mb" title="Deferred tax assets operating loss carryforwards"><ix:nonFraction name="us-gaap:DeferredTaxAssetsOperatingLossCarryforwards" contextRef="AsOf2023-12-31" id="Fact001579" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">10,861</ix:nonFraction></span>, respectively, which can be
carried forward ten years for HNTEs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences
become deductible. Recovery of substantially all of the Company&#8217;s deferred tax assets is dependent upon the generation of future
income, exclusive of reversing taxable temporary differences. The valuation allowance is considered on an individual entity basis. As
of December 31, 2023 and 2022, valuation allowances on deferred tax assets are provided because the Company believes that it is more-likely-than-not
that certain of the subsidiaries in the PRC will not be able to generate sufficient taxable income in the near future, to realize the
deferred tax assets carried-forwards, while the remaining PRC operating entities have been gradually recovered. 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 believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize
the deferred tax assets as of December 31, 2023 and 2022.Accordingly, as of December 31, 2022 and 2023, a RMB<span id="xdx_904_eus-gaap--DeferredTaxAssetsValuationAllowance_iI_pn3n3_uRMB_c20221231_zI61yw62Rrpl" title="Deferred tax assets valuation allowance"><ix:nonFraction name="us-gaap:DeferredTaxAssetsValuationAllowance" contextRef="AsOf2022-12-31" id="Fact001581" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">3,366</ix:nonFraction></span> and RMB<span id="xdx_90C_eus-gaap--DeferredTaxAssetsValuationAllowance_iI_pn3n3_uRMB_c20231231_z414sxduNmTa" title="Deferred tax assets valuation allowance"><ix:nonFraction name="us-gaap:DeferredTaxAssetsValuationAllowance" contextRef="AsOf2023-12-31" id="Fact001583" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">3,029</ix:nonFraction></span> valuation
allowance has been established respectively.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">The Company evaluates each uncertain tax position (including the potential
application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions.
As of December 31, 2021, 2022 and 2023, the Company did not have any unrecognized uncertain tax positions and the Company does not believe
that its unrecognized tax benefits will change over the next twelve months. For the years ended December 31, 2021, 2022 and 2023, the
Company did not incur any interest and penalties related to potential underpaid income tax expenses. As of December 31, 2023, the tax
years ended December 31, 2018 through 2022 for the Company&#8217;s subsidiaries in the PRC are generally subject to examination by the
PRC tax authorities.</p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: -17.85pt"></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify">&#160;</p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001585" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p id="xdx_806_eus-gaap--RelatedPartyTransactionsDisclosureTextBlock_z6GAE5hL8la" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>14.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_823_zWLRuNMMM8ee">Related party transactions</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(a)</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Related
                                            parties</b></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001587" name="LGCL:ScheduleOfRelatedPartiesTableTextBlock"><p id="xdx_891_ecustom--ScheduleOfRelatedPartiesTableTextBlock_zklmekfEZstl" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a list of related parties which the Group has significant transactions with:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BC_zZIODJBX6B16" style="display: none">Schedule
of related party</span></span></p>

<table cellspacing="0" cellpadding="0" title="(error)" style="font: 10pt Times New Roman, Times, Serif; width: 96%; border-collapse: collapse; margin-left: 0.25in">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; white-space: nowrap; text-align: left; width: 49%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Names
    of related parties</b></span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif">
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
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<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(b)</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Related
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BC_zegoBt6325O2" style="display: none">Schedule
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<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td style="text-align: left">Technology services received from:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td>Beagledata</td><td>&#160;</td>
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    <td>Related party transactions</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:RelatedPartyTransactionAmountsOfTransaction" contextRef="From2021-01-012021-12-31_custom_BeagledataMember_custom_OutsourcingServicesMember" id="Fact001607" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">1,200</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1608">-</span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:RelatedPartyTransactionAmountsOfTransaction" contextRef="From2023-01-012023-12-31_custom_BeagledataMember_custom_OutsourcingServicesMember" id="Fact001609" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">566</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
</table>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify; text-indent: -17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 125; Value: 1 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- Field: /Sequence --></td></tr></table></div>
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<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify; text-indent: -17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>14.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Related
                                            party transactions (cont.)</b></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span id="xdx_F02_zOQIoPXgLcJa" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span id="xdx_F1A_zsg742yMScq7" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001610" xml:lang="en-US">Beagledata
                                            provided technology services for the years ended December 31, 2022 and 2023, and the Group
                                            recorded it as research and development expenses in the consolidated statements of income
                                            and comprehensive income.</ix:footnote></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 35.85pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 18pt"><span id="xdx_F00_znu506vgu6g8" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span id="xdx_F1E_zjHngNYVpVAc" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001611" xml:lang="en-US">The
                                            Group provided recruitment services to Beagledata, including flexible staffing services and
                                            permanent recruitment services for the years ended December 31, 2022 and 2023.</ix:footnote></span></td></tr></table>

</ix:nonNumeric><p id="xdx_8A0_zYO4vSWEPCJf" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 35.85pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(c)</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Balances
                                            with related parties:</b></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001613" name="LGCL:ScheduleOfBalanceWithRelatedPartyTableTextBlock"><p id="xdx_895_ecustom--ScheduleOfBalanceWithRelatedPartyTableTextBlock_zEmy10opBsi2" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Balances
with related parties consisted of the following for the periods indicated:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BA_zIJskJRq7aBb" style="display: none">Schedule
of balances with related party</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_497_20221231_zA7qjFDwmmTe" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49B_20231231_zF0sNaMxSXpj" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Amounts due to related parties:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_40A_eus-gaap--OtherLiabilitiesCurrent_iI_uRMB_hus-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--BeagledataMember_zKLMaozQWPL4" style="vertical-align: bottom; background-color: White">
    <td style="width: 60%; text-align: left">Beagledata (<span id="xdx_F41_z9YiVfC7o0zg">i</span>)</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2022-12-31_custom_BeagledataMember" id="Fact001615" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,120</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 2%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 16%; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2023-12-31_custom_BeagledataMember" id="Fact001616" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,479</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr id="xdx_400_eus-gaap--OtherLiabilitiesCurrent_iI_uRMB_hus-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--Mr.HowardMember_zgB6ci5yYRRg" style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Mr. Howard (<span id="xdx_F4D_zIURSUem9qW9">ii</span>)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2022-12-31_custom_Mr.HowardMember" id="Fact001618" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">36</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2023-12-31_custom_Mr.HowardMember" id="Fact001619" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">618</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr id="xdx_404_eus-gaap--OtherLiabilitiesCurrent_iI_uRMB_hus-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_zszHtkJwjYRa" style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Total</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2022-12-31_us-gaap_RelatedPartyMember" id="Fact001621" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,156</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2023-12-31_us-gaap_RelatedPartyMember" id="Fact001622" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">3,097</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--OtherLiabilitiesCurrent_iI_uRMB_hus-gaap--RelatedPartyTransactionsByRelatedPartyAxis__us-gaap--RelatedPartyMember_z3osawwBB9ac" style="display: none; vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 2.5pt">Amounts due to related parties</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2022-12-31_us-gaap_RelatedPartyMember" id="Fact001624" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,156</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
    <td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 2.5pt double; font-weight: bold; text-align: right"><ix:nonFraction name="us-gaap:OtherLiabilitiesCurrent" contextRef="AsOf2023-12-31_us-gaap_RelatedPartyMember" id="Fact001625" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">3,097</ix:nonFraction></td><td style="padding-bottom: 2.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
</table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 18pt"><span id="xdx_F01_zYPZUPjT84yj" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span id="xdx_F1F_zL1y6XlIroKf" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001626" xml:lang="en-US">As
                                            of December 31, 2022 and 2023, amounts due to Beagledata consisted of technology services
                                            fees payable of RMB<span id="xdx_90D_ecustom--TechnologyServicesFees_iI_uRMB_c20221231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--BeagledataMember_zLNURHSzEa5b" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNjaGVkdWxlIG9mIGJhbGFuY2VzIHdpdGggcmVsYXRlZCBwYXJ0eSAoRGV0YWlscykgKFBhcmVudGhldGljYWwpAA__"><ix:nonFraction name="LGCL:TechnologyServicesFees" contextRef="AsOf2022-12-31_custom_BeagledataMember" id="Fact001627" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,120</ix:nonFraction></span> and RMB<span id="xdx_904_ecustom--TechnologyServicesFees_iI_uRMB_c20231231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--BeagledataMember_zmdwkzJ3XtQ9" title="Technology services fees payable" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNjaGVkdWxlIG9mIGJhbGFuY2VzIHdpdGggcmVsYXRlZCBwYXJ0eSAoRGV0YWlscykgKFBhcmVudGhldGljYWwpAA__"><ix:nonFraction name="LGCL:TechnologyServicesFees" contextRef="AsOf2023-12-31_custom_BeagledataMember" id="Fact001629" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">2,120</ix:nonFraction></span>, respectively, and contract liabilities of <span id="xdx_901_eus-gaap--ContractWithCustomerLiabilityCurrent_iI_dxL_c20221231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--BeagledataMember_zgYxqHrdTfMd" title="Technology services fees payable::XDX::-" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNjaGVkdWxlIG9mIGJhbGFuY2VzIHdpdGggcmVsYXRlZCBwYXJ0eSAoRGV0YWlscykgKFBhcmVudGhldGljYWwpAA__"><span style="-sec-ix-hidden: xdx2ixbrl1631">nil</span></span> and
                                            RMB<span id="xdx_90C_eus-gaap--ContractWithCustomerLiabilityCurrent_iI_uRMB_c20231231__us-gaap--RelatedPartyTransactionsByRelatedPartyAxis__custom--BeagledataMember_zQvJGK5IYSCf" title="Contract liability" class="xdx_phnt_RGlzY2xvc3VyZSAtIFNjaGVkdWxlIG9mIGJhbGFuY2VzIHdpdGggcmVsYXRlZCBwYXJ0eSAoRGV0YWlscykgKFBhcmVudGhldGljYWwpAA__"><ix:nonFraction name="us-gaap:ContractWithCustomerLiabilityCurrent" contextRef="AsOf2023-12-31_custom_BeagledataMember" id="Fact001633" format="ixt:numdotdecimal" decimals="-3" scale="3" unitRef="RMB">359</ix:nonFraction></span>, respectively.</ix:footnote></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 35.85pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 18pt"><span id="xdx_F0D_zKqC1koj8U22" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span id="xdx_F17_z9lCyS3VaJc4" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001634" xml:lang="en-US">Amounts
                                            due to Mr. Howard represented expensed paid on behalf of the Group.</ix:footnote></span></td></tr></table>

</ix:nonNumeric><p id="xdx_8AA_zb4GFNBuFJc3" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 35.85pt; text-align: justify; text-indent: -0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001636" name="us-gaap:EarningsPerShareTextBlock"><p id="xdx_804_eus-gaap--EarningsPerShareTextBlock_z8vAKqK4tcD4" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>15.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_823_z1fxfI4avV98">Income per share</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001638" name="us-gaap:ScheduleOfEarningsPerShareBasicAndDilutedTableTextBlock"><p id="xdx_899_eus-gaap--ScheduleOfEarningsPerShareBasicAndDilutedTableTextBlock_zBCIQXwv9kCa" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth the basic and diluted net income per share computation and provides a reconciliation of the numerator and
denominator for the years presented:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BD_zk2j7XfMcvOj" style="display: none">Schedule
of computation of basic and diluted income</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_498_20210101__20211231_zjqvFlR4Tze7" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49F_20220101__20221231_zoBfT4eHTWA4" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_49E_20230101__20231231_z9qIWv1Z2Hob" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the years ended December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Basic and diluted earnings per ordinary share calculation:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--NetIncomeLossAvailableToCommonStockholdersDilutedAbstract_iB_zh4GMGGWplmd" style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="width: 46%; text-align: left">Net income attributable to Lucas GC Limited</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_401_eus-gaap--RedeemablePreferredStockDividends_iN_di_uRMB_msNILATz3OP_z8RAEW5vXsYc" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Less: Deemed dividend to redeemable preferred shareholders</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1650">-</span></td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left; padding-bottom: 1.5pt">Accretion of subsidiary&#8217; redeemable preferred shares to redemption value</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: xdx2ixbrl1654">-</span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_406_eus-gaap--NetIncomeLossAvailableToCommonStockholdersDilutedAbstract_iB_zAXqDEnXpUbg" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold">Denominator:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt">Weighted average ordinary shares outstanding-basic and diluted</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span id="xdx_900_eus-gaap--WeightedAverageNumberOfSharesOutstandingBasic_pid_c20210101__20211231_z5Jzinx12UEj" title="Basic"><span id="xdx_907_eus-gaap--WeightedAverageNumberOfDilutedSharesOutstanding_pid_c20210101__20211231_zEbh8O8VExS2" title="Diluted"><ix:nonFraction name="us-gaap:WeightedAverageNumberOfSharesOutstandingBasic" contextRef="From2021-01-012021-12-31" id="Fact001664" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding" contextRef="From2021-01-012021-12-31" id="Fact001666" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">78,063,300</ix:nonFraction></ix:nonFraction></span></span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span id="xdx_90B_eus-gaap--WeightedAverageNumberOfSharesOutstandingBasic_pid_c20220101__20221231_zmkEX0BbQNig" title="Basic"><span id="xdx_906_eus-gaap--WeightedAverageNumberOfDilutedSharesOutstanding_pid_c20220101__20221231_zBxj1aeRkL75" title="Diluted"><ix:nonFraction name="us-gaap:WeightedAverageNumberOfSharesOutstandingBasic" contextRef="From2022-01-012022-12-31" id="Fact001668" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding" contextRef="From2022-01-012022-12-31" id="Fact001670" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">78,063,300</ix:nonFraction></ix:nonFraction></span></span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span id="xdx_902_eus-gaap--WeightedAverageNumberOfSharesOutstandingBasic_pid_c20230101__20231231_znKMNPuMpSP6" title="Weighted average ordinary shares outstanding - Basic"><span id="xdx_90C_eus-gaap--WeightedAverageNumberOfDilutedSharesOutstanding_pid_c20230101__20231231_zph1ntvpYwl8" title="Weighted average ordinary shares outstanding - Diluted"><ix:nonFraction name="us-gaap:WeightedAverageNumberOfSharesOutstandingBasic" contextRef="From2023-01-01to2023-12-31" id="Fact001672" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares"><ix:nonFraction name="us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding" contextRef="From2023-01-01to2023-12-31" id="Fact001674" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">78,063,300</ix:nonFraction></ix:nonFraction></span></span></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">Income per ordinary share basic and diluted</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_90B_eus-gaap--EarningsPerShareBasic_pid_c20210101__20211231_z64VUNj6JXka" title="Basic"><span id="xdx_902_eus-gaap--EarningsPerShareDiluted_pid_c20210101__20211231_zAVHITiYFK0l" title="Diluted"><ix:nonFraction name="us-gaap:EarningsPerShareBasic" contextRef="From2021-01-012021-12-31" id="Fact001676" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares"><ix:nonFraction name="us-gaap:EarningsPerShareDiluted" contextRef="From2021-01-012021-12-31" id="Fact001678" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">0.48</ix:nonFraction></ix:nonFraction></span></span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_906_eus-gaap--EarningsPerShareBasic_pid_c20220101__20221231_zdfvta6OTwbi" title="Basic"><span id="xdx_902_eus-gaap--EarningsPerShareDiluted_pid_c20220101__20221231_zIhIKngqV12j" title="Diluted"><ix:nonFraction name="us-gaap:EarningsPerShareBasic" contextRef="From2022-01-012022-12-31" id="Fact001680" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares"><ix:nonFraction name="us-gaap:EarningsPerShareDiluted" contextRef="From2022-01-012022-12-31" id="Fact001682" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">0.43</ix:nonFraction></ix:nonFraction></span></span></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span id="xdx_909_eus-gaap--EarningsPerShareBasic_pid_c20230101__20231231_zHD2MFTbZPx3" title="Income per ordinary share - Basic"><span id="xdx_908_eus-gaap--EarningsPerShareDiluted_pid_c20230101__20231231_znJa03wu6poi" title="Income per ordinary share - Diluted"><ix:nonFraction name="us-gaap:EarningsPerShareBasic" contextRef="From2023-01-01to2023-12-31" id="Fact001684" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares"><ix:nonFraction name="us-gaap:EarningsPerShareDiluted" contextRef="From2023-01-01to2023-12-31" id="Fact001686" format="ixt:numdotdecimal" decimals="INF" unitRef="RMBPShares">0.99</ix:nonFraction></ix:nonFraction></span></span></td><td style="text-align: left">&#160;</td></tr>
  </table>

</ix:nonNumeric><p id="xdx_8AE_zB7BY9qrCBMa" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>


<ix:exclude><!-- Field: Page; Sequence: 126; Value: 1 -->
    <div style="border-bottom: Black 1.5pt solid; margin-bottom: 6pt"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="text-align: center; width: 100%">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->25<!-- Field: /Sequence --></td></tr></table></div>
    <div style="break-before: page; margin-top: 6pt"><p style="margin: 0pt">&#160;</p></div>
    <!-- Field: /Page --></ix:exclude>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001688" name="us-gaap:LesseeOperatingLeasesTextBlock"><p id="xdx_802_eus-gaap--LesseeOperatingLeasesTextBlock_zvNDSIkXGyE7" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>16.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_82D_zx8imQnam0Ta">Leases</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Effective
on January 1, 2022, the Group adopted Topic 842. At the inception of a contract, the Group determines if the arrangement is, or contains,
a lease. The leases of the Group mainly consisted of office leasing.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001690" name="us-gaap:OperatingLeaseLeaseIncomeTableTextBlock"><p id="xdx_895_eus-gaap--OperatingLeaseLeaseIncomeTableTextBlock_zhLkzMPehmRi" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Supplemental
balance sheet information related to operating lease was as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BD_zJQ55NpAIxjh" style="display: none">Schedule
of operating leases</span>&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr id="xdx_408_eus-gaap--OperatingLeaseLiability_iI_uRMB_z88Djwcugc32" style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 2.5pt">Total operating lease liabilities</td><td style="font-weight: bold; padding-bottom: 2.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
weighted average remaining lease terms and discount rates for the operating lease for the years ended December 31, 2021, 2022 and 2023
were as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" id="xdx_496_20211231_zCWnWsSx8xgb" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">For the years ended December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Weighted average remaining lease term (years)</td><td style="width: 2%">&#160;</td>
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    <td>Weighted average discount rate</td><td>&#160;</td>
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  </table>

</ix:nonNumeric><p id="xdx_8AC_zLmoTBRr4RM3" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001714" name="us-gaap:LeaseCostTableTextBlock"><p id="xdx_897_eus-gaap--LeaseCostTableTextBlock_zI63105ETVJd" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the years ended December 31, 2021, 2022 and 2023, the lease expenses were as follows:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8BC_zq9pNxNXR6E4" style="display: none">Schedule
of lease expenses</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" id="xdx_492_20230101__20231231_zn2NExqzpt5k" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2023</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">RMB</td><td style="font-weight: bold">&#160;</td></tr>
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    <td style="width: 52%; text-align: left">Operating lease expense</td><td style="width: 2%">&#160;</td>
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  </table>

</ix:nonNumeric><p id="xdx_8AE_z1GCVeDlTbb6" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001728" name="us-gaap:LesseeOperatingLeaseLiabilityMaturityTableTextBlock"><p id="xdx_894_eus-gaap--LesseeOperatingLeaseLiabilityMaturityTableTextBlock_zUcqEbOGYEd1" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a schedule of future minimum payments under the Group&#8217;s operating leases as of December 31, 2023:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B6_zG19qHnjlSCj" style="display: none">Schedule
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  <tr style="display: none; vertical-align: bottom">
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</ix:nonNumeric><p id="xdx_8A4_zjJRTck9gz38" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify; text-indent: -17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial
instruments that potentially expose the Group to concentrations of credit risk consist primarily of accounts receivable.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<span id="xdx_8B6_z3DEbZ0PSceh" style="display: none">Schedule
of concentration of credit risk</span></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="display: none"></span></span></p>

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    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


<ix:exclude><!-- Field: Page; Sequence: 128; Value: 1 -->
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>17.</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Concentration
                                            of credit risk (cont.)</b></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td style="width: 60%; text-align: left">Supplier E</td><td style="width: 2%">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth a summary of single suppliers who represent 10% or more of the Group&#8217;s total advance to suppliers, net:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="display: none; vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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<tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr id="xdx_402_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_hsrt--MajorCustomersAxis__custom--SupplierIMember__us-gaap--ConcentrationRiskByBenchmarkAxis__custom--AdvanceToSuppliersMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_ziGu5Z8bXqWh" style="vertical-align: bottom; background-color: White">
    <td style="width: 60%; text-align: left">Supplier I</td><td style="width: 2%">&#160;</td>
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  <tr id="xdx_40E_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_hsrt--MajorCustomersAxis__custom--SupplierJMember__us-gaap--ConcentrationRiskByBenchmarkAxis__custom--AdvanceToSuppliersMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zrdXwBUlGHIa" style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr id="xdx_407_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_hsrt--MajorCustomersAxis__custom--SupplierKMember__us-gaap--ConcentrationRiskByBenchmarkAxis__custom--AdvanceToSuppliersMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zElXjuM4eMBe" style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Supplier K</td><td>&#160;</td>
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    <td style="text-align: left">Supplier L</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction name="us-gaap:ConcentrationRiskPercentage1" contextRef="From2022-01-012022-12-31_custom_SupplierLMember_custom_AdvanceToSuppliersMember_us-gaap_CustomerConcentrationRiskMember" id="Fact001812" format="ixt:numdotdecimal" decimals="INF" scale="-2" unitRef="Pure">11</ix:nonFraction></td><td style="text-align: left">%</td><td>&#160;</td>
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  <tr id="xdx_407_eus-gaap--ConcentrationRiskPercentage1_pid_dp_uPure_hsrt--MajorCustomersAxis__custom--SupplierLMember__us-gaap--ConcentrationRiskByBenchmarkAxis__custom--AdvanceToSuppliersMember__us-gaap--ConcentrationRiskByTypeAxis__us-gaap--CustomerConcentrationRiskMember_zbMezcgmsQF6" style="display: none; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Concentration risk percentage</td><td>&#160;</td>
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</table>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 15pt; text-align: right"><span id="xdx_F02_zSXXssIUOG26" style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="width: 5pt"/><td style="text-align: justify"><span id="xdx_F10_zPSW9zk0HXja" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001817" xml:lang="en-US">Represent
percentage less than 10%</ix:footnote></span></td>
</tr></table>




</ix:nonNumeric><p id="xdx_8A8_zAmfGO488j27" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001819" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p id="xdx_808_eus-gaap--CommitmentsAndContingenciesDisclosureTextBlock_zhpY2mVa7cwj" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>18.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_82F_zyxhUXVpUvBf">Commitments and contingencies</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<table cellpadding="0" cellspacing="0" style="font: bold 10pt Times New Roman, Times, Serif; width: 100%; margin-top: 0; margin-bottom: 0"><tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
<td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(d)</b></span></td><td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Contingencies</b></span></td></tr></table>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the ordinary course of business, the Group may be subject to legal proceedings regarding contractual and employment relationships and
a variety of other matters. The Group records contingent liabilities resulting from such claims, when a loss is assessed to be probable,
and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation
as of December 31, 2023 and through the issuance date of these consolidated financial statements.</span></p>

</ix:nonNumeric><p id="xdx_81A_zXFQBv61ja47" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>LUCAS
GC LIMITED</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023 </b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands, except for share and per share data, unless otherwise noted)</b></span></p>

<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001821" name="LGCL:CondensedCompanyFinancialStatementsDisclosureTextBlock"><p id="xdx_805_ecustom--CondensedCompanyFinancialStatementsDisclosureTextBlock_zmJxPmC0DSX3" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>19.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_820_zLBGlEx3f0pk">Condensed company financial statements</span></b></span></p>



<p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify; text-indent: -17.85pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company performed a test on the restricted net assets of consolidated subsidiary in accordance with U.S. Securities and Exchange Commission
Regulation S-X Rule 4-08 (e) (3), &#8220;General Notes to Financial Statements&#8221; and concluded that it was applicable for the Company
to disclose the financial statements for the parent company.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Basis
of presentation</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
condensed financial information of the Parent Company has been prepared using the same accounting policies as set out in the Group&#8217;s
consolidated financial statements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration: underline">Investments
in subsidiaries</span></i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Parent Company and its subsidiaries were included in the consolidated financial statements where inter-company balances and transactions
were eliminated upon consolidation.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001823" name="srt:ScheduleOfCondensedBalanceSheetTableTextBlock"><p id="xdx_891_esrt--ScheduleOfCondensedBalanceSheetTableTextBlock_zNf6OOaE1pUi" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 20pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration: underline"><span>Condensed
Balance Sheets</span></span></b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 20pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span><span id="xdx_8BB_zOcOAS6cfMLl" style="display: none">Schedule
of condensed balance sheet</span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 20pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p>

<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td id="xdx_F0D_zbK92yqeQiD6" style="width: 15pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="width: 5pt"/><td style="text-align: justify"><span id="xdx_F13_zj0rjzfLevi6" style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:footnote id="Footnote001904" xml:lang="en-US">The shares and
per share information are presented on a retroactive basis to reflect the reorganization, as well as the stock split on May 31, 2023.</ix:footnote></span></td>
</tr></table>

</ix:nonNumeric><p id="xdx_8AB_zgbJqTPjWOv9" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="display: none; vertical-align: bottom; background-color: White">
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<tr style="vertical-align: bottom">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</ix:nonNumeric><p id="xdx_8A1_z8xfXJjbpUO8" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

</ix:nonNumeric><ix:nonNumeric contextRef="From2023-01-01to2023-12-31" escape="true" id="Fact001931" name="us-gaap:SubsequentEventsTextBlock"><p id="xdx_809_eus-gaap--SubsequentEventsTextBlock_zdYLJgWHJdI1" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>20.</b></span> <span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span id="xdx_82B_zw9mEVjLyEC">Subsequent events</span></b></span></p>



<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Initial
Public Offering</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
March 2024, the Group completed its initial public offering of <span id="xdx_904_eus-gaap--StockIssuedDuringPeriodSharesNewIssues_pid_c20240301__20240331__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember_zCI6xKba1BQb" title="Number of new stock issued during the period"><ix:nonFraction name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" contextRef="From2024-03-012024-03-31_us-gaap_SubsequentEventMember_us-gaap_IPOMember" id="Fact001933" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">1,500,000</ix:nonFraction></span> ordinary shares at a public offering price of $<span title="Number of new stock issued during the period"><span id="xdx_90F_eus-gaap--SharesIssuedPricePerShare_iI_pid_uUSDPShares_c20240331__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember_zTSU5ZOjzI2i" title="Shares issued, price per share"><ix:nonFraction name="us-gaap:SharesIssuedPricePerShare" contextRef="AsOf2024-03-31_us-gaap_SubsequentEventMember_us-gaap_IPOMember" id="Fact001935" format="ixt:numdotdecimal" decimals="INF" unitRef="USDPShares">4.00</ix:nonFraction></span></span> per share
for total gross proceeds of $<span id="xdx_904_eus-gaap--ProceedsFromIssuanceInitialPublicOffering_pp0d_uUSD_c20240301__20240331__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember_zOujQBgPQ5A" title="Gross proceeds"><ix:nonFraction name="us-gaap:ProceedsFromIssuanceInitialPublicOffering" contextRef="From2024-03-012024-03-31_us-gaap_SubsequentEventMember_us-gaap_IPOMember" id="Fact001937" format="ixt:numdotdecimal" decimals="0" unitRef="USD">6,000</ix:nonFraction></span> before deducting underwriting discounts and offering expenses.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the Company has granted to the underwriter an option, exercisable for 45 days from the date of the final prospectus, to purchase
up to an aggregate of an additional <span id="xdx_901_eus-gaap--ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant_iI_pid_c20240331__us-gaap--SubsequentEventTypeAxis__us-gaap--SubsequentEventMember__us-gaap--SubsidiarySaleOfStockAxis__us-gaap--IPOMember_zZWZcGr7zQib" title="Number shares granted"><ix:nonFraction name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNumberOfSharesAvailableForGrant" contextRef="AsOf2024-03-31_us-gaap_SubsequentEventMember_us-gaap_IPOMember" id="Fact001939" format="ixt:numdotdecimal" decimals="INF" unitRef="Shares">225,000</ix:nonFraction></span> ordinary shares at the initial public offering price, less underwriting discounts. As of
the date of issuance of these consolidated financial statements, over-allotment was not exercised.</span></p>

</ix:nonNumeric><p id="xdx_81C_zcKqP7Now4ma" style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 17.85pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>


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{"company-data": {"conformed-name": "Lucas GC Ltd", "cik": "0001954694", "assigned-sic": "7370", "organization-name": "06 Technology", "irs-number": "000000000", "state-of-incorporation": "E9"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "001-41658", "film-number": "24890611"}, "business-address": {"street1": "ROOM 5A01, 4TH FLOOR, AIR CHINA BUILDING", "street2": "XIAOYUN ROAD, SANYUANQIAO, CHAOYANG,", "city": "BEIJING", "state": "F4", "zip": "100027", "phone": "(86) 18500976532"}, "mail-address": {"street1": "ROOM 5A01, 4TH FLOOR, AIR CHINA BUILDING", "street2": "XIAOYUN ROAD, SANYUANQIAO, CHAOYANG,", "city": "BEIJING", "state": "F4", "zip": "100027"}}
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
20-F
(Mark
One)
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended
December 31
,
2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from _________to_________
OR
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date
of event requiring this shell company report:__________
For
the transition period from________to_________
Commission
file number:
333-270107
Lucas
GC Limited
(Exact
name of Registrant as specified in its charter)
N/A
(Translation
of Registrant's name into English)
Cayman
Islands
(Jurisdiction
of incorporation or organization)
Room
5A01, 4th Floor
,
Air
China Building, Xiaoyun Road
,
Sanyuanqiao
,
Chaoyang District
,
Beijing
100027
,
China
(Address
of principal executive offices)
Howard
Lee
Chairman
and Chief Executive Officer
Telephone:
(
86
)
18500976532
Email:
info@lucasgc.com
Room
5A01, 4th Floor
,
Air
China Building, Xiaoyun Road
,
Sanyuanqiao
,
Chaoyang District
,
Beijing
100027
,
China
(Name,
Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities
registered or to be registered pursuant to Section 12(b) of the Act:
Title
    of each class
Trading
    Symbol(s)
Name
    of each exchange on which registered
Ordinary
    shares, par value US$0. 000005 per share
LGCL
The
Nasdaq
Stock Market LLC
(The
    Nasdaq Capital Market)
Securities
registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title
of Class)
Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title
of Class)
Indicate
the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered
by the annual report:
As
of December 31, 2023, there were
78,063,300
ordinary shares issued and outstanding, par value US$0.000005 per share.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes ☐
No
☒
If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 Yes ☐
No
☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days.
Yes
☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes
☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company. See definition of "large accelerated filer, "accelerated filer" and "emerging growth company"
in Rule 12b-2 of the Exchange Act.
Large
    accelerated filer
☐
Accelerated
    filer
☐
Non-accelerated
    filer
☒
Emerging
    growth company
☒
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.
☐
†
The
    term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards
    Board to its Accounting Standards Codification after April 5, 2012.
Indicate
by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP
☒
International
    Financial Reporting Standards as issued
Other
    ☐
by
    the International Accounting Standards Board ☐
If
"Other" has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow: Item 17 ☐ Item 18 ☐
If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No
☒
(APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate
by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
TABLE
OF CONTENTS
Page
INTRODUCTION
ii
FORWARD-LOOKING INFORMATION
iii
PART I
1
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
1
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
1
ITEM 3. KEY INFORMATION
1
ITEM 4. INFORMATION ON THE COMPANY
36
ITEM 4A. UNRESOLVED STAFF COMMENTS
49
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
49
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
75
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
80
ITEM 8. FINANCIAL INFORMATION
80
ITEM 9. THE OFFER AND LISTING
81
ITEM 10. ADDITIONAL INFORMATION
81
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
93
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
93
PART II
94
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
94
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
94
ITEM 15. CONTROLS AND PROCEDURES
94
ITEM 16. [RESERVED]
95
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
95
ITEM 16B. CODE OF ETHICS
95
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
95
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
95
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
95
ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
95
ITEM 16G. CORPORATE GOVERNANCE
96
ITEM 16H. MINE SAFETY DISCLOSURE
96
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
96
ITEM 16J. INSIDER TRADING POLICIES
96
ITEM 16K. CYBERSECURITY
96
PART III
96
ITEM 17. FINANCIAL STATEMENTS
96
ITEM 18. FINANCIAL STATEMENTS
96
ITEM 19. EXHIBITS
96
SIGNATURES
97
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
i
INTRODUCTION
Unless
otherwise indicated or the context otherwise requires, all information in this annual report reflects the following:
●
"CAC"
    refers to the Cyberspace Administration of China;
●
"CSRC"
    refers to the China Securities Regulatory Commission;
●
"CAGR"
    refers to compound average growth rate;
●
"China"
    or the "PRC", in each case, refers to the People's Republic of China, excluding, for the purpose of this annual
    report only, Hong Kong, Macau and Taiwan. The term "Chinese" has a correlative meaning for the purpose of this annual
    report. When used in the case of laws and regulations, of "China" or "the PRC", it refers to only such laws
    and regulations of mainland China;
●
"EIT"
    refers to enterprise income tax;
●
"Hong
    Kong" refers to Hong Kong Special Administrative Region in the PRC;
●
"ordinary
    shares" or "shares" refer to our ordinary shares of par value US$0.000005 per share;
●
"R&D"
    refers to research and development;
●
"RMB"
    and "Renminbi" refer to the legal currency of mainland China;
●
"SEC"
    refers to the Securities and Exchange Commission;
●
"US$"
    and "U.S. dollars" refer to the legal currency of the United States;
●
"U.S.
    GAAP" refers to generally accepted accounting principles in the United States; and
●
"we,"
    "us," "our company," and "our" refer to Lucas GC Limited, a Cayman Islands company and its subsidiaries.
ii
FORWARD-LOOKING
INFORMATION
This
annual report contains forward-looking statements that reflect our current expectations and views of future events. Known and unknown
risks, uncertainties and other factors, including those listed under "Risk Factors," may cause our actual results, performance
or achievements to be materially different from those expressed or implied by the forward-looking statements.
You
can identify some of these forward-looking statements by words or phrases such as "may," "will," "expect,"
"anticipate," "aim," "estimate," "intend," "plan," "believe,"
"is/are likely to," "potential," "continue" or other similar expressions. We have based these forward-looking
statements largely on our current expectations and projections about future events that we believe may affect our financial condition,
results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:
●
our
    goals and strategies;
●
our
    future business development, financial condition and results of operations;
●
the
    expected growth of the integrated logistics industry in China;
●
our
    expectations regarding demand for and market acceptance of our products and services;
●
our
    expectations regarding our bases of customers;
●
our
    plans to invest in our products and services;
●
competition
    in our industries; and
●
developments
    in government policies and regulations relating to our industry.
These
forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking
statements are reasonable, our expectations may later be found to be incorrect. The forward-looking statements made in this annual report
relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law,
we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future
events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should
thoroughly read this annual report and the documents that we refer to herein with the understanding that our actual future results may
be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.
This
annual report contains certain data and information that we obtained from various government and private publications. Statistical data
in these publications also include projections based on a number of assumptions. China's services for professionals industry may
not grow at the rate projected by market data, or at all. Failure of this industry to grow at the projected rate may have a material
and adverse effect on our business and the market price of our ordinary shares. In addition, the highly-fragmented and rapidly changing
nature of the services for professionals industry results in significant uncertainties for any projections or estimates relating to the
growth prospects or future condition of our industry. Furthermore, if any one or more of the assumptions underlying the market data are
later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance
on these forward-looking statements.
iii
PART
I
ITEM
1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not
applicable.
ITEM
2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not
applicable.
ITEM
3. KEY INFORMATION
Our
Company
We
are the largest technology-driven online agent-centric human capital management service provider targeting professionals based on Platform-as-a-Service,
or PaaS, in China in terms of the number of active users in the human resources industry as of June 30, 2022 and total net revenues for
the year ended December 31, 2021. As a company empowered by artificial intelligence, or AI, data analytics, and blockchain technologies,
we are committed to digitalizing and intellectualizing the entire human capital management process. We provide a platform to support
trusted and private social networks of professionals, through which we provide services consisting of recruitment services, outsourcing
services, and other services such as information technology services and training services. Our users are primarily professionals who
work in human resources related functions. Our corporate customers are corporations with recruitment, training, sales leads generation
and outsourcing demands.
We
have developed into a comprehensive social network platform providing various services targeting professionals spanning multiple industries
in China. We provide services consisting of recruitment services, outsourcing services, and other services such as information technology
services and training services.
Risks
Related to Doing Business in China
We
are not a Chinese operating company, but a Cayman Islands holding company with operations mainly conducted by its subsidiaries based
in mainland China.
We
face various legal and operational risks and uncertainties associated with being based in and having the majority of our operations in
mainland China and the complex and evolving mainland China laws and regulations. For example, we face risks associated with the fact
that the PRC government has significant authority in regulating our operations and may influence or intervene in our operations at any
time, regulatory approvals on offerings conducted overseas by, and foreign investment in, China-based issuers, anti-monopoly regulatory
actions, and oversight on data security, which may impact our ability to conduct certain businesses, accept foreign investments, or continue
to list on a United States exchange. These risks could result in a material adverse change in our operations and the value of our shares,
significantly limit or hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities
to significantly decline or become worthless.
Permissions
Required from the PRC Authorities for Our Operations and Overseas Securities Offerings
Our
operations in China are governed by PRC laws and regulations. We are required to obtain certain licenses, permits and approvals from
relevant governmental authorities in China in order to operate our business. As of December 31, 2023, we had obtained the licenses,
permits and registrations from the PRC government authorities that are material and necessary for our business operations in China.
Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by
relevant government authorities, and the promulgation of new laws and regulations and amendment to the existing ones, we may be
required to obtain additional licenses, permits, registrations, filings or approvals for our business operations in the future. We
cannot assure you that we will be able to obtain, in a timely manner or at all, or maintain such licenses, permits or approvals, and
we may also inadvertently conclude that such permissions or approvals are not required. Any lack of or failure to maintain requisite
approvals, licenses or permits applicable to us may have a material adverse impact on our business, results of operations, financial
condition and prospects and cause the value of any securities we offer to significantly decline or become worthless. For details,
see "Item 3. Key Information — D. Risk Factors — Risks Related to Our Business and Industry— Any lack of
requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our
business, financial condition and results of operations."
1
On
November 14, 2021, the CAC, issued the Administrative Regulations of Cyber Data Security (Draft for Comments), or the Draft Cyber
Data Security Regulations, which provide that data processors conducting the following activities shall apply for cybersecurity
review: (i) merger, reorganization or spin-off of Internet platform operators that have acquired a large number of data resources
related to national security, economic development or public interests affects or may affect national security; (ii) listing abroad
of data processors processing over one million users' personal information; (iii) listing in Hong Kong which affects or may
affect national security; (iv) other data processing activities that affect or may affect national security. On December 28, 2021,
the CAC, together with other twelve PRC regulatory authorities, jointly promulgated the Cybersecurity Review Measures which became
effective on February 15, 2022. According to the Cybersecurity Review Measures, critical information infrastructure operators that
procure internet products and services are subject to the cybersecurity review if their activities affect or may affect national
security. The Cybersecurity Review Measures further stipulate that an internet platform operator who possesses personal information
of more than one million users shall apply for a cybersecurity review before any public offering in a foreign country, and the
relevant governmental authorities may initiate a cybersecurity review if they consider that the relevant network products or
services or data processing activities affect or may affect national security. As of December 31, 2023, we had not received any
notice that we are a critical information infrastructure operator from any government authority, nor had we received any request
from the CAC to undergo a cybersecurity review in relation to our initial public offering. However, in connection with any future
overseas capital markets activities, we cannot assure you that we will not be required to undergo a cybersecurity review conducted
by the CAC, or meet other regulatory requirements that may be adopted in the future by mainland China authorities. To the extent
such requirements are or become applicable, we cannot assure you that we would be able to comply with them. For more detailed
information, see "Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in China — We
are subject to a variety of laws and regulations regarding cybersecurity and data protection, and any failure to comply with
applicable laws and regulations, including improper use or appropriation of personal information provided directly or indirectly by
our customers or end users, could have a material adverse effect on our business, financial condition and results of
operations."
On
February 17, 2023, the CSRC promulgated the Trial Measures of the Overseas Securities Offering and Listing by Domestic Companies (the
"Overseas Listing Trial Measures") and five interpretive guidelines (collectively, the "CSRC Filing Rules"),
which became effective on March 31, 2023. Under the CSRC Filing Rules, a filing-based regulatory system shall be applied to "indirect
overseas offerings and listings" of PRC domestic enterprises, which refers to securities offerings and listings in an overseas
market made under the name of an offshore entity but based on the underlying equity, assets, earnings or other similar rights of a domestic
enterprise that operates its main business domestically. The CSRC Filing Rules state that, any post-listing follow-on offering by an
issuer in the same overseas market where it has previously offered and listed securities, including issuance of shares, convertible notes
and other similar securities, shall be subject to filing requirement within three business days after the completion of the offering,
and if the subsequent offering is conducted in other overseas markets, it shall be filed with the CSRC within three working days after
the applications for such offerings are submitted. Therefore, any of our future offering and listing of our securities in an overseas
market shall be subject to the filing requirements under the CSRC Filing Rules. In addition, we are required to submit a report to CSRC
after the occurrence and public disclosure of the following material events: (1) change of control; (2) investigations or sanctions imposed
by overseas securities regulatory agencies or other relevant competent authorities; (3) change of listing status or transfer of listing
segment and (4) voluntary or mandatory delisting. If we fail to complete the filing or reporting procedures, under the CSRC Filing Rules
or otherwise, for any future overseas securities offering or listing, we may face sanctions by the CSRC or other PRC regulatory authorities,
which may include orders for correction, warnings and fines. Any adverse regulatory actions or sanctions could have a material adverse
effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ordinary
Shares.
We have completed the required filings
with the CSRC for our initial public offering in accordance with the requirements under these measures and the supporting guidelines.
The CSRC has concluded the filing procedure and published the filing results on the CSRC website on
October 19, 2023. In addition, as of the date of this annual report, we have not received
any formal inquiry, notice, warning, sanction, or regulatory objection from the CSRC with respect to our initial public offering and
listing overseas. However, we could be subject to the filing requirements with the CSRC if we conduct subsequent offerings. See "Item
4. Information on the Company — Regulations — Regulations on M&A and Overseas Listings"
We
cannot assure you that we can complete the filing procedures, obtain the approvals or complete other compliance procedures in a timely
manner, or at all, or that any completion of filing or approval or other compliance procedures would not be rescinded. Any such failure
would subject us to sanctions by the CSRC or other PRC regulatory authorities. These regulatory authorities may impose restrictions and
penalties on the operations in China, significantly limit or completely hinder our ability to launch any new offering of our securities,
limit our ability to pay dividends outside of China, delay or restrict the repatriation of the proceeds from future capital raising activities
into China, or take other actions that could materially and adversely affect our business, results of operations, financial condition
and prospects, as well as the trading price of our ordinary shares. Furthermore, the PRC government authorities may further strengthen
oversight and control over listings and offerings that are conducted overseas. Any such action may adversely affect our operations and
significantly limit or completely hinder our ability to offer or continue to offer securities to you and cause the value of such securities
to significantly decline or be worthless.
The
Holding Foreign Companies Accountable Act
The
Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. Pursuant to the HFCA Act, if the Securities
and Exchange Commission, or the SEC, determines that we have filed audit reports issued by a registered public accounting firm that has
not been subject to inspections by the Public Company Accounting Oversight Board, or the PCAOB, for two consecutive years, the SEC will
prohibit our ordinary shares from being traded on a national securities exchange or in the over-the-counter trading market in the United
States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or
investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor. On December
15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the
list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
2
Our
auditor, Marcum Asia CPAs LLP ("Marcum Asia"), the independent registered public accounting firm that issues the audit
report included elsewhere in this annual report, as auditor of companies that are traded publicly in the United States and firms
registered with the PCAOB, has been subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to
assess its compliance with the applicable professional standards. Marcum Asia is not subject to the determinations announced by the
PCAOB on December 16, 2021. The PCAOB is expected to continue to demand complete access to inspections and investigations against
accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already made plans to resume
regular inspections in early 2023 and beyond. For this reason, we do not expect to be identified as a Commission-Identified Issuer
under the HFCA Act after we file this annual report on Form 20-F. Each year, the PCAOB will determine whether it can inspect and
investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future
that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and if we
use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with
the SEC by then, we may be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for
the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future
fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the
HFCA Act, and the value of our ordinary shares may significantly decline or become worthless. For details, see "Item 3. Key
Information — D. Risk Factors — Risks Related to Doing Business in China — The PCAOB had historically been unable
to inspect auditors in mainland China and Hong Kong in relation to their audit work. If the PCAOB determines in the future that it
no longer has full access to inspect and investigate completely accounting firms in these jurisdictions and if we use an accounting
firm headquartered in one of these jurisdictions to issue an audit report by then, our ordinary shares may be prohibited from
trading in the United States under the HFCA Act, and such delisting or the threat of delisting may materially and adversely affect
the value of your investment."
Selected
Financial Data
The
following selected consolidated statements of income and comprehensive income data for the years ended December 31, 2021, 2022 and 2023,
selected consolidated balance sheets data as of December 31, 2022 and 2023, and selected consolidated cash flows data for the years ended
December 31, 2021, 2022 and 2023 have been derived from our audited consolidated financial statements, which are included in this annual
report beginning on page F-1.
Our
consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United
States of America, or U.S. GAAP. Our historical results are not necessarily indicative of results expected for future periods. You should
read this Selected Consolidated Financial Data section together with our consolidated financial statements and the related notes in conjunction
with "Item 5. Operating and Financial Review and Prospects" included elsewhere in this annual report.
The
following table presents our selected consolidated statements of income and comprehensive income data for the years ended December 31,
2021, 2022 and 2023:
For the Year Ended December 31,
2021
2022
2023
RMB
RMB
RMB
US$
Selected Consolidated Statements of income and Comprehensive Income Data:
Net revenues
652,245
766,571
1,473,958
207,603
Cost of revenues
(473,153
)
(551,373
)
(1,055,406
)
(148,651
)
Gross profit
179,092
215,198
418,552
58,952
Operating expenses:
General and administrative expenses
(38,428
)
(47,733
)
(108,376
)
(15,264
)
Research and development expenses
(70,246
)
(79,868
)
(157,543
)
(22,189
)
Selling and marketing expenses
(33,304
)
(55,974
)
(84,917
)
(11,960
)
Total operating expenses
(141,978
)
(183,575
)
(350,836
)
(49,413
)
Operating profit
37,114
31,623
67,716
9,539
Other income/(expenses):
Financial (expenses) income, net
(68
)
63
(893
)
(126
)
Other income, net
2,514
4,130
3,478
490
Total other income, net
2,446
4,193
2,585
364
Income before income tax expense
39,560
35,816
70,301
9,903
Income tax benefit
243
595
7,880
1,110
Net income
39,803
36,411
78,181
11,013
3
The
following table presents our selected consolidated balance sheets data as of December 31, 2022 and 2023:
As of December 31,
2022
2023
RMB
RMB
US$
Selected Consolidated Balance Sheet Data:
Cash and cash equivalents
48,473
30,123
4,243
Short-term investments
4
-
-
Accounts receivable, net
102,762
28,144
3,964
Advance to suppliers, net
39,553
164,802
23,210
Prepaid expenses and other current assets
1,614
1,626
229
Total current assets
195,750
231,336
32,581
Non-current assets
Software and equipment, net
40,496
48,299
6,803
Deferred tax assets
4,222
12,103
1,705
Total liabilities
123,459
95,230
13,412
Total shareholders' equity
117,793
196,592
27,689
The
following table presents our selected consolidated cash flows data for the years ended December 31, 2021, 2022 and 2023:
For the Year Ended December 31,
2021
2022
2023
RMB
RMB
RMB
US$
Net cash provided by/ (used in) operating activities
60,625
(15,120
)
(36,408
)
(5,128
)
Net cash (used in)/provided by investing activities
(47,849
)
16,819
(12,097
)
(1,703
)
Net cash provided by financing activities
26,500
3,418
29,422
4,143
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(81
)
148
(8
)
(1
)
Net increase/(decrease) in cash, cash equivalents and restricted cash:
39,195
5,265
(19,091
)
(2,689
)
Cash, cash equivalents and restricted cash at the beginning of year
4,854
44,049
49,314
6,946
Cash, cash equivalents and restricted cash at the end of year
44,049
49,314
30,223
4,257
A.
[
Reserved
]
B.
Capitalization
    and Indebtedness
Not
    applicable.
C.
Reasons
    for the Offer and Use of Proceeds
Not
    applicable.
D.
Risk
    Factors
Summary
Risk Factors
Our
business is subject to numerous risks and uncertainties, including risks that may prevent us from achieving our business objectives or
may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more
fully below and include, but are not limited to, risks related to:
Risks
Related to Our Business and Industry
●
We
    have a limited operating history under our current platforms and business model, which makes it difficult to evaluate our business
    and prospects, and any future changes to our business model could materially and adversely affect our business, financial condition
    and results of operations.
●
Our
    growth depends on our ability to attract and retain a large number of users, and the loss of our users, or failure to attract new
    users, could materially and adversely affect our business.
●
Because
    a substantial portion of the services we offer are recruitment services, if we fail to attract more corporate customers to our platforms,
    or if corporate customers decide to purchase less of our recruitment services for any reason, our revenues may stagnate or decline,
    and our business and prospects may be materially and adversely affected.
●
Because
    a significant portion of the services we offer are outsourcing services, a decline in the demand or the market for outsourcing services
    could materially and adversely affect our business, prospects, financial condition and results of operations.
●
Volatility
    in the financial and economic environment in the markets where we have operations could harm our business.
●
If
    the market for freelancers and the services they offer is not sustained or develops more slowly than we expect, our growth may slow
    or stall.
●
We
    face significant competition, which may cause us to suffer from a weakened market position that could materially and adversely affect
    our results of operations.
●
Our
    historical revenue growth should not be considered indicative of our future performance.
●
We
    have incurred negative cash flows in operating activities in the past and may incur operating losses in the future and may not maintain
    profitability.
4
●
We
    depend on a limited number of customers for a significant portion of our revenues and the loss of one or more of these customers
    could adversely affect our business, financial condition, and results of operations.
●
We
    may fail to successfully enter necessary or desirable strategic alliances or make acquisitions or investments, and we may not be
    able to achieve the anticipated benefits from these alliances, acquisitions or investments we make.
●
If
    we fail to maintain and improve the quality of our PaaS platforms, we may not be able to attract and retain users and corporate customers.
●
If
    our technology capabilities in AI, data analytics and blockchain fail to yield satisfactory results or fail to improve, our platforms
    may not be able to effectively match our users with suitable positions from corporate customers or to optimally recommend positions
    for our users, and our user growth, retention, results of operations and business prospects may suffer consequently.
●
Our
    users may engage in intentional or negligent misconduct or other improper activities on our platforms or otherwise misuse our platforms,
    which may damage our brand image and reputation, our business and our results of operations.
●
If
    we fail to maintain and enhance our brand, our business, results of operations and prospects may be materially and adversely affected.
●
Our
    platforms contain open-source software components, and failure to comply with the terms of the underlying licenses could restrict
    our ability to market or operate our platforms.
●
If
    we are unable to protect our users' personal information, we could be exposed to data loss, litigation, and liability, and
    our reputation could be significantly harmed.
●
We
    are subject to a variety of laws and regulations regarding cybersecurity and data protection, and any failure to comply with applicable
    laws and regulations, including improper use or appropriation of personal information provided directly or indirectly by our customers
    or end users, could have a material adverse effect on our business, financial condition and results of operations.
●
We
are subject to
to our leased properties.
●
Any
    lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our
    business, financial condition and results of operations.
●
There
    could be adverse legal, tax, and other consequences if users on our platforms were to be classified as our employees or dispatched
    employees instead of independent contractors.
●
Changes
    in laws and regulations related to the internet and fixed telecommunications or changes in the internet infrastructure and fixed
    telecommunications networks itself may diminish the demand for our services and could have a negative impact on our business.
●
We
    may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive
    position.
●
We
    may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
Risks
Related to Doing Business in China
●
Change
    in China's economic, political or social conditions, laws, regulations or governmental policies could have a material adverse
    effect on our business, financial conditions and results of operations.
●
Uncertainties
    with respect to the PRC legal system, including uncertainties regarding the interpretation and enforcement of laws, and sudden or
    unexpected changes of PRC laws and regulations with little advance notice could adversely affect us and limit the legal protections
    available to you and us, and the Chinese government may exert more oversight and control over offerings that are conducted overseas,
    which changes could materially hinder our ability to offer or continue to offer our securities, and cause the value of our securities
    to significantly decline or become worthless.
●
The
    Chinese government has substantial oversight and influence over the manner in which we must conduct our business and may intervene
    or influence our operations at any time, which actions could impact our operations materially and adversely, and significantly limit
    or completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly
    decline or be worthless.
●
The
    PCAOB had historically been unable to inspect auditors in mainland China and Hong Kong in relation to their audit work. If the PCAOB
    determines in the future that it no longer has full access to inspect and investigate completely accounting firms in these jurisdictions
    and if we use an accounting firm headquartered in one of these jurisdictions to issue an audit report by then, our ordinary shares
    may be prohibited from trading in the United States under the HFCA Act, and such delisting or the threat of delisting may materially
    and adversely affect the value of your investment.
●
You
    may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against
    us or our management named in the annual report based on foreign laws.
●
You
    may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing
    actions in Hong Kong against us or our management named in this annual report based on Hong Kong laws.
●
It
    may be difficult for overseas regulators to conduct investigations or collect evidence within China.
●
It
    may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within Hong Kong.
●
If
    we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences
    to us and our non-PRC shareholders.
●
The
    M&A Rules and certain other PRC regulations may make it more difficult for us to pursue growth through acquisitions.
5
Risks
Related to Our Ordinary Shares
●
The
    trading price of our ordinary shares is likely to be volatile, which could result in substantial losses to investors.
●
If
    securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations
    regarding our ordinary shares, the market price for our ordinary shares and trading volume could decline.
●
The
    sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.
●
Because
    we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ordinary shares for return
    on your investment.
●
There
    can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any
    taxable year, which could subject U.S. investors in our ordinary shares or ordinary shares to significant adverse U.S. federal income
    tax consequences.
●
You
    may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because
    we are incorporated under Cayman Islands law.
●
Certain
    judgments obtained against us by our shareholders may not be enforceable.
●
We
    are a "controlled company" within the meaning of the Nasdaq Stock Market listing rules and, as a result, may rely on
    exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.
●
We
    are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies may make our ordinary
    shares less attractive to investors.
●
We
    are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions
    applicable to United States domestic public companies.
Risks
Related to Our Business and Industry
We
have a limited operating history under our current platforms and business model, which makes it difficult to evaluate our business and
prospects, and any future changes to our business model could materially and adversely affect our business, financial condition and results
of operations.
Although
we initiated our business in 2011 as a recruitment company assisting conglomerates and Fortune 500 companies to recruit mid- to high-level
executives, we upgraded our business model in 2016 to incorporate cutting-edge technologies including AI and data analytics, and launched
one of the first AI+ recruitment platforms in China. In 2019 and 2022, we launched our platforms,
Columbus
and
Star Career
,
respectively, on which our users can recommend job opportunities, health-related products and training services to their acquaintances
via their own private mobile social networks. As a result, we have only limited experience with our current business model, which makes
it difficult to evaluate our business and future prospects and future growth. We have encountered, and will continue to encounter, risks
and difficulties frequently experienced by growing companies in rapidly changing industries, including difficulties in our ability to
achieve market acceptance of our platforms and attract and retain users, as well as increasing competition and increasing expenses as
we continue to grow our business. As a result, we may from time to time decide to make further changes to our business model due to a
variety of factors, including changes in the market for our platforms and competitors introducing new services. We may not be successful
in addressing these and other challenges we may face in the future and changes to our business model may, among other things, result
in user dissatisfaction and could lead to a loss of users on our platforms.
Our
growth depends on our ability to attract and retain a large number of users, and the loss of our users, or failure to attract new users,
could materially and adversely affect our business.
Our
business includes recruitment services, outsourcing services and other services, while the recruitment services constitute our major
source of revenue. Our recruitment serves are provided via our users of our PaaS platforms, who will recommend the job opportunities
posted by our corporate customers to their acquaintances via their own private mobile social networks. Therefore, the size of our users,
including both talent scouts and corporate customers, is critical to our success. As of December 31, 2023, we had approximately 638,020
active registered users on our proprietary platforms,
Star Career
and
Columbus.
We have experienced strong growth in the
number of users on our platforms. The number of active registered users on both of our platforms grew by 48% from December 2022 to December
2023. However, we cannot guarantee that we will be able to achieve similar user growth in the future. For example, in our recruitment
services, our corporate customers and users have many different ways to market their services and secure candidates, including meeting
and contacting prospective candidates through other platforms and advertising to prospective candidates online or offline through other
methods. Job seekers have similarly diverse options to find talent scouts, such as interacting with them directly through our platforms
and finding talent scouts through other online or offline platforms. Any decrease in the attractiveness of our platforms relative to
these other options available to talent scouts and job seekers could lead to decreased engagement on our platforms, which could result
in a decrease in revenue on our platforms. If we fail to attract new professionals or our existing professionals decrease their use of
or cease using our platforms, or the quality or types of services provided by our platforms are not satisfactory to the professionals,
they may decrease their use of, or cease using, our platforms.
6
Key
factors in attracting and retaining professionals include our ability to grow our brand awareness, attract and retain high-quality professionals
and increase the quantity and quality of products and services offered on our platforms. Thus, achieving growth in our community of users
may require us to increasingly engage in sophisticated and costly sales and marketing efforts that may not result in additional users.
We may also need to modify our revenue model to attract and retain such users.
Users
can generally decide to cease using our platforms at any time. Users may stop using our platforms and related services if the quality
of the user experience on our platforms, including our support capabilities in the event of a problem, does not meet their expectations
or keep pace with the quality of the user experience generally offered by competitive products and services. Users may also choose to
cease using our platforms if they perceive that our business model is not in line with the value they derive from our platforms or for
other reasons. In addition, expenditures by professionals may be cyclical and be affected by adverse changes in overall economic conditions
or budgeting patterns. If we fail to attract new users or fail to maintain existing users, our revenue may grow more slowly than expected
and our business and financial performance could be materially and adversely affected.
Because
a substantial portion of the services we offer are recruitment services, if we fail to attract more corporate customers to our platforms,
or if corporate customers decide to purchase less of our recruitment services for any reason, our revenues may stagnate or decline, and
our business and prospects may be materially and adversely affected.
In
2021, 2022 and 2023, approximately 76.3%, 53.9% and 44.7% of our net revenues were generated from recruitment services for corporate
customers, respectively. Corporate customers are by far the most important source of revenue for us, and attracting more corporate customers
to our platforms is therefore of critical importance to us. Due to their contribution to our revenues and ability to spend, large businesses
with sufficient funds would benefit us most as a revenue source, and we need to invest in developing and promoting products and services
that meet their needs. Additionally, small- and mid-sized businesses may also be a source of corporate customers growth for us, as they
have historically been underserved and usually lack direct access to a scaled user base and effective means to promulgate their businesses.
We, however, cannot assure you that our efforts to reach to more corporate customers will convince more enterprise users to use our online
recruitment platform. There is also no guarantee that our existing enterprise customers will continue to pay for our online recruitment
services at the same frequency or price going forward, as competition or alternative means of job hunting may put pressure on the demand
and pricing for our recruitment services. If we are not successful in expanding our corporate customer base or improving our monetization
of corporate customers, our revenues may stagnate or decline, and our business and prospects may be materially and adversely affected.
Because
a significant portion of the services we offer are outsourcing services, a decline in the demand or the market for outsourcing services
could materially and adversely affect our business, prospects, financial condition and results of operations.
In
2021, 2022 and 2023, approximately 17.4%, 39.4% and 48.4% of the services we offer relate to outsourcing services, respectively. The
market for our outsourcing services is at a relatively early stage of development in China. Many corporations are unfamiliar with these
services and may not accept the value proposition of these service offerings. Processing, tracking, collecting and remitting funds to
the applicable third parties are complex operations, and many companies may not trust us with their data. As such, companies may not
be willing to use our services as significant functions and may instead choose to continue to perform such operations in-house. If, for
any reason, the market for outsourcing services declines, including as a result of global economic conditions, automation, increased
use of artificial intelligence, or otherwise, or if demand for these services slows or businesses satisfy their needs for these services
through alternative means, the growth in the number of projects we receive may slow or decline and as a result our business, prospects,
financial condition and results of operations could be materially and adversely affected. In addition, we rely on third-party sales agents
and service providers, including technology service providers and industry experts, to source deals and deliver part of the outsourcing
services. Failure by these providers, for any reason, to source deals or deliver their services in a timely and accurate manner could
result in significant disruptions to our outsourcing operations, impact our customer relationships, harm our brand names and reputation,
and result in significant penalties or liabilities to us.
Volatility
in the financial and economic environment in the markets where we have operations could harm our business.
Demand
for our PaaS services is sensitive to changes in the level of overall economic activity in the markets in which we operate. During periods
of weak economic conditions, employment levels tend to decrease, and business failures tend to increase and interest rates may become
more volatile. Current or potential corporate customers may also react to weak economic conditions or forecasted weak economic conditions
by reducing their employee headcount or by lowering their salary or compensation levels, any of which would affect our total net revenues.
These conditions may affect the willingness of our corporate customers and potential customers to pay third parties for recruitment services
and other services like ours, and may impact their ability to meet their obligations to us on time, or at all. In addition, if businesses
have difficulty obtaining funding, business growth and new business formation may be impaired, which could also harm our business.
7
If
the market for freelancers and the services they offer is not sustained or develops more slowly than we expect, our growth may slow or
stall.
Our
PaaS primarily engages freelancers as our sales agents and talent scouts for recruitment, outsourcing and other services they may provide.
The market for freelancers and the services they offer is relatively new, rapidly evolving and unproven. Our future success will depend
in large part on the continued growth and expansion of this market and the willingness of businesses to engage freelancers to provide
services. It is difficult to predict the size or rate of expansion of this market, or the extent to which technological or other developments
will impact the overall demand for freelancers. Further, many businesses may be unwilling to engage freelancers for a variety of reasons,
including perceived negative connotations with outsourcing work or security concerns. If the market for freelancers and the services
they offer does not achieve widespread adoption, or there is a reduction in demand for freelancer services, particularly demand for information
technology services, our business, prospects, financial condition and results of operations could be materially and adversely affected.
We
face significant competition, which may cause us to suffer from a weakened market position that could materially and adversely affect
our results of operations.
Successful
execution of our strategy depends on our ability to attract and retain users, expand the market for our platforms, maintain a technological
edge and provide value to our users. We face competition from a number of online and offline platforms and competitors that offer recruitment
and outsourcing services as part of their broader services portfolio. According to the Frost & Sullivan report, in the industry of
services for professionals, our main competitors fall into the following categories:
●
online
    agent-centric service providers;
●
online
    HR service providers;
●
traditional
    staffing companies; and
●
traditional
    workforce solutions providers.
Well-established
internet companies, social networking providers and career-related internet portals have entered or may decide to target the market for
professional services, and some of these companies have launched products and services that directly compete with our platforms. These
or other powerful companies that have extensive and loyal user bases in the geographic markets where we operate may decide to directly
target our users, thereby intensifying competition in the services for professionals market. Although professional social networking
businesses with online recruitment functions historically have not had significant market positions in the services for professionals
market, these businesses may dedicate resources to expand their operations and as a result, become a significant competitive threat in
the future.
Our
current competitors may also consolidate or be acquired by an existing or prospective competitor, which could result in the emergence
of a stronger competitor, leading to a potential loss of our market share. There can be no assurances that we will maintain our strong
position among services for professionals marketplaces, particularly if our key competitors consolidate or if large search engines, social
media companies or other online platforms successfully leverage their large user bases to penetrate our markets.
Many
of our current and potential competitors, both online and offline, enjoy substantial competitive advantages, such as greater name recognition,
longer operating histories, greater financial, technical and other resources, and, in some cases, the ability to rapidly combine online
platforms with traditional human capital management services. These companies may use these advantages to offer services similar to our
platform at a lower price, develop different products and services to compete with our platforms, spend more on advertising and brand
marketing, invest more in research and development, or respond more quickly and effectively than we do to new or changing opportunities,
technologies, standards, regulatory conditions or user preferences or requirements. As a result, our users may decide to shift from utilizing
our platforms to utilizing our competitors' products, services and solutions.
Our
historical revenue growth should not be considered indicative of our future performance.
We
have experienced substantial growth in the past. Our net revenues increased by 17.5% from RMB652.2 million in 2021 to RMB766.6 million
in 2022 and further increased by 92.3% from RMB766.6 million in 2022 to RMB1,474.0 (US$207.6 million) in 2023. Our gross profits increased
by 20.2% from RMB179.1 million in 2021 to RMB215.2 million in 2022 and further increased by 94.5% from RMB215.2 million in 2022 to RMB418.6
million (US$59.0 million) in 2023. Our expansion has placed and will continue to place, substantial demands on our managerial, financial,
operational, IT, and other resources. In order to manage and support our growth, we must continue to improve our existing managerial,
operational and IT systems, including our financial and management controls, and recruit, train and retain qualified management and other
personnel. Our planned expansion will also require us to maintain consistent and high-quality services to ensure that our brand does
not suffer as a result of any deviations, whether actual or perceived, in our service standards. We cannot assure you that we will be
able to effectively and efficiently manage the growth of our operations or maintain our service standards. If we are unable to do so,
our results of operations and financial condition may be materially and adversely affected.
We
have incurred negative cash flows in operating activities in the past and may incur operating losses in the future and may not maintain
profitability.
We
incurred negative cash flows in operating activities for the amounts of RMB15.1 million and RMB36.4 million (US$5.1
million) during the years ended December 31, 2022 and 2023, respectively, and we may incur operating losses in the foreseeable
future. We expect to continue the development and expansion of our business, particularly to invest significantly in research and
development related to artificial intelligence, data analytics and blockchain technologies, and we anticipate additional costs in
connection with legal, accounting and other administrative expenses related to operating as a public company. While our revenue has
grown in recent years, if our revenue declines or fails to grow at a rate sufficient to offset increases in our operating expenses,
we will not be able to achieve and maintain profitability in future periods. As a result, we may continue to generate losses. We
cannot ensure that we will achieve profitability in the future or that, if we do become profitable, we will be able to sustain
profitability.
8
We
depend on a limited number of customers for a significant portion of our revenues and the loss of one or more of these customers could
adversely affect our business, financial condition, and results of operations.
Due
to the nature of our business and our limited operating history, we have a limited customer base and have depended on a small number
of customers for a significant portion of revenues. For the years ended December 31, 2021, 2022 and 2023, we had 399, 391 and 582
corporate customers, respectively, and net revenues generated in relation to our five largest corporate customers in terms of
contract amount accounted for approximately 25.6%, 23.3% and 15.9%, respectively. Our ability to maintain close relationships with
our top customers is essential to the growth and profitability of our business. If we fail to retain these top customers in any
particular period, or if a large customer enters into fewer engagements with us or fails to enter into any engagements with us, or
if we fail to develop additional major customers, or if we fail to develop additional major customers, then our revenue could
decline, which may adversely affect our business, financial condition, and results of operations.
We
may fail to successfully enter necessary or desirable strategic alliances or make acquisitions or investments, and we may not be able
to achieve the anticipated benefits from these alliances, acquisitions or investments we make.
To
further expand our business, we intend to grow via acquisitions, with a particular focus on targets in the Association of Southeast Asian
Nations, or ASEAN, countries and the U.S. We may evaluate and consider strategic investments and acquisitions or enter into strategic
alliances to develop new services or solutions and enhance our competitive position. Investments or acquisitions involve numerous risks,
including potential failure to achieve the expected benefits of the integration or acquisition; difficulties in, and the cost of, integrating
operations, technologies, services and personnel; potential write-offs of acquired assets or investments; and downward effect on our
operating results. These transactions will also divert the management's time and resources from our normal course of operations,
and we may have to incur unexpected liabilities or expenses. We may also in the future enter into strategic alliances with various third
parties. Strategic alliances with third parties could subject us to a number of risks, including risks associated with potential leakage
of proprietary information, non-performance by the counterparty and an increase in expenses incurred in establishing new strategic alliances,
any of which may materially and adversely affect our business.
In
addition, if we do not successfully execute or effectively operate, integrate, leverage and grow acquired businesses, our financial results
and reputation may suffer. Our strategy for long-term growth, productivity and profitability depends in part on our ability to make prudent
strategic investment or acquisition decisions and to realize the benefits we expect when we make those investments or acquisitions. While
we expect our future acquisitions to enhance our value proposition to customers and improve our long-term profitability, there can be
no assurance that we will realize our expectations within the time frame we envisage, if at all, or that we can continue to support the
value we allocate to these acquired businesses, including their goodwill or other intangible assets.
We
may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances,
and financing may not be available on terms acceptable to us, or at all.
Since
inception, we have obtained four rounds of equity financing to support the growth of our business. As we intend to continue to make investments
to support the growth of our business, we may require additional capital to pursue our business objectives and respond to business opportunities,
challenges or unforeseen circumstances, including developing new services, expanding our infrastructure, and acquiring complementary
businesses and technologies. We plan to attract more users through marketing efforts, diversify product and service offerings, provide
more training programs, continuously innovate in technology and services, and expand geographical footprint. Accordingly, we may need
to engage in equity or debt financings to secure additional funds. However, additional funds may not be available when we need them,
on terms that are acceptable to us, or at all. Repayment of the debts may divert a substantial portion of cash flow to repay principal
and service interest on such debt, which would reduce the funds available for expenses, capital expenditures, acquisitions and other
general corporate purposes; and we may suffer default and foreclosure on our assets if our operating cash flow is insufficient to service
debt obligations, which could in turn result in acceleration of obligations to repay the indebtedness and limit our sources of financing.
Volatility
in the credit markets may also have an adverse effect on our ability to obtain debt financing. If we raise additional funds through further
issuances of equity or convertible debt securities, our existing shareholders could suffer significant dilution, and any new equity securities
we issue could have rights, preferences and privileges superior to those of holders of our ordinary shares. If we are unable to obtain
adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to pursue our business objectives
and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, financial
condition, results of operations and prospects could be adversely affected.
If
we fail to maintain and improve the quality of our PaaS platforms, we may not be able to attract and retain users and corporate customers.
To
satisfy both users and corporates, we need to continue to improve their user experience as well as innovate and introduce features and
services that users find useful and that cause them to use our platforms more frequently. This includes improving our technology to optimize
search results, tailoring our database to additional geographic and market segments and improving the user-friendliness of our platforms
and our ability to provide high-quality support. Our users depend on our support organization to resolve issues relating to our platforms.
Our ability to provide effective support is largely dependent on our ability to attract and retain employees who are well versed in our
platforms. As we continue to grow our user base, our support organization will face additional challenges. Any failure to maintain high-quality
support, or a market perception that we do not maintain high-quality support, could harm our reputation or adversely affect our ability
to market the benefits of our platforms to existing and prospective users.
9
In
addition, we need to adapt, expand and improve our platforms and user interfaces to keep up with changing user preferences. We invest
substantial resources in researching and developing new features and enhancing our platforms by incorporating these new features, improving
functionality and adding other improvements to meet our users' evolving demands. The success of any enhancements or improvements
to our platforms or any new features depends on several factors, including timely completion, adequate quality testing, integration with
technologies on our platforms and third-party partners' technologies and overall market acceptance. Because further development
of our platforms is complex, challenging and dependent upon an array of factors, the timetable for the release of new features and enhancements
to our platforms is difficult to predict, and we may not offer new features as rapidly as users of our platforms require or expect.
It
is difficult to predict the problems we may encounter in introducing new features to our platforms, and we may need to devote significant
resources to the creation, support and maintenance of these features. We provide no assurances that our initiatives to improve our user
experience will be successful. We also cannot predict whether any new features will be well received by users, or whether improving our
platforms will be successful or sufficient to offset the costs incurred to offer these new features. If we are unable to improve or maintain
the quality of our platforms, our business, prospects, financial condition and results of operations could be materially and adversely
affected.
If
our technology capabilities in AI, data analytics and blockchain fail to yield satisfactory results or fail to improve, our platforms
may not be able to effectively match our users with suitable positions from corporate customers or to optimally recommend positions for
our users, and our user growth, retention, results of operations and business prospects may suffer consequently.
The
core functionality of our platforms, namely personalized recommendations of products and services to our users, is dependent on our technology
capabilities in AI, data analytics and blockchain. Our technology capabilities in AI, data analytics and blockchain, therefore, are crucial
to us continuing to retain and attract users to our platforms. Our users will continue to compare the core functionalities of our platforms
against those of the platforms run by our competitors, and may switch to a competitor platform if our platforms underperform their expectations.
In addition, managing some of the other important aspects of our operations, such as sales and marketing activities, also requires us
to make decisions informed by our AI technology and data analytics. Any failure to improve our technology capabilities in AI, big data
analytics and blockchain and any failure of our technology capabilities in those regards to produce satisfactory results may materially
and adversely affect our user retention, financial condition and results of operations.
Errors,
defects or disruptions in our platforms could diminish our brand, subject us to liability, and materially and adversely affect our business,
prospects, financial condition and results of operations.
Any
errors, defects, or disruptions in our platforms, or other performance problems with our platforms could harm our brand and may damage
the businesses of our users. Our online systems, including our website and mobile apps, could contain undetected errors, or "bugs,"
that could adversely affect their performance. Additionally, we regularly update and enhance our website, platforms and our other online
systems and introduce new versions of our apps. These updates may contain undetected errors when first introduced or released, which
may cause disruptions in our services and may, as a result, cause us to lose market share, and our brand, business, prospects, financial
condition and results of operations could be materially and adversely affected.
Our
users may engage in intentional or negligent misconduct or other improper activities on our platforms or otherwise misuse our platforms,
which may damage our brand image and reputation, our business and our results of operations.
We
adopt a comprehensive suite of registration procedures to verify the identity of our users and corporate customers, but we have limited
control over the real-time and offline behavior of our users and it is still possible for our platforms to be misused by our users for
inappropriate or illegal purposes.
We
have implemented control procedures on our platforms to detect and block illegal or inappropriate content and illegal or fraudulent activities
conducted through the misuse of our platforms. We may be required by relevant governmental authorities to report certain misbehaviors
for further investigation if such misbehaviors are subject to regulatory investigation or other governmental proceedings. Despite our
detection and filtering efforts, we may not be able to identify every incident of inappropriate content or illegal or fraudulent activities,
prevent all such content from being further disseminated or prohibit such activities from occurring. We may not be able to filter all
the content generated by our users as it appears, especially in the context of instant messaging between users and corporate customers.
Therefore, our users may engage in illegal, obscene or incendiary conversations or engage in unethical or illegal activities via our
platforms.
10
If
user misconduct and misuse of our platforms for inappropriate or illegal purposes occur on our online recruitment platform, claims may
be brought against us for torts, defamation, libel, negligence, copyright, patent or trademark infringement. In response to allegations
of illegal or inappropriate activities conducted through our platforms, relevant governmental authorities may intervene and hold us liable
for non-compliance with applicable laws and regulations and subject us to administrative penalties or other sanctions, such as requiring
us to restrict or discontinue some or all of our features and services. In addition, our users may suffer or allege to have suffered
physical, financial or emotional harm caused by contacts initiated on our platforms. Our business and public perception of our brands
may be materially and adversely affected if we do face civil lawsuits or other liabilities initiated by such affected users. Defending
any actions brought by such affected users could be costly and require significant time and attention of our management and other resources,
which would materially and adversely affect our business.
If
we fail to maintain and enhance our brand, our business, results of operations and prospects may be materially and adversely affected.
We
believe that maintaining and enhancing our brand are of significant importance to the success of our business. A well-recognized brand
is critical to increasing the number and the level of engagement of freelancers and, in turn, enhancing our attractiveness to buyers.
Successful promotion of our brand and our platforms depends on, among other things, the effectiveness of our marketing efforts, our ability
to provide a reliable, trustworthy and useful platform, the perceived value of our platform and our ability to provide quality support.
In order to maintain and enhance our brand, we will need to continuously invest in marketing programs that may not be successful in achieving
meaningful awareness levels. We aim to achieve time to return on investment, which represents the total amount of time required for us
to recover performance marketing investments in a given buyer cohort from the revenue that cohort generates, within one year or less.
However, brand promotion activities may not yield increased revenue, and even if they do, the increased revenue may not offset the expenses
we incur in building and maintaining our brand. We have conducted and may continue to conduct various marketing and brand promotion activities,
including print advertisements. We cannot assure you, however, that these activities will be successful or that we will be able to achieve
the brand awareness we expect. In addition, our competitors may increase the intensity of their marketing campaigns, which may force
us to increase our advertising spend to maintain our brand awareness.
In
addition, any negative publicity relating to our platforms, regardless of its veracity, could harm our brand. If our brand is harmed,
we may not be able to grow or maintain our user base, and our business, prospects, financial condition and results of operations could
be materially and adversely affected. Further, activities of users that are deemed to be hostile, offensive or inappropriate to other
users, including users acting under false or inauthentic identities, could damage our brand or harm our ability to expand our user base.
We do not monitor or review the appropriateness of the content generated by users or have control over the activities in which our users
engage. While we have adopted policies regarding illegal or offensive use of our platforms by our users and retain authority to remove
user generated content that violates our policies, users could nonetheless engage in these activities. The safeguards we have in place
may not be sufficient to avoid harm to our brand, especially if such hostile, offensive or inappropriate use was high profile.
Our
platforms contain open-source software components, and failure to comply with the terms of the underlying licenses could restrict our
ability to market or operate our platforms.
We
use open-source software in connection with our technology and services. Some open-source software licenses require those who distribute
open-source software as part of their software to publicly disclose all or part of the source code (including proprietary code) to such
software and/or make available any derivative works of the open-source code on unfavorable terms or at no cost. The use of such open-source
code may ultimately require us to replace certain code used on our platforms or discontinue certain aspects of our platforms. From time
to time, we may face claims from third parties claiming infringement of their intellectual property rights, or demanding the release
or license of the open-source software or derivative works that we developed using such software (which could include our proprietary
source code) or otherwise seeking to enforce the terms of the applicable open-source license. These claims could result in litigation
and could require us to pay substantial damages, publicly release the affected portions of our source code, be limited in or cease using
the implicated software unless and until we can re-engineer such software to avoid infringement or change the use of, or remove, the
implicated open-source software.
In
addition to risks related to license requirements, use of certain open-source software can lead to greater risks than use of third-party
commercial software, as the original developers of open-source code generally do not provide warranties (with respect to, for example,
non-infringement or functionality) or indemnities or other contractual protections. Our use of open-source software may also present
additional security risks because the source code for open-source software is publicly available, which may make it easier for hackers
and other third parties to determine how to breach our website and systems that rely on open-source software. Any of these risks could
be difficult to eliminate or manage.
If
we are unable to protect our users' personal information, we could be exposed to data loss, litigation, and liability, and our
reputation could be significantly harmed.
Privacy
protection is increasingly demanding, and the use of electronic payment methods and collection of other personal information expose us
to increased risk of privacy and/or security breaches as well as other risks. We or our third-party service providers may experience
or be affected by with security breaches in which our users' personal information is stolen. Also, security and information systems
that we use or rely on may be compromised as a result of data corruption or loss, cyberattack or a network security incident or the independent
third-party service provider may fail to comply with applicable laws and regulations. Although private networks are used to transmit
confidential information, third parties may have the technology or know-how to breach the security of the customer information transmitted,
and the security measures employed may not effectively prohibit others from obtaining improper access to this information. The techniques
used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often difficult to detect
for long periods of time, which may cause a breach to go undetected for an extensive period of time. Advances in computer and software
capabilities, new tools, and other developments may increase the risk of such a breach. In addition, our contractors or third parties
with whom we do business or to whom we outsource business operations may be subject to cyberattack or a network security incident that
may lead to loss of our users' data or may attempt to circumvent our security measures in order to misappropriate such information,
and may purposefully or inadvertently cause a breach involving such information. If a person is able to circumvent our security measures
or those of third parties, he or she could destroy or steal valuable information or disrupt our operations. We may become subject to
claims for purportedly fraudulent transactions arising out of the unlawful access or exfiltration of personal data, and we may also be
subject to lawsuits, administrative fines or other proceedings relating to these types of incidents. Any such claim or proceeding could
cause us to incur significant unplanned expenses, which could have an adverse impact on our business, financial condition and results
of operations. Further, adverse publicity resulting from such claims or proceedings could significantly harm our reputation which, in
turn, may have an adverse effect on our business, financial condition and results of operations.
11
We
are subject to a variety of laws and regulations regarding cybersecurity and data protection, and any failure to comply with applicable
laws and regulations, including improper use or appropriation of personal information provided directly or indirectly by our customers
or end users, could have a material adverse effect on our business, financial condition and results of operations.
We
may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection.
These laws and regulations are continuously evolving and developing. The scope and interpretation of the laws that are or may be applicable
to us are often uncertain and may be conflicting, particularly with respect to foreign laws. In particular, there are numerous laws and
regulations regarding privacy and the collection, sharing, use, processing, disclosure, and protection of personal information and other
user data. Such laws and regulations often vary in scope, may be subject to differing interpretations, and may be inconsistent among
different jurisdictions.
The
integrity and protection of our users, employees and company data is critical to our business. Our users and employees expect that we
will adequately protect their personal information. We are required by applicable laws to keep this personal information strictly confidential
and to take adequate security measures to safeguard such information. The PRC Criminal Law, as latest amended on December 26, 2020, prohibits
institutions, companies and their employees from selling or otherwise illegally disclosing a citizen's personal information obtained
during the course of performing duties or providing services, or obtaining such information through theft or other illegal ways. On November
7, 2016, the Standing Committee of the National People's Congress of the PRC, or the SCNPC, issued the Cyber Security Law of the
PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber Security Law, network operators must not collect
users' personal information without their consent and may only collect users' personal information necessary to the provision
of services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions
regarding the protection of personal information as stipulated under the relevant laws and regulations. The Civil Code of the PRC (issued
by the National People's Congress of the PRC on May 28, 2020 and effective from January 1, 2021) provides the main legal basis
for privacy and personal information infringement claims under PRC civil law.
PRC
regulators, including the CAC, the Ministry of Industry and Information Technology, or the MIIT, and the Ministry of Public Security,
have been increasingly focused on regulation in areas of data security and data protection. The PRC regulatory requirements regarding
cybersecurity are constantly evolving. For instance, various PRC regulatory bodies, including the CAC, the Ministry of Public Security
and the State Administration for Market Regulation, or the SAMR, have enforced data privacy and protection laws and regulations with
varying and evolving standards and interpretations. In addition, certain internet platforms in mainland China have reportedly been subject
to heightened regulatory scrutiny in relation to cybersecurity matters.
In
April 2020, the PRC government promulgated the Cybersecurity Review Measures (the "2020 Cybersecurity Review Measures"),
which came into effect on June 1, 2020. In July 2021, the CAC and other related authorities released a draft amendment to the 2020 Cybersecurity
Review Measures for public comments. On December 28, 2021, the PRC government promulgated the 2022 Cybersecurity Review Measures, which
came into effect and replaced the 2020 Cybersecurity Review Measures on February 15, 2022. Compared with the 2020 Cybersecurity Review
Measures, the 2022 Cybersecurity Review Measures contain the following key changes: (i) internet platform operators who are engaged in
data processing are also subject to the regulatory scope; (ii) the CSRC is included as one of the regulatory authorities for purposes
of jointly establishing the state cybersecurity review mechanism; (iii) internet platform operators holding personal information of more
than one million users and seeking to have their securities list on a stock exchange in a foreign country shall file for cybersecurity
review with the Cybersecurity Review Office; (iv) the risks of core data, material data or large amounts of personal information being
stolen, leaked, destroyed, damaged, illegally used or illegally transmitted to overseas parties and the risks of critical information
infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used maliciously by
foreign governments and any cybersecurity risk after a company's listing on a stock exchange shall be collectively taken into consideration
during the cybersecurity review process; and (v) critical information infrastructure operators and internet platform operators covered
by the 2022 Cybersecurity Review Measures shall take measures to prevent and mitigate cybersecurity risks in accordance with the requirements
therein. According to the 2022 Cybersecurity Review Measures, (i) critical information infrastructure operators that purchase network
products and services and internet platform operators that conduct data processing activities shall be subject to cybersecurity review
in accordance with the 2022 Cybersecurity Review Measures if such activities affect or may affect national security; and (ii) internet
platform operators holding personal information of more than one million users and seeking to have their securities list on a stock exchange
in a foreign country shall file for cybersecurity review with the Cybersecurity Review Office. Under the Regulation on Protecting the
Security of Critical Information Infrastructure promulgated by the State Council on July 30, 2021, effective September 1, 2021, "critical
information infrastructure" is defined as important network facilities and information systems in important industries and fields,
such as public telecommunication and information services, energy, transportation, water conservancy, finance, public services, e-government
and national defense, science, technology and industry, as well as other important network facilities and information systems that, in
case of destruction, loss of function or leak of data, may severely damage national security, the national economy and the people's
livelihood and public interests. And the PRC competent authorities shall be responsible for organizing the determination of critical
information infrastructure in the industry and field concerned according to the determination rules, and inform the critical information
infrastructure operators of the determination results in a timely manner and notify the public security department under the State Council
of the same. As of the date of this annual report, neither we nor any of our PRC subsidiaries has been informed by any PRC governmental
authority that we or any of our PRC subsidiaries is a "critical information infrastructure operator", and as an internet
platform operator, we have not conducted any data processing activities that affected or may affect national security, nor do we hold
personal information of more than one million users. We believe that we are not subject to a cybersecurity review pursuant to the 2022
Cybersecurity Review Measures, as neither we nor any of our PRC subsidiaries qualify as (i) a critical information infrastructure operator,
or (ii) an internet platform operator that has conducted any data processing activities that affected or may affect national security,
or has held personal information of more than one million users as of the date of this annual report.
12
On
November 14, 2021, the CAC released the draft Administrative Regulation on Network Data Security for public comments through December
13, 2021 (the "Draft Regulation on Network Data Security"). Under the Draft Regulation on Network Data Security, (i) data
processors, i.e., individuals and organizations who can decide on the purpose and method of their data processing activities at their
own discretion, that process personal information of more than one million individuals shall apply for cybersecurity review before listing
in a foreign country; (ii) foreign-listed data processors shall carry out annual data security evaluation and submit the evaluation report
to the municipal cyberspace administration authority; and (iii) where the data processor undergoes merger, reorganization and subdivision
that involves important data and personal information of more than one million individuals, the recipient of the data shall report the
transaction to the in-charge authority at the municipal level.
As
of the date of this annual report, neither we nor any of our PRC subsidiaries has been required by any PRC governmental authority to
apply for cybersecurity review, nor have we or any of our PRC subsidiaries received any inquiry, notice, warning, sanction in such respect
or been denied permission from any PRC regulatory authority to list on U.S. exchanges. We believe that neither we nor any of our PRC
subsidiaries is subject to the cybersecurity review, by the CAC under the 2022 Cybersecurity Review Measures with respect to the offering
of our securities or the business operations of our PRC subsidiaries, because neither we nor any of our PRC subsidiaries qualifies as
a critical information infrastructure operator or has conducted any data processing activities that affect or may affect national security
or holds personal information of more than one million users. However, as PRC governmental authorities have significant discretion in
interpreting and implementing statutory provisions and there remains significant uncertainty in the interpretation and enforcement of
relevant PRC cybersecurity laws and regulations if the PRC regulatory authorities take a position contrary to ours, we cannot assure
you that we or any of our PRC subsidiaries will not be deemed to be subject to PRC cybersecurity review requirements under the 2022 Cybersecurity
Review Measures or the Draft Administrative Regulations (if enacted) as a critical information infrastructure operator or an internet
platform operator that is engaged in data processing activities that affect or may affect national security or holds personal information
of more than one million users, nor can we assure you that we or our PRC subsidiaries would be able to pass such review. If we or any
of our PRC subsidiaries inadvertently concludes that such permission or approval is not required, or if applicable laws, regulations
or interpretations change and obligate us to obtain such permission or approvals in the future, we or our PRC subsidiaries may be subject
to fines, suspension of business, website closure, revocation of business licenses or other penalties, as well as reputational damage
or legal proceedings or actions against us, which may have a material adverse effect on our business, financial condition or results
of operations. In addition, we could become subject to enhanced cybersecurity review or investigations launched by PRC regulators in
the future pursuant to new laws, regulations or policies. Any failure or delay in the completion of the cybersecurity review procedures
or any other non-compliance with applicable laws and regulations may result in fines, suspension of business, website closure, revocation
of business licenses or other penalties, as well as reputational damage or legal proceedings or actions against us, which may have a
material adverse effect on our business, financial condition or results of operations.
On
June 10, 2021, the SCNPC promulgated the PRC Data Security Law, which became effective in September 2021. The PRC Data Security Law imposes
data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification
and hierarchical protection system based on the importance of data in economic and social development and the degree of harm it will
cause to national security, public interests or the rights and interests of individuals or organizations when such data is tampered with,
destroyed, leaked or illegally acquired or used.
The
PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and
imposes export restrictions on certain data and information. On August 20, 2021, the SCNPC promulgated the Personal Information Protection
Law, effective November 1, 2021. The Personal Information Protection Law clarifies the definition of personal information, which excludes
information that has been anonymized, and the required procedures for personal information processing, the obligations of personal information
processors, and individuals' personal information rights and interests. The Personal Information Protection Law provides that,
among other things, (i) the processing of personal information is only permissible under certain circumstances, such as prior consent
from the subject individual, fulfillment of contractual and legal obligations, furtherance of public interests or other circumstances
prescribed by laws and regulations; (ii) the collection of personal information should be conducted in a disciplined manner with as little
impact on individuals' rights and interests as possible; and (iii) excessive collection of personal information is prohibited.
In particular, the Personal Information Protection Law provides that personal information processors should ensure the transparency and
fairness of automated decision-making based on personal information, refrain from offering unreasonably differentiated transaction terms
to different individuals and, when sending commercial promotions or information updates to individuals selected through automated decision-making,
simultaneously offer such individuals an option not based on such individuals' specific characteristics or a more convenient way
for such individuals to turn off such promotions.
13
On July 7, 2022, the CAC promulgated the Measures for the Security Assessment
of Outbound Data Transfer, or the Data Transfer Measures, which became effective on September 1, 2022, pursuant to which, to provide data
abroad under any of the following circumstances, a data processor shall apply to the national cyberspace administration for the security
assessment of the outbound data transfer through the local provincial cyberspace administration: (i) the data processor provides important
data abroad; (ii) the critical information infrastructure operator or the data processor that has processed the personal information of
over one million people provides personal information abroad; (iii) the data processor that has provided the personal information of over
100,000 people or the sensitive personal information of over 10,000 people cumulatively since January 1 of the previous year provides
personal information abroad; and (iv) any other circumstance where an application for the security assessment of outbound data transfer
is required by the national cyberspace administration. On March 22,2024, the CAC promulgated the Provisions on Promoting and Regulating
Cross-border Data Flows, which stipulate that, if the data have not been informed or publicly announced as important data by relevant
PRC departments or regions, data processors are not required to apply for security assessment for cross-border provision of the data as
important data. Besides, to provide data abroad under any of the following circumstances, a data processor shall apply to the national
cyberspace administration for the security assessment of the outbound data transfer through the local provincial cyberspace administration:
(i) where a critical information infrastructure operator provides personal information or important data abroad; or (ii) where any data
processor other than a critical information infrastructure operator provides important data abroad or, as of January 1 of the current
year, provides personal information (excluding sensitive personal information) of not less than 1 million people or sensitive personal
information of not less than 10,000 people in aggregate to overseas parties. In case of any discrepancy between the Provisions on Promoting
and Regulating Cross-border Data Flows and the relevant provisions such as the Security Assessment of Outbound Data Transfer, or the Data
Transfer Measures promulgated on July 7, 2022 and the Measures on Standard Contracts for Cross-border Provision of Personal Information
promulgated on February 22, 2023, the provisions under the Provisions on Promoting and Regulating Cross-border Data Flows shall prevail.
As of the date of this annual report, the data collected and generated in our business does not have a bearing on national security, economic
operation, social stability, public health and security, among others, and has not been classified as important data by relevant PRC authorities,
and, neither we nor any of our PRC subsidiaries have ever provided any personal information collected and generated in the operations
within the territory of the PRC to overseas recipients. Given the above-mentioned facts, we do not believe that we or any of our PRC subsidiaries is engaged in any activity that is subject to security assessment
as outlined in the Data Transfer Measures. However, as PRC governmental authorities have significant discretion in interpreting and implementing
statutory provisions and there remains significant uncertainty in the interpretation and enforcement of relevant PRC data security laws
and regulations if the PRC regulatory authorities take a position contrary to ours, we cannot assure you that the activities we or any
of our PRC subsidiaries engaging in will not be deemed to be subject to PRC security assessment as stipulated in the Data Transfer Measures
in the future, nor can we assure you that we or our PRC subsidiaries would be able to pass such assessment. The promulgation of the above-mentioned
laws and regulations indicates heightened regulatory scrutiny from PRC regulatory authorities in areas such as data security and personal
information protection.
As
uncertainties remain regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we or our
PRC subsidiaries will be able to comply with such regulations in all respects, and we or our PRC subsidiaries may be ordered to rectify
or terminate any actions that are deemed illegal by regulatory authorities. In addition, while our PRC subsidiaries take various measures
to comply with all applicable data privacy and protection laws and regulations, there is no guarantee that our current security measures,
operation and those of our third-party service providers may always be adequate for the protection of our users, employee or company
data against security breaches, cyberattacks or other unauthorized access, which could result in loss or misuse of such data, interruptions
to our service system, diminished user experience, loss of user confidence and trust and impairment of our technology infrastructure
and harm our reputation and business, resulting in fines, penalties and potential lawsuits.
We
are subject to risks relating to our leased properties.
We
lease real properties in China from third parties primarily as office space. We have not registered any of our lease agreements for these
properties with the PRC governmental authorities as required by PRC law. The failure to do so does not in itself invalidate the lease
agreements, so we have not taken any actions to register our leased properties with the PRC governmental authorities or find alternative
locations for our operations in the PRC. However, we may be ordered by the PRC government authorities to rectify such noncompliance and,
if such noncompliance is not rectified within a given period of time, we may be subject to fines imposed by PRC government authorities
ranging from RMB1,000 and RMB10,000 for each lease agreement that has not been registered with the relevant PRC governmental authorities.
As of the date of this annual report, eight of our lease agreements had not been registered. We may be required by PRC government authorities
to file these lease agreements for registration within a time limit, and may be subject to a maximum fine of RMB10,000 for each lease
agreement which in aggregate amounted to RMB80,000 for the eight unregistered lease agreements.
14
The
ownership certificates or other similar proof of certain of our leased properties, including the documentation proving the lessors'
right to lease those properties to us, have not been provided to us by the relevant lessors. Therefore, we cannot assure you that such
lessors are entitled to lease the relevant real properties to us. If the lessors are not entitled to lease the real properties to us
and the owners of such real properties decline to ratify the lease agreements between us and the respective lessors, we may not be able
to enforce our rights to lease such properties under the respective lease agreements against the owners. As of the date of this annual
report, we are not aware of any claim or challenge brought by any third parties against us or our lessors with respect to the defects
in our leasehold interests. If our lease agreements are claimed as null and void by the owners of the leased real properties, we could
be required to vacate the properties and incur additional costs, in the event of which we could only initiate the claim against the lessors
under relevant lease agreements for indemnities for their breach of the relevant leasing agreements. We cannot assure you that suitable
alternative locations are readily available on commercially reasonable terms, or at all, and if we are unable to relocate our officers
in a timely manner, our operations may be interrupted.
Any
lack of requisite approvals, licenses or permits applicable to our business operation may have a material and adverse impact on our business,
financial condition and results of operations.
Our
business is subject to certain regulations, and we are required to hold a number of licenses, permits and filings in connection with
our business operation, including, but not limited to, Human Resource Service License. Failure to satisfy these requirements may
result in penalties to rectify, fines, confiscation of illegal gains, or suspension of business. As of the date of this annual report, we have obtained all material licenses and permits described above for our current
operations including, among others, the Human Resource Service License. We will also apply for certain permits and filings the
government authorities if needed in the future. However, we cannot assure you that we can obtain such permits or complete such
filings in a timely manner, or at all, due to complex procedural requirements and the expansion of our business.
New
laws and regulations may be enforced from time to time to require additional licenses and permits other than those we currently have
or provide additional requirements on the operation of our business. If the relevant governmental authorities promulgate new laws and
regulations that require additional approvals or licenses or provide additional requirements on the operation of any part of our business
and we are not able to obtain such approvals, licenses, permits or filings or adjust our business model to comply with such new laws
in a timely manner, we could be subject to penalties and operational disruption and our financial condition and results of operations
could be adversely affected.
There
could be adverse legal, tax, and other consequences if users on our platforms were to be classified as our employees or dispatched employees
instead of independent contractors.
Our
users are considered as third-party independent contractors or individual businesses. We believe that our business model is consistent
with the prevailing practice in the workforce operational solution industry and recent policies of the State Council of the People's
Republic of China, or the State Council, that promote on-demand consumer service businesses and the associated workforce model through
flexible regulatory measures. Furthermore, we believe the users on our platforms are independent contractors or individual businesses
because, among other things, we do not establish a labor relationship nor sign any labor contracts with them. As such, we do not believe
that users on our platforms should be deemed as our employees or dispatched employees under the relevant PRC laws and regulations. As
of the date of this annual report, our business model has not been investigated or challenged by any government authorities, nor are
we aware of any government action contemplated or threatened. We cannot assure you that we will not be involved in lawsuits or arbitration
cases in which the judge or arbitrator may side with the claimant in determining the relationship with users on our platforms in the
future. We also cannot assure you that we will not be subject to government investigations on or challenges to the legality of our business
model in the future. If, as a result of legislation or judicial decisions, we are required to classify users on our platform as our employees
or dispatched employees, we would incur significant additional expenses for compensating users on our platforms, potentially including
expenses associated with various employee benefits pursuant to relevant PRC laws and regulations. In addition, we may be required to
fundamentally change our operation model to comply with the relevant PRC laws and regulations, including the requirement that the total
number of dispatched employees may not exceed 10% of the total number of employees. We would also be subject to claims for vicarious
liability in relation to torts committed by users during their course of services, or other claims under the relevant PRC laws and regulations.
Any of the foregoing could significantly increase our costs to serve corporate customers, harm our reputation and brand, subject us to
rectification orders and fines, and cause us to significantly alter our existing business model and operations. As a result, our business,
financial condition, results of operations and prospects will be materially and adversely affected.
Any
failure to maintain the satisfactory performance of our technology systems and resulting interruptions in the availability of our websites,
applications, or services could adversely affect our business, results of operations and prospects.
The
satisfactory performance, reliability and availability of our technology systems are critical to our success. We have developed technology
that enables us to deliver our recruitment, outsourcing and other services with simplicity, convenience, speed and reliability. These
integrated technologies support the smooth performance of certain key functions of our business. However, our technology or infrastructure
may not function properly at all times. We may be unable to monitor and ensure high-quality maintenance and upgrade of our technology
and infrastructure, and our users may experience service outages and delays in accessing and using our platforms as we seek to source
additional capacity. In addition, we may experience surges in online traffic associated with promotional activities as we scale, which
can put additional demand on our platforms at specific times. Any disruption to our technology and causing interruptions to our website,
applications, platforms or services could adversely affect our business and results of operations.
15
Our
technology systems may also experience telecommunications failures, computer viruses, failures during the process of upgrading or replacing
software, databases or components, power outages, hardware failures, user errors, or other attempts to harm our technology systems, which
may result in the unavailability or slowdown of our platforms or certain functions, delays or errors in transaction processing, loss
of data, inability to accept and fulfill orders, reduced gross merchandise volume and the attractiveness of our platforms. Further, hackers,
acting individually or in coordinated groups, may also launch distributed denial of service attacks or other coordinated attacks that
may cause service outages or other interruptions in our business. Any of such occurrences could cause severe disruption to our daily
operations. If we cannot successfully execute system maintenance and repair, our business and results of operations could be adversely
affected and we could be subject to liability claims.
If
we fail to keep up with the technological developments and implementation of advanced technologies, our business, results of operations
and prospects may be materially and adversely affected.
We
apply technology to serve our clients more efficiently and bring them better user experience. Our success will in part depends on our
ability to keep up with the changes in technology and the continued successful implementation of advanced technology, including AI, 5G,
cloud computing, distributed architecture and big data analytics. If we fail to adapt our platforms and services to changes in technological
development in an effective and timely manner, our business operations may suffer. Changes in technologies may require substantial expenditures
in research and development as well as in modification of our services. Technical hurdles in implementing technological advances may
result in our services becoming less attractive to users and corporate customers, which, in turn, may materially and adversely affect
our business, results of operations and prospects.
Changes
in laws and regulations related to the internet and fixed telecommunications or changes in the internet infrastructure and fixed telecommunications
networks itself may diminish the demand for our services, and could have a negative impact on our business.
The
future success of our business depends upon the continued use of the internet as a primary medium for commerce, communication and business
solutions. Access to the internet is maintained through state-owned telecommunication operators under the administrative control and
regulatory supervision of the MIIT. We rely on this infrastructure to provide data communications primarily through local telecommunication
lines and wireless telecommunication networks. In addition, the national networks in China are connected to the internet through international
gateways. These international gateways are the only channels through which a domestic user can connect to the internet and may not sufficiently
support the continually growing demand for internet usage. With the expansion of our business, we may be required to upgrade our technology
and infrastructure to keep up with the increasing traffic on our platforms. We cannot assure you that the internet infrastructure and
the fixed telecommunications networks in China can support the demands associated with the continued growth in internet usage. If we
cannot increase our capacity to deliver our online services, we may not be able to accommodate the increases in traffic we anticipate
from our expanding user base and the adoption or acceptance of our offerings may be hindered, which could adversely impact our business
and profitability. In the event of disruptions, failures or other problems with internet infrastructure, we or our users may not have
access to alternative networks on a timely basis, if at all. Additionally, we have no control over the costs of the services provided
by telecommunication service providers. If the prices we pay for telecommunications and internet services rise significantly, our results
of operations may be materially and adversely affected. Furthermore, if internet access fees or other charges to internet users increase,
some users may be prevented from accessing the mobile internet and thus cause the growth of mobile internet users to decelerate. Such
deceleration may adversely affect our ability to continue expanding our user base.
Our
technology infrastructure may encounter disruptions or other outages caused by problems or defects in our technologies and systems, such
as malfunctions in software or network overload. Incidents of serious network overload may cause laggings for some of our users for a
period of several hours each time, and may negatively affect our user experience. Our growing operations will place increasing pressure
on our server and bandwidth capacities as we further expand our user base and develop more features and functions. We may encounter problems
when upgrading our systems or services and there may be undetected programing errors, which could adversely affect the performance of
our operating systems and user experience. Furthermore, our infrastructure is also vulnerable to damages from fires, floods, earthquakes,
power loss and telecommunication failures.
Government
bodies or agencies in jurisdictions where we have operations have in the past adopted, and may in the future adopt, laws or regulations
affecting the use of the Internet as a commercial medium. Changes to these laws or regulations could require us to modify our solutions
in order to comply with these changes. In addition, government agencies or private organizations may begin to impose taxes, fees or other
charges for accessing the Internet or commerce conducted via the Internet. These laws or charges could limit the growth of Internet-related
commerce or communications generally, result in reductions in the demand for internet-based services such as ours.
In
addition, the use of the Internet as a business tool could be adversely affected due to delays in the development or adoption of new
standards and protocols to handle increased demands of Internet activity, security, reliability, cost, ease of use, accessibility, and
quality of service. The performance of the Internet and its acceptance as a business tool has been adversely affected by "viruses",
"worms" and other malicious programs and the Internet has experienced a variety of outages and other delays as a result of
damage to portions of its infrastructure. Any network interruption or inadequacy that causes interruptions to our platforms, or failure
to maintain the network and server or solve such problems in a timely manner, could reduce our user satisfaction, which in turn, could
adversely affect our reputation, user base and our business, financial condition, results of operations and prospects.
16
We
may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.
We
regard our patents, trademarks, copyrights, domain names, know-how, proprietary technologies, and similar intellectual property (which
we have ownership or legal rights to use) as critical to our success, and we rely on a combination of intellectual property laws and
contractual arrangements, including confidentiality, invention assignment and non-compete arrangements with our employees and others,
to protect our proprietary rights. As of the date of this annual report, we have ten patents registered in the U.S. and seven patents
registered in China, all in the areas of artificial intelligence, data analytics and blockchain technology, 68 registered trademarks,
74 registered copyrights, and ten registered domain names. In addition, as of the date of this annual report, we have nine additional
patent applications that are pending in both the U.S. and China. Despite these measures, any of our intellectual property rights could
be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive
advantages. In addition, there can be no assurance that our patent applications will be approved, that any issued patents will adequately
protect our intellectual property, or that such patents will not be challenged by third parties or found by a judicial authority to be
invalid or unenforceable. Further, because of the rapid pace of technological change in our industry, parts of our business rely on technologies
developed or licensed by third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third
parties on reasonable terms, or at all.
It
is often difficult to register, maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject
to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation.
Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies
available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce
our contractual rights in China. Policing any unauthorized use of our intellectual property is difficult and costly and the steps we
take may be inadequate to prevent the infringement or misappropriation of our intellectual property. In the event that we resort to litigation
to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and
financial resources, and could put our intellectual property at risk of being invalidated or narrowed in scope. We cannot assure you
that we will prevail in such litigation, and even if we do prevail, we may not obtain a meaningful recovery. In addition, our trade secrets
may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any failure in maintaining, protecting
or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition and results of
operations.
We
may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
We
cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate patents, copyrights
or other intellectual property rights held by third parties. We have been, and from time to time in the future may be, subject to legal
proceedings and claims relating to the intellectual property rights of others. In addition, there may be other third-party intellectual
property that is infringed by our solutions or services, the solutions or services provided by third-party merchants on our marketplace,
or other aspects of our business. There could also be existing patents of which we are not aware that our solutions or services may inadvertently
infringe. We cannot assure you that holders of patents purportedly relating to some aspects of our technology platform or business, if
any such holders exist, would not seek to enforce such patents against us in China, the United States or any other jurisdictions. Further,
the application and interpretation of China's patent laws and the procedures and standards for granting patents in China are still
evolving and are uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis. If we are
found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or
may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our
own. In addition, we may incur significant expenses, and may be forced to divert management's time and other resources from our
business and operations to defend against these third-party infringement claims, regardless of their merits. Successful infringement
or licensing claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations
by restricting or prohibiting our use of the intellectual property in question. Finally, we use open-source software in connection with
our solutions and services. Companies that incorporate open-source software into their solutions and services have, from time to time,
faced claims challenging the ownership of open-source software and compliance with open-source license terms. As a result, we could be
subject to suits by parties claiming ownership of what we believe to be open-source software or noncompliance with open-source licensing
terms. Some open-source software licenses may require users who distribute open-source software as part of their software to publicly
disclose all or part of the source code to such software and make available any derivative works of the open-source code on unfavorable
terms or at no cost. Any requirement to disclose our source code or pay damages for breach of contract could be harmful to our business,
results of operations and financial condition.
Our
business depends on the continued efforts of our senior management, particularly our founder, chairman of the Board and CEO, Mr. Howard
Lee. If Mr. Lee, or one or more other of our key executives and employees, were unable or unwilling to continue in their present positions,
our business may be severely disrupted.
Our
business operations depend on the continuing services of our senior management, particularly Mr. Lee, our founder, chairman of the Board
and CEO, and our other executive officers named in this annual report. While we have provided different incentives to our management,
we cannot assure you that we can continue to retain their services. If one or more of our key executives were unable or unwilling to
continue in their present positions, we may not be able to replace them easily or at all, our future growth may be constrained, our business
may be severely disrupted and our financial condition and results of operations may be materially and adversely affected, and we may
incur additional expenses to recruit, train and retain qualified personnel. In addition, although we have entered into confidentiality
and non-competition agreements with our key executives of our subsidiaries in China, there is no assurance that any member of our management
team will not join our competitors or form a competing business. Moreover, it is possible that our key employees, upon their departure,
will join our competitors or start their own competing businesses, and may solicit certain of our current customers, which may adversely
affect our business, financial results and daily operations. If any dispute arises between us and our current or former officers, we
may have to incur substantial costs and expenses in order to enforce such agreements in China or we may be unable to enforce them at
all.
17
The
majority of our executive officers have no prior experience in operating a U.S. public company, and their inability to operate the public
company aspects of our business could harm us.
The
majority of our executive officers have no experience in operating a U.S. public company, which makes our ability to comply with applicable
laws, rules and regulations uncertain. Our failure to comply with all laws, rules and regulations applicable to U.S. public companies
could subject us or our management to regulatory scrutiny or sanction, which could harm our reputation and share price.
We
are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance
with such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and
legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.
We
are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws and regulations
in various jurisdictions in which we conduct activities, including the U.S. Foreign Corrupt Practices Act, or FCPA, and other anti-corruption
laws and regulations. The FCPA prohibits us and our officers, directors, employees and business partners acting on our behalf, including
agents, from corruptly offering, promising, authorizing or providing anything of value to a "foreign official" for the purposes
of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires
companies to make and keep books, records and accounts that accurately reflect transactions and dispositions of assets and to maintain
a system of adequate internal accounting controls.
We
have direct or indirect interactions with officials and employees of government agencies and state- owned affiliated entities in the
ordinary course of business. These interactions subject us to an increased level of compliance- related concerns. We are in the process
of implementing policies and procedures designed to ensure compliance by us and our directors, officers, employees, representatives,
consultants, agents and business partners with applicable anti-corruption, anti-bribery, anti-money laundering, financial and economic
sanctions and similar laws and regulations. However, our policies and procedures may not be sufficient, and our directors, officers,
employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible.
Non-compliance
with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower
complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences,
remedial measures and legal expenses, all of which could materially and adversely affect our business, results of operations, financial
condition and reputation. In addition, changes in economic sanctions laws in the future could adversely impact our business and investments
in our shares.
Content
posted or displayed on or linked to our online recruitment platform may be found objectionable by PRC regulatory authorities and may
subject us to penalties and other negative consequences.
The
PRC government has adopted laws and regulations governing internet and wireless access and the distribution of information over the internet
and wireless telecommunications networks. Under these laws and regulations, internet content providers and internet publishers are prohibited
from posting or displaying over the internet or wireless networks content that, among other things, violates the principle of the PRC
constitution, laws and regulations, impairs the national dignity of China or the public interest, or is obscene, superstitious, fraudulent
or defamatory. Furthermore, internet content providers are also prohibited from displaying content that may be deemed by relevant government
authorities as instigating ethnical hatred and harming ethnical unity, harming the national religious policy, "socially destabilizing"
or leaking "state secrets" of the PRC. Failure to comply with these requirements may result in the revocation of licenses
to provide internet content or other approvals, licenses or permits, the closure of the concerned platforms and reputational harm. The
operator may also be held liable for any censored information displayed on or linked to their platform. The liabilities and penalties
resulting from such non-compliance may materially and adversely damage our business and results of operations.
On
December 15, 2019, the CAC, released the Provisions on Ecological Governance of Network Information Content, or PEGNIC, which came into
force on March 1, 2020. The PEGNIC is one of the latest regulations governing the distribution of information over the internet and wireless
telecommunications networks in which it classifies the network information into three categories, namely the "encouraged information,"
the "illegal information" and the "undesirable information." While illegal information is strictly prohibited
from distribution, the internet content providers are required to take relevant measures to prevent and resist the production and distribution
of undesirable information. PEGNIC further clarifies the duties owed by the internet content providers in preventing the display of content
that against the PEGNIC, such as obligations to improve the systems for user registration, account management, information release review,
follow-up comments review, website ecological management, real-time inspection, emergency response and disposal mechanism for cyber rumor
and black industry chain information.
We
have designed and implemented procedures to monitor content on our online recruitment platform. However, it may not be possible to determine
in all cases the types of content that could result in our liability as a distributor of such content, and we may not be able to capture
all violating content in time. If any of the content posted or displayed on our online recruitment platform is deemed by the PRC government
to violate any content restrictions, we may not be able to continue to display such content and could become subject to penalties, including
confiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect
our business, financial condition and results of operations.
18
PRC
regulatory authorities may also conduct various reviews and inspections on our business operations, especially those related to content
distribution, from time to time. If any non-compliance incidents in our business operations are identified, we may be required to take
certain rectification measures in accordance with applicable laws and regulations, or we may be subject to other regulatory actions such
as administrative penalties. It may be difficult to determine the type of content or actions that may result in liability to us and,
if we are found to be liable, we may be prevented from operating our business in the PRC. Moreover, complying with relevant regulatory
requirements may result in limitation to our scope of services, reduction in user engagement or loss of users, diversion of our management
team's attention and increased operational costs and expenses. The costs of compliance with these regulations may continue to increase
as a result of more content being made available by an increasing number of users of our online recruitment platform, which may adversely
affect our results of operations.
We
are dependent on app stores to distribute our mobile applications.
We
offer our recruitment and other services through our platforms, an important component of which is our mobile applications. Our mobile
applications are offered via app stores operated by third parties, such as Apple App Store and various Android app stores, which could
suspend or terminate our users' access to our mobile applications, increase access costs or change the terms of access in a way
that makes our mobile applications less desirable or harder to access. As such, the promotion, distribution and operation of our mobile
applications are subject to such distribution platforms' standard terms and policies for application developers, which are subject
to the interpretation of, and frequent changes by, these distribution channels. If Apple's App Store or any Android app stores
interpret or change their standard terms and conditions in a manner that is detrimental to us, or terminate their existing relationship
with us, our business, financial condition and results of operations may be materially and adversely affected. In the future, it is possible
that compliance requirements of app stores may cause us to suspend our mobile applications from such stores. As a result, our ability
to expand our user base may be hindered if potential users experience difficulties in or are barred from accessing our mobile applications.
Any such incident may adversely affect our brands and reputation, business, financial condition and results of operations.
We
are subject to changing laws, rules and regulations in the U.S. regarding regulatory matters, corporate governance and public disclosure
that will increase both our costs and the risks associated with non-compliance.
We
are subject to rules and regulations by various governing bodies and self-regulatory organizations, including, for example, the SEC and
The Nasdaq Stock Market, which are charged with the protection of investors and the oversight of companies whose securities are publicly
traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations
have resulted in and are likely to continue to result in increased general and administrative expenses and a diversion of management
time and attention from revenue-generating activities to compliance activities.
Moreover,
because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time
as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs
necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations
and any subsequent changes, we may be subject to penalty and our business may be harmed.
If
we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our results of operations,
meet our reporting obligations or prevent fraud, and investor confidence and the market price of our shares may be materially and adversely
affected.
We
are subject to the reporting requirements of the Exchange Act of 1934, or Exchange Act, the Sarbanes- Oxley Act of 2002 and the rules
and regulations of the Nasdaq Stock Market. Our independent registered public accounting firm has not conducted an audit of our internal
control over financial reporting, as we are not required to provide a report of management's assessment on our internal control
over financial reporting due to a transition period established by the rules of the SEC for newly public companies. However, in the course
of auditing our consolidated financial statements, we and our independent registered public accounting firm identified one material weaknesses
in our internal control over financial reporting. As defined in standards established by the PCAOB, a "material weakness"
is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material
weakness identified relates to lack of accounting staff and resources with appropriate knowledge of the U.S. GAAP and SEC reporting and
compliance requirements to design and implement formal period-end financial reporting policies and procedures to address complex U.S.
GAAP technical accounting issue in accordance with U.S. GAAP and the SEC requirements. This material weakness, if not remediated timely,
may lead to misstatements in our consolidated financial statements in the future. Following the identification of this material weakness,
we have taken and plan to continue to take remedial measures. See "Item 15. Controls and Procedures – Internal Control over
Financial Reporting." We cannot assure you, however, that these measures may fully address this material weakness in our internal
control over financial reporting or that we may not identify additional material weaknesses or significant deficiencies in the future.
19
Section
404 of the Sarbanes-Oxley Act of 2002 requires that we include a report of management on our internal control over financial reporting
in our annual report on Form 20-F beginning with our second annual report on Form 20-F. In addition, once we cease to be an "emerging
growth company" as such term is defined under the JOBS Act, our independent registered public accounting firm must attest to and
report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over
financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is
effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is
qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or
reviewed, or if it interprets the relevant requirements differently from us. In addition, as we are a public company, our reporting obligations
may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may
be unable to timely complete our evaluation testing and any required remediation.
During
the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley
Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail
to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from
time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting. If
we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements
and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.
This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of
our shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse
of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil
or criminal sanctions. We may also be required to restate our financial statements from prior periods.
Our
insurance coverage may not be adequate, which could expose us to significant costs and business disruptions.
We
have obtained or caused relevant counterparties to obtain insurance to cover certain potential risks and liabilities. We provide social
security insurance, including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance and medical
insurance for our employees. There can be no assurance that our insurance coverage is sufficient to prevent us from any loss or that
we will be able to successfully claim our losses under our current insurance policies on a timely basis, or at all. If we incur any loss
that is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial
condition and results of operations could be materially and adversely affected.
The
COVID-19 pandemic has, and will likely continue to, negatively impact the global economy and disrupt normal business activity, which
may have an adverse effect on our results of operations.
The
global spread of COVID-19 and the efforts to control it have slowed global economic activity and disrupted, and reduced the efficiency
of, normal business activities in much of the world. The pandemic has resulted in authorities around the world implementing numerous
unprecedented measures such as travel restrictions, quarantines, shelter in place orders, and factory and office shutdowns. These measures
have impacted and will likely continue to impact our workforce and operations, and those of our users and clients.
Beginning
in March 2022, the outbreak of the Omicron variant of COVID-19 and the zero-COVID measures, such as lengthy city-wide lock-downs, undertaken
in certain cities in which we operate, have caused disruptions to our business. In response to governmental directives and recommended
safety measures, we have implemented personal safety measures at all our facilities. However, these measures may not be sufficient to
mitigate the risk of infection by COVID-19. If a significant number of our employees, or employees and third parties performing key functions,
including our chief executive officer and members of our board of directors, become ill, our business may be further adversely impacted.
In
the longer-term, the COVID-19 pandemic is likely to adversely affect the economies and financial markets of many countries, and could
result in a global economic downturn and a recession. Although China began to modify its zero-COVID policy in late 2022, and most of
the travel restrictions and quarantine requirements were lifted in December 2022, there remains uncertainty as to the future impact of
the virus, especially in light of this change in policy. Future lockdowns or other restrictive measures that may be imposed, especially
those imposed in major cities where we have a significant presence, may have a material impact on our services and our users, which may,
in turn negatively impact our results of operations.
Pandemics
and epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks may disrupt our operations, which could
materially and adversely affect our business, financial condition, results of operations and prospects.
In
recent years, there have been outbreaks of epidemics globally. In addition to the impact of COVID-19 as described above, our business
could be materially and adversely affected by natural disasters, such as snowstorms, earthquakes, fires or floods, the outbreak of other
widespread health epidemic, such as swine flu, avian influenza, severe acute respiratory syndrome, Ebola, or Zika or other events, such
as wars, acts of terrorism, environmental accidents, power shortage or communication interruptions. The occurrence of such a disaster
or prolonged outbreak of an epidemic illness or other adverse public health developments in the countries and regions we operate in could
materially disrupt our business and operations. Such events could also significantly affect our industry and cause a temporary closure
of the facilities we use for our operations, which would severely disrupt our operations and have a material adverse effect on our business,
financial condition, results of operations and prospects. Our operations could be disrupted if any of our employees were suspected of
having any of the epidemic illnesses, since this could require us to quarantine some or all of such. employees or disinfect the facilities
used for our operations. In addition, our revenues and profitability could be materially reduced to the extent that a natural disaster,
health epidemic or other outbreak harms the Chinese or global economy in general. Our operations could also be severely disrupted if
our clients, users or other participants were affected by such natural disasters, health epidemics or other outbreaks.
20
We
may be subject to social and natural catastrophic events that are beyond our control, such as natural disasters, health epidemics, riots,
political and military upheavals and other outbreaks in the country or region where we have our operations or where a portion of our
users are located. Such events could significantly disrupt our operations and negatively impact our business, financial condition, results
of operations and prospects.
We
may be subject to potential liability in connection with pending or threatened legal proceedings and other matters, which could adversely
affect our business or financial results.
From
time to time, we have become and may in the future become a party to various legal or administrative proceedings arising in the ordinary
course of our business in China. We may also be subject to potential liability in connection with pending or threatened legal proceedings
arising from breach of contract claims, anti-competition claims and other matters. These proceedings, investigations, claims and complaints
could be initiated or asserted under or on the basis of a variety of laws in different jurisdictions, including data protection and privacy
laws, trucker or consumer protection laws, labor and employment laws, anti-monopoly or competition laws, transportation laws, advertising
laws, intellectual property laws, securities laws, tort laws, contract laws and property laws. There is no guarantee that we will be
successful in defending ourselves in legal and administrative actions or in asserting our rights under various laws. If we fail to defend
ourselves in these actions, we may be subject to restrictions, fines or penalties that will materially and adversely affect our operations.
Even if we are successful in our attempt to defend ourselves in legal and regulatory actions or to assert our rights under various laws
and regulations, the process of communicating with relevant regulators, defending ourselves and enforcing our rights against the various
parties involved may be expensive and time-consuming. These actions could expose us to negative publicity, substantial monetary damages
and legal defense costs, injunctive relief and criminal and civil fines and penalties, including but not limited to suspension or revocation
of licenses to conduct business.
We
may be subject to potential liability in connection with pending or threatened legal proceedings and other matters, which could adversely
affect our business or financial results.
From
time to time, we have become and may in the future become a party to various legal or administrative proceedings arising in the ordinary
course of our business in China. We may also be subject to potential liability in connection with pending or threatened legal proceedings
arising from breach of contract claims, anti-competition claims and other matters. These proceedings, investigations, claims and complaints
could be initiated or asserted under or on the basis of a variety of laws in different jurisdictions, including data protection and privacy
laws, trucker or consumer protection laws, labor and employment laws, anti-monopoly or competition laws, transportation laws, advertising
laws, intellectual property laws, securities laws, tort laws, contract laws and property laws. There is no guarantee that we will be
successful in defending ourselves in legal and administrative actions or in asserting our rights under various laws. If we fail to defend
ourselves in these actions, we may be subject to restrictions, fines or penalties that will materially and adversely affect our operations.
Even if we are successful in our attempt to defend ourselves in legal and regulatory actions or to assert our rights under various laws
and regulations, the process of communicating with relevant regulators, defending ourselves and enforcing our rights against the various
parties involved may be expensive and time-consuming. These actions could expose us to negative publicity, substantial monetary damages
and legal defense costs, injunctive relief and criminal and civil fines and penalties, including but not limited to suspension or revocation
of licenses to conduct business.
We
may be subject to risks associated with increased scrutiny of environmental, social, and governance matters.
Increased
attention to climate change and other environmental, social, and governance, or ESG, issues, as well as societal expectations regarding
voluntary ESG initiatives and disclosures, may result in increased costs, impact our reputation, or otherwise affect our business performance.
We may take certain actions in the future, including the establishment of ESG-related goals or targets, to address ESG issues. Achieving
our goals or targets is subject to risks and uncertainties and depends on numerous conditions, some of which are outside our control.
There can be no assurances that our commitments will be achieved in the manner we currently intend or at all, and any failure to advance
or meet such commitments may adversely impact our relationship with certain stakeholders.
Risks
Related to Doing Business in China
Change
in China's economic, political or social conditions, laws, regulations or governmental policies could have a material adverse effect
on our business, financial conditions and results of operations.
Substantially
all of our revenues are sourced from China. Accordingly, our results of operations and prospects are, to significant degree, subject
to economic, political and legal developments in China. The financial reforms that begun in the late 1970s have resulted in significant
economic growth. However, any economic reform policies or measures in China may from time to time be modified or revised. China's
economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement,
level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented
measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and
the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still
owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development
by imposing industrial policies. The Chinese government also exercises significant control over China's economic growth through
allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential
treatment to particular industries or companies.
21
While
the PRC economy has experienced significant growth in the past 30 years, growth has been uneven across different regions and among different
economic sectors. The Chinese government has implemented measures to encourage economic growth and guide the allocation of the resources.
Some of these measures may benefit the overall Chinese economy but may have a negative effect on us. For example, our financial condition
and results of operations may be adversely affected by government control over capital investments or changes in tax regulations.
Although
the PRC economy has grown significantly in the past decade, that growth may not continue, as evidenced by the slowing of the growth of
the PRC economy since 2012. Any adverse changes in economic conditions in China, in the policies of the PRC government or in the laws
and regulations in China could have a material adverse effect on a specific industry including our operating companies in China. Such
developments could adversely affect our business and operating results, lead to reduction in demand for our services and adversely affect
our competitive position.
Uncertainties
with respect to the PRC legal system, including uncertainties regarding the interpretation and enforcement of laws, and sudden or unexpected
changes of PRC laws and regulations with little advance notice could adversely affect us and limit the legal protections available to
you and us, and the Chinese government may exert more oversight and control over offerings that are conducted overseas, which changes
could materially hinder our ability to continue to offer our securities, and cause the value of our securities to significantly decline
or become worthless.
Our
operating subsidiaries are incorporated under and governed by the laws of the PRC. The PRC legal system is a civil law system based on
written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value.
In
1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general,
such as foreign investment, corporate organization and governance, commerce, taxation and trade. As a significant part of our
business is conducted in China, our operations are principally governed by PRC laws and regulations. However, since the PRC legal
system continues to evolve rapidly, rules and regulations in China can change quickly with little advance notice. The
interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws and regulations involve
uncertainties, which may limit legal protections available to us. Uncertainties due to evolving laws and regulations could also
impede the ability of a China-based company like us, to obtain or maintain permits or licenses required to conduct business in
China. In the absence of required permits or licenses, governmental authorities could impose material sanctions or penalties on us.
See "— Any lack of requisite approvals, licenses or permits applicable to our business operation may have a material and
adverse impact on our business, financial condition and results of operations" in this subsection for more details. In
addition, some regulatory requirements issued by certain PRC government authorities may not be consistently applied by other PRC
government authorities (including local government authorities), thus making strict compliance with all regulatory requirements
impractical, or in some circumstances impossible. For example, we may have to resort to administrative and court proceedings to
enforce the legal protection that we enjoy either by law or contract. Since PRC administrative and court authorities have
significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate or
predict the outcome of administrative and court proceedings and the level of legal protection available to you and us than in more
developed legal systems.
Furthermore,
the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or
at all, and which may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules
until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property
(including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China
could materially and adversely affect our business and impede our ability to continue our operations.
On
July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly
issued an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the capital
market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement
and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system
of extraterritorial application of the PRC securities laws. Since this announcement is relatively new, uncertainties still exist in relation
to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed
implementations and interpretations will be modified or promulgated, and, if any, the potential impact such modified or new laws and
regulations will have on companies like us and our securities.
Given
statements by the Chinese government indicating an intent to exert more oversight and control over securities offerings and other capital
markets activities that are conducted overseas and foreign investment in China-based companies like us. Although we are currently not
required to obtain permission from any of the PRC federal or local government and has not received any denial to list on the U.S. exchange,
it is uncertain whether or when we might be required to obtain permission from the PRC government to list on U.S. exchanges in the future,
and even if such permission is obtained, whether it will be later denied or rescinded, which could significantly limit or completely
hinder our ability to offer or continue to offer our securities to investors and cause the value of our shares to significantly decline
or be worthless. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas
could materially and adversely hinder our ability to offer or continue to offer our securities, and cause the value of our securities
to significantly decline or become worthless.
22
The
Chinese government has substantial oversight and influence over the manner in which we must conduct our business and may intervene or
influence our operations at any time, which actions could impact our operations materially and adversely, and significantly limit or
completely hinder our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly
decline or be worthless.
The
Chinese government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations
at any time as the government deems appropriate to further regulatory, political and societal goals. For instance, the Chinese government
has published new policies that significantly affected certain industries such as the education and internet industries. The Chinese
government has exercised, and continues to exercise, substantial control over virtually every sector of the Chinese economy through regulation
and state ownership, which could materially and adversely impact the results of our operations and future prospects.
Our
ability to operate in the PRC may be further harmed by changes in its laws and regulations. The central or local governments of the PRC
may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts
on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including
any decision not to continue to support economic reforms and to return to a more centrally planned economy or regional or local variations
in the implementation of economic policies, could have a significant effect on economic conditions in the PRC or particular regions thereof.
We cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely
affect our business, financial condition, results of operations and the value of our ordinary shares.
Our
business is also subject to various government and regulatory interference. We could be subject to regulation by various political and
regulatory entities, including various local and municipal agencies and government sub-divisions. The Company may incur increased costs
necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. Our operations could
be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry, which
could result in further material changes in our operations and adversely impact the value of our securities.
The
PCAOB had historically been unable to inspect auditors in mainland China and Hong Kong in relation to their audit work. If the PCAOB
determines in the future that it no longer has full access to inspect and investigate completely accounting firms in these jurisdictions
and if we use an accounting firm headquartered in one of these jurisdictions to issue an audit report by then, our ordinary shares may
be prohibited from trading in the United States under the HFCA Act, and such delisting or the threat of delisting may materially and
adversely affect the value of your investment.
On
April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint
statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including
China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers
in China and higher risks of fraud in emerging markets.
On
May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating
in "Restrictive Market", (ii) adopt a new requirement relating to the qualification of management or board of director for
Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications
of the company's auditors.
On
May 20, 2020, the U.S. Senate passed the HFCA Act requiring a foreign company to certify it is not owned or controlled by a foreign government
if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the
PCAOB is unable to inspect the company's auditors for three consecutive years, the issuer's securities are prohibited to
trade on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the HFCA Act. On December 18, 2020, the
HFCA Act was signed into law. On December 2, 2021, the SEC adopted final amendments implementing congressionally mandated submission
and disclosure requirements of the HFCA Act. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable
Act. The bill, if enacted, would shorten the three-consecutive-year compliance period under the HFCA Act to two consecutive years. On
December 29, 2022, the Accelerating HFCA Act was signed into law, which amended the HFCA Act by requiring the SEC to prohibit an issuer's
securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead
of three. As a result, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has
not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our ordinary shares from being traded on
a national securities exchange or in the over-the-counter trading market in the United States.
On
December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate
completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was not subject to that determination.
On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or
investigate completely registered public accounting firms.
23
Our
auditor, Marcum Asia, an independent registered public accounting firm that issues the audit report included elsewhere in this annual
report, is an auditor of companies that are traded publicly in the United States and firm registered with the PCAOB and has been subject
to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional
standards. Marcum Asia has been inspected by the PCAOB on a regular basis, with the last inspection in 2020 and was not subject to the
determination announced by the PCAOB on December 16, 2021. The PCAOB is expected to continue to demand complete access to inspections
and investigations against accounting firms headquartered in mainland China and Hong Kong in the future and states that it has already
made plans to resume regular inspections in early 2023 and beyond. For this reason, we do not expect to be identified as a Commission-Identified
Issuer under the HFCA Act following our filing of an annual report on Form 20-F for the relevant fiscal year. Each year, the PCAOB will
determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If
the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland
China and Hong Kong and if we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial
statements filed with the SEC by then, we may be identified as a Commission-Identified Issuer following our filing of an annual report
on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer
for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading
under the HFCA Act. If our ordinary shares are prohibited from trading in the United States, there is no certainty that we will be able
to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able
to trade in the United States would substantially impair your ability to sell or purchase our ordinary shares when you wish to do so,
and the risk and uncertainty associated with delisting would have a negative impact on the price of our ordinary shares. Also, such a
prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material
adverse impact on our business, financial condition, and prospects.
Under
the PRC laws, the approval of and the filing with the CSRC or other PRC government authorities may be required in connection with
any of our future offering and listing in an overseas market, and, if required, we cannot predict whether or for how long we will be
able to obtain such approval or complete such filing.
Regulations
on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies
in 2006 and amended in 2009, requires an overseas special purpose vehicle, that is controlled directly or indirectly by the PRC companies
or individuals and that has been formed for overseas listing purposes through acquisitions of PRC domestic interest held by such PRC
companies or individuals, to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle's
securities on an overseas stock exchange. The CSRC currently has not issued any definitive rule or interpretation concerning whether
our offshore offerings are subject to the M&A Rules. The interpretation and application of the regulations remain unclear. If the CSRC approval is required, it is uncertain whether we can or how
long it will take us to obtain the approval and, even if we obtain such CSRC approval, the approval could be rescinded. Any failure to
obtain or delay in obtaining the CSRC approval for any of our future overseas offerings, or a rescission of such approval if obtained, would
subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations
in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially
and adversely affect our business, financial condition, and results of operations.
On
July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance
with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision
on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant
regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. As a follow-up, on December 24,
2021, the CSRC issued a draft of the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing
by Domestic Companies, and issued a draft of Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic
Companies for public comments. These draft measures propose to establish a new filing-based regime to regulate overseas offerings and
listings by domestic companies. Specifically, an overseas offering and listing by a PRC company, whether directly or indirectly, an initial
or follow-on offering, must be filed with the CSRC. The examination and determination of an indirect offering and listing will be conducted
on a substance-over-form basis, and an offering and listing shall be deemed as a PRC company's indirect overseas offering and listing
if the issuer meets the following conditions: (i) any of the operating income, gross profit, total assets, or net assets of the PRC enterprise
in the most recent fiscal year was more than 50% of the relevant line item in the issuer's audited consolidated financial statement
for that year; and (ii) senior management personnel responsible for business operations and management are mostly PRC citizens or are
ordinarily resident in the PRC, and the principal place of business is in the PRC or carried out in the PRC. The issuer or its affiliated
PRC entity, as the case may be, shall file with the CSRC for its initial public offering, follow-on offering and other equivalent offering
activities. Particularly, the issuer shall submit the filing with respect to its initial public offering and listing within three business
days after its initial filing of the listing application, and submit the filing with respect to its follow-on offering within three business
days after the completion of the follow-on offering. Failure to comply with the filing requirements may result in fines to the relevant
PRC companies, suspension of their businesses, revocation of their business licenses and operation permits and fines on the controlling
shareholder and other responsible persons. These draft measures also set forth certain regulatory red lines for overseas offerings and
listings by PRC enterprises.
24
On
February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies,
or the Trial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated
No. 1 to No. 5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of
Overseas Listings by Domestic Companies and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively,
the Guidance Rules and Notice. The Trial Measures, together with the Guidance Rules and Notice, reiterate the basic supervision principles
as reflected in the Draft Overseas Listing Regulations and regulate both direct and indirect overseas offering and listing by PRC domestic
companies by adopting a filing-based regulatory regime. Pursuant to the Trial Measures, (i) an overseas offering and listing by a domestic
company, whether directly or indirectly, shall be filed with the CSRC; and (ii) the issuer or its affiliated domestic company, as the
case may be, shall file with the CSRC for its initial public offering, follow-on offering, issuance of convertible bonds, offshore relisting
after go-private transactions and other equivalent offing activities in an overseas market. In addition, after a domestic company has
offered and listed securities in an overseas market, it is required to file a report to the CSRC after the occurrence and public disclosure
of certain material corporate events, including but not limited to, change of control and voluntary or mandatory delisting.
We have completed the required filings
with the CSRC for our initial public offering in accordance with the requirements under these measures and the supporting guidelines.
The CSRC has concluded the filing procedure and published the filing results on the CSRC website on
October 19
,
2023.
We may be
required to file with the CSRC in connection with any of our future offering and listing in an overseas market, including follow-on offerings,
issuance of convertible bonds, offshore relisting after going-private transactions, and other equivalent offering activities. If we fail
to complete such filing procedures for any future overseas offering or listing in an overseas market, including our follow-on offerings,
issuance of convertible bonds, offshore relisting after going-private transactions, and other equivalent offering activities, we may
face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on us, restrictions on or delays
to our financing transactions offshore, or other actions that could have a material and adverse effect on our business, financial condition,
results of operations, reputation and prospects, as well as the trading price of our ordinary shares.
On
February 24, 2023, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives
Administration of China jointly revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities
Offering and Listing which was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration
of China in 2009, or the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality
and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023
with the Trial Measures. One of the major revisions to the revised Provisions is expanding its application to cover indirect overseas
offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a)
a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals
or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain
state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and
file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or through
its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities
service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security
or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations.
On
or after March 31, 2023, any failure or perceived failure by the Company or PRC subsidiaries to comply with the above confidentiality
and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in that the relevant
entities would be held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability
if suspected of committing a crime.
In
addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements
on us. If it is determined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures,
including the cybersecurity review under the Measures for Cybersecurity Review and the Draft Regulation on Network for Data Security
(if implemented), are required for any of our future overseas offerings, it is uncertain whether we can or how long it will take us
to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any
failure to obtain or delay in obtaining such approval or completing such filing procedures for any of our future overseas offerings,
or a rescission of any such approval or filing if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory
authorities for failure to seek CSRC approval or filing or other government authorization for our future overseas offerings. These
regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of
China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from any of our future overseas
offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of
operations, and prospects, as well as the trading price of our listed securities. The CSRC or other PRC regulatory authorities also
may take actions requiring us, or making it advisable for us, to halt our future overseas offerings before settlement and delivery of the
shares offered.
Consequently,
if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the
risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules
or explanations requiring that we obtain additional approvals or accomplish additional required filing or other regulatory procedures for our prior
overseas offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain
such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our
business, prospects, financial condition, reputation, and the trading price of our listed securities.
25
You
may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us
or our management named in the annual report based on foreign laws.
We
are a company incorporated under the laws of the Cayman Islands. However, we conduct substantially all of our operations in China and
substantially all of our assets are located in China. In addition, most of our senior executive officers reside within China for a significant
portion of the time and most of them are PRC nationals. As a result, it may be difficult for you to effect service of process upon us
or our management named in the annual report inside mainland China. It may also be difficult for you to enforce in U.S. courts of the
judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers
and directors as none of them currently resides in the United States or has substantial assets located in the United States. In addition,
there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against
us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state.
The
recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce
foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the
country where the judgment is made or on principles of reciprocity between jurisdictions. In addition, according to the PRC Civil Procedures
Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates
the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what
basis a PRC court would enforce a judgment rendered by a court in the United States. Furthermore, class action lawsuits, which are available
in the United States for investors to seek remedies, are generally uncommon in China.
You
may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing actions
in Hong Kong against us or our management named in this annual report based on Hong Kong laws.
We
have two subsidiaries in Hong Kong, including (i) Lucas Star Global Limited, a wholly owned subsidiary of Lucas Star Holding Limited,
which is the wholly owned subsidiary of Lucas GC Limited; and (ii) Lucas GC Limited (Hong Kong), a wholly owned subsidiary of Lucas Group
China Limited. We do have management members who are Hong Kong residents and reside within Hong Kong for a significant portion of the
time. You may incur additional costs and procedural obstacles in effecting service of legal process, enforcing foreign judgments or bringing
actions in Hong Kong against us or our management named in the annual report, as judgments entered in the U.S. can be enforced in Hong
Kong only at common law. If you want to enforce a judgment of the U.S. in Hong Kong, it must be a final judgment conclusive upon the
merits of the claim, for a liquidated amount in a civil matter and not in respect of taxes, fines, penalties, or similar charges, the
proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the judgment is not contrary
to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a "competent" court as determined
by the private international law rules applied by the Hong Kong courts.
Furthermore,
foreign judgments of the U.S. courts will not be directly enforced in Hong Kong as there are currently no treaties or other arrangements
providing for reciprocal enforcement of foreign judgments between Hong Kong and the U.S. However, the common law permits an action to
be brought upon a foreign judgment. That is to say, a foreign judgment itself may form the basis of a cause of action since the judgment
may be regarded as creating a debt between the parties to it. In a common law action for enforcement of a foreign judgment in Hong Kong,
the enforcement is subject to various conditions, including but not limited to, that the foreign judgment is a final judgment conclusive
upon the merits of the claim, the judgment is for a liquidated amount in civil matter and not in respect of taxes, fines, penalties,
or similar charges, the proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the
judgment is not contrary to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a "competent"
court as determined by the private international law rules applied by the Hong Kong courts. The defenses that are available to a defendant
in a common law action brought on the basis of a foreign judgment include lack of jurisdiction, breach of natural justice, fraud, and
contrary to public policy. However, a separate legal action for debt must be commenced in Hong Kong in order to recover such debt from
the judgment debtor. As a result, subject to the conditions with regard to enforcement of judgments of United States courts being met,
including but not limited to the above, a foreign judgment of United States of civil liabilities predicated solely upon the federal securities
laws of the United States or the securities laws of any State or territory within the U.S. could be enforceable in Hong Kong.
It
may be difficult for overseas regulators to conduct investigations or collect evidence within China.
Shareholder
claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or
practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for
regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory
cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision
and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the
absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became
effective in March 2020 ("Article 177"), no overseas securities regulator is allowed to directly conduct investigation
or evidence collection activities within the territory of the PRC. In addition, entities or individuals are prohibited from
providing documents and information in connection with any securities business activities to any organizations and/or persons aboard
without the prior consent of the securities regulatory authority of the State Council and the competent departments of the State
Council. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an
overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase
difficulties faced by you in protecting your interests. See also "Item 3. Key Information — D. Risk Factors —
Risks Related to Our Ordinary Shares — You may face difficulties in protecting your interests, and your ability to protect
your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law" for risks associated
with investing in us as a Cayman Islands exempted company.
26
It
may be difficult for overseas shareholders and/or regulators to conduct investigations or collect evidence within Hong Kong.
The
Securities and Futures Commission of Hong Kong ("SFC") is a signatory to the International Organization of Securities Commissions
Multilateral Memorandum of Understanding ("MMOU"), which provides for mutual investigatory and other assistance and exchange
of information between securities regulators around the world, including the SEC. This is also reflected in section 186 of the Securities
and Futures Ordinance ("SFO") which empowers the SFC to exercise its investigatory powers to obtain information and documents
requested by non-Hong Kong regulators, and section 378 of the SFO which allows the SFC to share confidential information and documents
in its possession with such regulators. However, there is no assurance that such cooperation will materialize, or if it does, whether
it will adequately address any efforts to investigate or collect evidence to the extent that may be sought by the U.S. regulators.
If
we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences
to us and our non-PRC shareholders.
Under
the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with "de facto management
body" within China is considered a "resident enterprise" and will be subject to the enterprise income tax on its global
income at the rate of 25%. The implementation rules define the term "de facto management body" as the body that exercises
full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise.
The Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident Enterprises on the
Basis of De Facto Management Bodies, which was issued by the State Administration of Taxation, or the SAT, on April 22, 2009 and further
amended on December 29, 2017, or Circular 82, provides certain specific criteria for determining whether the "de facto management
body" of a PRC-controlled enterprise that is incorporated offshore is located in China. Although Circular 82 only applies to offshore
enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria
set forth in the circular may reflect the SAT's general position on how the "de facto management body" text should
be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise
controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its "de facto
management body" in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions
are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise's
financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise's
primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the
PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.
We
believe none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of
an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the
term "de facto management body." If the PRC tax authorities determine that we are a PRC resident enterprise for enterprise
income tax purposes, we could be subject to PRC tax at a rate of 25% on our worldwide income, subject to any reduction set forth in applicable
tax treaties. Furthermore, if we are deemed a PRC resident enterprise, dividends payable to our non-PRC resident enterprise shareholders
and any gain realized on the transfer of ordinary shares may be subject to PRC tax at a rate of 10% in the case of non-PRC resident enterprises
or a rate of 20% in the case of non-PRC individuals unless a reduced rate is available under an applicable tax treaty. It is unclear
whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country or area of
tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your
investment in the ordinary shares.
We
face uncertainties with respect to indirect transfer of equity interests in PRC resident enterprises by their non-PRC resident companies.
We
may face uncertainties regarding the reporting on and consequences of private equity financing transactions involving the transfer and
exchange of shares in our company by non-resident investors in the future. In February 2015, the SAT issued the Bulletin on Issues of
Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or Bulletin 7. Pursuant to Bulletin 7, an "indirect
transfer" of PRC assets, including a transfer of equity interests in an unlisted non-PRC holding company of a PRC resident enterprise
and excluding the transfer of PRC assets by a non-PRC resident enterprise from the purchase and sale of equities of the same listed overseas
enterprise on the public market, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of the underlying
PRC assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment
of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and
the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a
rate of 10% for the transfer of equity interests in a PRC resident enterprise.
27
On
October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident
Enterprise Income Tax at Source, or Bulletin 37, which came into effect on December 1, 2017 and was most-recently amended on June 15,
2018. Bulletin 37 further clarifies the practice and procedure of the withholding of nonresident enterprise income tax. We face uncertainties
on the reporting and consequences of potential future private equity financing transactions, share exchanges or other transactions involving
the transfer of shares in our company by our non-PRC resident holding enterprise shareholders. The PRC tax authorities may pursue such
non-resident enterprises with respect to a filing or the transferees with respect to withholding obligation, and request our PRC subsidiaries
to assist in the filing. As a result, we and non-resident enterprises in such transactions may become at risk of being subject to filing
obligations or being taxed under Bulletin 7 and Bulletin 37, and may be required to expend valuable resources to comply with them or
to establish that we and our non-resident enterprises should not be taxed under these regulations, which may have a material adverse
effect on our financial condition and results of operations.
The
PRC tax authorities have the discretion under Bulletin 7 to make adjustments to the taxable capital gains based on the difference between
the fair value of the taxable assets transferred and the cost of investment. If the PRC tax authorities make adjustments to the taxable
income of the transactions under Bulletin 7, our income tax costs associated with such transactions will be increased, which may have
an adverse effect on our financial condition and results of operations. We cannot assure you that the PRC tax authorities will not, at
their discretion, adjust any capital gains and impose tax return filing obligations on us or require us to provide assistance to them
for the investigation of any transactions we were involved in. Heightened scrutiny over acquisition transactions by the PRC tax authorities
may have a negative impact on potential acquisitions we may pursue in the future.
If
our preferential tax treatments are revoked or become unavailable or if the calculation of our tax liability is successfully challenged
by the PRC tax authorities, we may be required to pay tax, interest and penalties in excess of our tax provisions.
The
Chinese government has provided various tax incentives to our PRC subsidiaries, primarily in the form of reduced enterprise income tax
rates. For example, under the PRC Enterprise Income Tax Law and its implementation rules, the statutory enterprise income tax rate is
25%. However, the income tax of an enterprise that has been determined to be a small low-profit enterprise can be reduced to a preferential
rate of 20% on 12.5% of its taxable income with respect to the portion of the annual taxable income that does not exceed RMB1 million
during certain periods. In addition, certain of our PRC subsidiaries enjoy preferential tax treatment, including being treated as high
and new technology enterprises and entitled to enjoy a reduced 15% enterprise income tax rate. Any increase in the enterprise income
tax rate applicable to our PRC subsidiaries in China, or any discontinuation, retroactive or future reduction or refund of any of the
preferential tax treatments and local government subsidies currently enjoyed by our PRC subsidiaries in China, could adversely affect
our business, financial condition and results of operations.
Further,
in the ordinary course of our business, we are subject to complex income tax and other tax regulations, and significant judgment is required
in the determination of a provision for income taxes. Although we believe our tax provisions are reasonable, if the PRC tax authorities
successfully challenge our position and we are required to pay tax, interest and penalties in excess of our tax provisions, our financial
condition and results of operations would be materially and adversely affected.
Failure
to make adequate contributions to various employee benefit plans as required by PRC regulations or comply with laws and regulations on
other employment practices may subject us to penalties.
Companies
operating in China are required to participate in various government sponsored employee benefit plans, including certain social insurance,
housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of
salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government from time to time
at locations where we operate our businesses. The requirement of employee benefit plans has not been implemented consistently by the
local governments in China given the different levels of economic development in different locations. Currently, our PRC subsidiaries
are making contributions to the plans based on the standards which are lower than the mandatory standards as required by law for all
employees. In addition, the candidates to whom we pay salaries in connection with our flexible employment recruitment services may be
seen as our employees by relevant government authorities and therefore, we may be required to pay employee benefits for them. With respect
to the underpaid or unpaid employee benefits, we may be required to make up the contributions for these plans as well as to pay late
fees and fines. If we are subject to late fees or fines in relation to the underpaid or unpaid employee benefits, our financial condition
and results of operations may be adversely affected. We may also be subject to regulatory investigations and other penalties if our other
employment practices are deemed to be in violation of relevant PRC laws and regulations.
The
enforcement of the PRC Labor Contract Law and other labor-related regulations in the PRC may subject us to penalties or liabilities.
The
PRC Labor Contract Law, which was enacted in 2008 and amended in 2012, introduced specific provisions related to fixed-term employment
contracts, part-time employment, probationary periods, consultation with labor unions and employee assemblies, employment without a written
contract, dismissal of employees, severance, and collective bargaining to enhance previous PRC labor laws. Under the Labor Contract Law,
an employer is obligated to sign a non-fixed term labor contract with any employee who has worked for the employer for ten consecutive
years except that the employee refuses to sign. Further, if an employee requests or agrees to renew a fixed-term labor contract that
has already been entered into twice consecutively, the resulting contract, with certain exceptions, must have non-fixed term. With certain
exceptions, an employer must pay severance to an employee where a labor contract is terminated or expires. In addition, the PRC governmental
authorities have continued to introduce various new labor-related regulations since the effectiveness of the Labor Contract Law.
These
laws and regulations designed to enhance labor protection tend to increase our labor costs. In addition, as the interpretation and implementation
of these regulations are still evolving, our employment practices may not be at all times deemed in compliance with the regulations.
As a result, we could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations.
28
The
M&A Rules and certain other PRC regulations may make it more difficult for us to pursue growth through acquisitions.
The
M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, and some other regulations and rules concerning mergers
and acquisitions established complex procedures and requirements for acquisition of Chinese companies by foreign investors, including
requirements in some instances that the Ministry of Commerce of the PRC be notified in advance of any change-of-control transaction in
which a foreign investor takes control of a PRC domestic enterprise engaging in certain industries. Moreover, the Anti-Monopoly Law promulgated
by the SCNPC, which became effective in 2008 and was recently amended in June 2022, requires that transactions which are deemed concentrations
and involve parties with specified turnover thresholds must be cleared by the relevant anti-monopoly authority before they can be completed.
In addition, the Rules on Implementation of Security Review System for the Merger and Acquisitions of Domestic Enterprises by Foreign
Investors issued by the Ministry of Commerce and became effective in September 2011 specify that mergers and acquisitions by foreign
investors that raise "national defense and security" concerns and mergers and acquisitions through which foreign investors
may acquire de facto control over domestic enterprises that raise "national security" concerns are subject to strict review
by the Ministry of Commerce, and the rules prohibit any activities attempting to bypass a security review, including by structuring the
transaction through a proxy or contractual control arrangement.
In
the future, we may pursue potential strategic acquisitions that are complementary to our business and operations. Complying with the
requirements of the above-mentioned regulations and other rules to complete such transactions could be time-consuming, and any required
approval processes, including obtaining approval or clearance from the Ministry of Commerce, may delay or inhibit our ability to complete
such transactions, which could affect our ability to expand our business or maintain our market share. Furthermore, according to the
M&A Rules, if a PRC entity or individual plans to merge or acquire its related PRC entity through an overseas company legitimately
incorporated or controlled by such entity or individual, such a merger and acquisition will be subject to examination and approval by
the Ministry of Commerce. The application and interpretations of M&A Rules are still uncertain, and there is possibility that the
PRC regulators may promulgate new rules or explanations requiring that we obtain approval of the Ministry of Commerce for our completed
or ongoing mergers and acquisitions. There is no assurance that we can obtain such approval from the Ministry of Commerce for our mergers
and acquisitions, and if we fail to obtain those approvals, we may be required to suspend our acquisition and be subject to penalties.
Any uncertainties regarding such approval requirements.
PRC
regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries' ability to change their
registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties
under PRC laws. In addition, any failure to comply with PRC regulations with respect to registration requirements for offshore financing
may subject us to legal or administrative sanctions.
In
July 2014, the State Administration of Foreign Exchange ("SAFE") promulgated the Circular on Relevant Issues Concerning Foreign
Exchange Control on Domestic Residents' Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles,
or SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign
individuals that are deemed as PRC residents for foreign exchange administration purpose) to register with SAFE or its local branches
in connection with their direct or indirect offshore investment activities. SAFE Circular 37 further requires amendment to the SAFE registrations
in the event of any changes with respect to the basic information of the offshore special purpose vehicle, such as change of a PRC individual
shareholder, name and operation term, or any significant changes with respect to the offshore special purpose vehicle, such as increase
or decrease of capital contribution, share transfer or exchange, or mergers or divisions. SAFE Circular 37 is applicable to our shareholders
who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.
Under
these foreign exchange regulations, PRC residents who make, or have previously made, prior to the implementation of these foreign exchange
regulations, direct or indirect investments in offshore companies are required to register those investments. In addition, any PRC resident
who is a direct or indirect shareholder of an offshore company is required to update its previously filed SAFE registration, to reflect
any material change involving its round-trip investment. If any PRC shareholder fails to make the required registration or update the
previously filed registration, the PRC subsidiary of that offshore parent company may be restricted from distributing their profits and
the proceeds from any reduction in capital, share transfer or liquidation to their offshore parent company, and the offshore parent company
may also be restricted from injecting additional capital into its PRC subsidiary. Moreover, failure to comply with the various foreign
exchange registration requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange
restrictions, including (i) the requirement by SAFE to return the foreign exchange remitted overseas or into the PRC within a period
of time specified by SAFE, with a fine of up to 30% of the total amount of foreign exchange remitted overseas or into PRC and deemed
to have been evasive or illegal and (ii) in circumstances involving serious violations, a fine of no less than 30% of and up to the total
amount of remitted foreign exchange deemed evasive or illegal.
We
are committed to complying with and to ensuring that our shareholders who are subject to these regulations will comply with the SAFE
rules and regulations. However, due to the inherent uncertainty in the implementation of the regulatory requirements by the PRC authorities,
such registration might not be always practically available in all circumstances as prescribed in those regulations. In addition, we
may not always be able to compel them to comply with SAFE Circular 37 or other related regulations. We cannot assure you that SAFE or
its local branches will not release explicit requirements or interpret the PRC laws and regulations otherwise. We may not be fully informed
of the identities of all our shareholders or beneficial owners who are PRC residents, and we cannot provide any assurance that all of
our shareholders and beneficial owners who are PRC residents will comply with our request to make, obtain or update any applicable registrations
or comply with other requirements under SAFE Circular 37 or other related rules in a timely manner.
29
Because
there is uncertainty concerning the reconciliation of these foreign exchange regulations with other approval requirements, it is unclear
how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented
by the governmental authorities. We cannot predict how these regulations will affect our business operations or future strategy. For
example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance
of dividends and foreign-currency-denominated borrowings, which may adversely affect our results of operations and financial condition.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.
In
addition, our offshore financing activities, such as the issuance of foreign debt, may also be subject to PRC laws and regulations. In
accordance with such laws and regulations, we may be required to complete examination and registration with the National Development
and Reform Commission, or NDRC, prior to such activities. Failure to comply with the requirements may result in administrative meeting,
warning, notification and other regulatory penalties and sanctions.
We
may be materially adversely affected if our shareholders and beneficial owners who are PRC entities fail to comply with the PRC overseas
investment regulations.
On
December 26, 2017, the NDRC promulgated the Administrative Measures on Overseas Investments by Enterprises, which took effect as of March
1, 2018. According to this regulation, non-sensitive overseas investment projects are subject to record-filing requirements with the
NDRC or its provincial branch. On September 6, 2014, the Ministry of Commerce promulgated the Administrative Measures on Overseas Investments,
which took effect as of October 6, 2014. According to this regulation, overseas investments of PRC enterprises that involve non-sensitive
countries and regions and non-sensitive industries are subject to record-filing requirements with Ministry of Commerce or its provincial
branch. According to the Circular of the State Administration of Foreign Exchange on Issuing the Regulations on Foreign Exchange Administration
of the Overseas Direct Investment of Domestic Institutions, which was promulgated by the State Administration of Foreign Exchange, or
SAFE, on July 13, 2009 and took effect on August 1, 2009, and Notice on Further Simplifying and Improving the Administration of the Foreign
Exchange Concerning Direct Investment, which was promulgated by the SAFE on February 13, 2015 and took effect on June 1, 2015, PRC enterprises
must register for overseas direct investment with authorized banks.
We
may not be fully informed of the identities of all our shareholders or beneficial owners who are PRC entities, and we cannot provide
any assurance that all of our shareholders and beneficial owners who are PRC entities will comply with our request to complete the overseas
direct investment procedures under the aforementioned regulations or other related rules in a timely manner, or at all. If they fail
to complete the filings or registrations required by the overseas direct investment regulations, the authorities may order them to suspend
or cease the implementation of such investment and make corrections within a specified time and other legal or administrative sanctions,
which may adversely affect our business, financial condition and results of operations.
We
may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may
have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our
ability to conduct our business.
We
are a Cayman Islands holding company and we rely principally on dividends and other distributions on equity from our PRC subsidiary for
our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders for services of
any debt we may incur. If our PRC subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict
its ability to pay dividends or make other distributions to us. Under PRC laws and regulations, our PRC subsidiary, which is a foreign-owned
enterprise, may pay dividends only out of its respective accumulated profits as determined in accordance with PRC accounting standards
and regulations. In addition, a foreign-owned enterprise, according to the PRC Companies Law, is required to set aside 10% of its accumulated
after-tax profits each year, if any, to fund a certain statutory reserves fund, until the aggregate amount of such fund reaches 50% of
its registered capital. Such reserve funds cannot be distributed to us as dividends.
Our
PRC subsidiaries generate essentially all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result,
any restriction on currency exchange may limit the ability of our PRC subsidiary to use their Renminbi revenues to pay dividends to us.
The
PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put forward
by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability of
our PRC subsidiary to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make
investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
In
addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable
to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties
or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises
are incorporated.
30
You
may be subject to PRC income tax on dividends from us or on any gain realized on the transfer of our ordinary shares.
Under
the Enterprise Income Tax Law and its implementation rules, PRC withholding tax at a rate of 10% is generally applicable to the income
derived from sources within China of non-PRC resident enterprises, which are established outside of China and do not have an establishment
or place of business in China, or which are established outside of China and have an establishment or place of business in China but
its income is not effectively connected with the establishment or place of business. Accordingly, dividends from us to and any gain realized
on the transfer of shares by non-PRC resident enterprise investors is subject to 10% PRC enterprise income tax if these gains are regarded
as income derived from sources within China. Under the PRC Individual Income Tax Law and its implementation rules, dividends regarded
as income derived from sources within China and paid to foreign individual investors who are not PRC residents are generally subject
to a PRC withholding tax at a rate of 20% and gains from PRC sources realized by these investors on the transfer of shares are generally
subject to 20% PRC income tax. Any such PRC tax liability may be reduced by the provisions of an applicable tax treaty. Although substantially
all of our business operations are in China, it is unclear whether the dividends we pay with respect to our shares, or the gains realized
from the transfer of our shares, would be treated as income derived from sources within China and as a result be subject to PRC income
tax. If PRC income tax is imposed on gains realized through the transfer of our ordinary shares or on dividends paid to our non-PRC resident
investors, the value of your investment in our ordinary shares may be materially and adversely affected. Furthermore, our shareholders
whose jurisdictions of residence have tax treaties or arrangements with China may not qualify for benefits under these tax treaties or
arrangements.
In
addition, pursuant to the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance
of Double Taxation and the Prevention of Fiscal Tax Evasion With Respect to Taxes On Income, and the Notice on Certain Issues with Respect
to the Enforcement of Dividend Provisions in Tax Treaties issued in 2009 by the SAT, if a Hong Kong resident enterprise owns more than
25% of the equity interest of a PRC company at all times during the twelve-month period immediately prior to obtaining a dividend from
such company, the 10% withholding tax on the dividend is reduced to 5%, provided that certain other conditions and requirements are satisfied
at the discretion of the PRC tax authority, however, if the PRC tax authorities determine, in their discretion, that a company benefits
from the reduced income tax rate due to a structure or arrangement that is primarily tax-driven, the PRC tax authorities may adjust the
preferential tax treatment. If our Hong Kong subsidiaries are determined by PRC government authorities as receiving benefits from reduced
income tax rates due to a structure or arrangement that is primarily tax-driven, the dividends paid by our PRC subsidiaries to our Hong
Kong subsidiaries will be taxed at a higher rate, which will have a material adverse effect on our financial performance.
PRC
regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion
may delay or prevent us from using the proceeds of our subsequent offerings to make loans or additional capital contributions to our
PRC subsidiaries in China, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
We
are an offshore holding company conducting our operations in China through our PRC subsidiaries. We may make loans to our PRC subsidiaries,
or we may make additional capital contributions to our PRC subsidiaries, or we may establish new PRC subsidiaries and make capital contributions
to these new PRC subsidiaries, or we may acquire offshore entities with business operations in China in an offshore transaction.
Most
of these ways are subject to PRC regulations and approvals or registration. For example, loans by us to our wholly-owned PRC subsidiary
to finance its activities cannot exceed statutory limits and must be registered with the local counterpart of SAFE. If we decide to finance
our wholly owned PRC subsidiary by means of capital contributions, these capital contributions are subject to registration with the SAMR
or its local branch, reporting of foreign investment information with the PRC Ministry of Commerce, or registration with other governmental
authorities in China.
SAFE
promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement
of Capital of Foreign-invested Enterprises, or SAFE Circular 19, effective June 2015. According to SAFE Circular 19, the flow and use
of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that
RMB capital may not be used for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of banks
loans that have been transferred to a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated
registered capital of a foreign-invested enterprise to be used for equity investments within China, it also reiterates the principle
that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used
for purposes beyond its business scope. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and
Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which
reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign
currency- denominated registered capital of a foreign-invested company to issue RMB entrusted loans, repay inter-enterprise loans or
repay bank loans that have been transferred to a third party to a prohibition against using such capital to issue loans to non-associated
enterprises. On October 23, 2019, the SAFE promulgated the Notice for Further Advancing the Facilitation of Cross- border Trade and Investment,
or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated
capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and does not
violate the negative list on foreign investment. SAFE promulgated the Circular on Optimizing Administration of Foreign Exchange to Support
the Development of Foreign-related Business on April 10, 2020, which stipulated that, eligible enterprises are allowed to make domestic
payments by using their capital funds, foreign debts and the income under capital accounts of overseas listing, with no need to provide
the evidentiary materials concerning authenticity of such capital for banks on a transaction-by-transaction basis in advance, provided
that their capital use shall be authentic and in line with provisions, and conform to the prevailing administrative regulations on the
use of income under capital accounts. The concerned bank shall conduct spot checking in accordance with the relevant requirements. However,
it is unclear how SAFE and competent banks will carry them out in practice.
31
In
light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies,
we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals
on a timely basis, or at all, with respect to future loans to our PRC subsidiary or future capital contributions by us to our PRC subsidiary.
As a result, uncertainties exist as to our ability to provide prompt financial support to our PRC subsidiary when needed. If we fail
to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from our subsequent offerings
and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity
and our ability to fund and expand our business.
Fluctuations
in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.
The
conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People's Bank of China, or
the PBOC. The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of Renminbi against
the U.S. dollar and other currencies is affected by changes in China's political and economic conditions and by China's foreign
exchange policies, among other things. We cannot assure you that Renminbi will not appreciate or depreciate significantly in value against
the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange
rate between Renminbi and the U.S. dollar in the future.
Substantially
all of our income and expenses are denominated in Renminbi and our reporting currency is Renminbi. Significant revaluation of the Renminbi
may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars we receive
from our initial public offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would reduce
the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the
purpose of paying dividends or for other business purposes, appreciation of the U.S. dollar against the Renminbi would reduce the U.S.
dollar amount available to us.
Very
limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into
any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging
transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to hedge our exposure
adequately or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our
ability to convert Renminbi into foreign currency.
Governmental
control of currency conversion may limit our ability to utilize our income effectively and affect the value of your investment.
The
PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of
currency out of China. We receive substantially all of our income in Renminbi. Under our current corporate structure, our Cayman Islands
holding company may rely on dividend payments from our PRC subsidiary to fund any cash and financing requirements payable outside of
China. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments
and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying
with certain procedural requirements. Specifically, under the existing exchange restrictions, cash generated from the operations of our
PRC subsidiary in China may be used to pay dividends to our company without prior approval of SAFE. However, approval from or registration
with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China
to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval
or complete certain mandatory registration procedures to use cash generated from the operations of our PRC subsidiary to pay any debts
they may incur in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside
China in a currency other than Renminbi.
In
addition, if any of our shareholders who is subject to SAFE regulations fails to satisfy the applicable overseas direct investment filing
or approval requirement, the PRC government may restrict our access to foreign currencies for current account transactions. If we are
prevented from obtaining sufficient foreign currency to satisfy our foreign currency demands, we may not be able to pay dividends in
foreign currencies to our shareholders, including holders of the ordinary shares.
If
the chops of our PRC subsidiaries are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the
corporate governance of these entities could be severely and adversely compromised.
In
China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature.
Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security
Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The
chops of our PRC subsidiaries are generally held securely by personnel designated or approved by us in accordance with our internal control
procedures. To the extent those chops are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes,
the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide
by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to
do so.
32
Risks
Related to Our Ordinary Shares
The
trading price of our ordinary shares is likely to be volatile, which could result in substantial losses to investors.
The
trading price of our ordinary shares is likely to be volatile and could fluctuate widely due to factors beyond our control. This may
happen because of broad market and industry factors, like the performance and fluctuation of the market prices of other companies with
business operations located mainly in China that have listed their securities in the United States. A number of Chinese companies have
listed or are in the process of listing their securities on U.S. stock markets. The securities of some of these companies have experienced
significant volatility, including price declines in connection with their initial public offerings. The trading performances of these
Chinese companies' securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the
United States in general and consequently may impact the trading performance of our ordinary shares, regardless of our actual operating
performance.
In
addition to market and industry factors, the price and trading volume for our ordinary shares may be highly volatile for factors specific
to our own operations, including the following:
●
variations
                                            in our income, earnings and cash flow;
●
announcements
                                            of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;
●
announcements
                                            of new services and expansions by us or our competitors;
●
changes
                                            in financial estimates by securities analysts;
●
detrimental
                                            adverse publicity about us, our services or our industry;
●
additions
                                            or departures of key personnel;
●
release
                                            of lock-up or other transfer restrictions on our outstanding equity securities or sales of
                                            additional equity securities; and
●
potential
                                            litigation or regulatory investigations.
Any
of these factors may result in large and sudden changes in the volume and price at which our ordinary shares will trade.
In
the past, shareholders of public companies have often brought securities class action suits against those companies following periods
of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount
of our management's attention and other resources from our business and operations and require us to incur significant expenses
to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our
reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be
required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.
If
securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations
regarding our ordinary shares, the market price for our ordinary shares and trading volume could decline.
The
trading market for our ordinary shares will be influenced by research or reports that industry or securities analysts publish about our
business. If one or more analysts who cover us downgrade our ordinary shares, the market price for our ordinary shares would likely decline.
If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial
markets, which in turn could cause the market price or trading volume for our ordinary shares to decline.
The
sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.
Sales
of substantial amounts of our ordinary shares in the public market, or the perception that these sales could occur, could adversely affect
the market price of our ordinary shares and could materially impair our ability to raise capital through equity offerings in the future.
We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the
availability of these securities for future sale will have on the market price of our ordinary shares. In addition, if we issue additional
ordinary shares, either through private transactions or in the public markets in the United States or other jurisdiction, your ownership
interests in our company would be diluted and this, in turn, would have an adverse effect on the price of our ordinary shares.
Because
we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ordinary shares for return on
your investment.
We
currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our
business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment
in our ordinary shares as a source for any future dividend income.
33
Our
board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and
pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations
and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial
condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment
in our ordinary shares will likely depend entirely upon any future price appreciation of our ordinary shares. There is no guarantee that
our ordinary shares will appreciate in value or even maintain the price at which you purchased the ordinary shares. You may not realize
a return on your investment in our ordinary shares and you may even lose your entire investment in our ordinary shares.
There
can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable
year, which could subject U.S. investors in our ordinary shares or ordinary shares to significant adverse U.S. federal income tax consequences.
A
non-U.S. corporation, such as our company, will generally be classified as a "passive foreign investment company," or "PFIC,"
for U.S. federal income tax purposes, for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain
types of "passive" income or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly
average) during such year is attributable to assets that produce or are held for the production of passive income. Passive income generally
includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of property producing such income and
net foreign currency gains. For this purpose, cash and assets readily convertible into cash are categorized as passive assets and the
company's goodwill and other unbooked intangibles are generally taken into account when determining the value of its assets.
Based
upon our current and projected income and assets and the market price of our ordinary shares, we do not believe that we were a PFIC for
the taxable year ended December 31, 2023 and we do not presently expect to be a PFIC for the current taxable year or the foreseeable
future. However, no assurance can be given in this regard because the determination of whether we will be or become a PFIC is a factual
determination made annually that will depend, in part, upon the composition of our income and assets and the value of our assets. Fluctuations
in the market price of the ordinary shares may cause us to be or become a PFIC for the current or future taxable years because the value
of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference
to the market price of the ordinary shares from time to time (which may be volatile). If our market capitalization subsequently declines,
we may be or become a PFIC for the current taxable year or future taxable years. Furthermore, the composition of our income and assets
may also be affected by how, and how quickly, we use our liquid assets. Under circumstances where our revenue from activities that produce
passive income significantly increases relative to our revenue from activities that produce non-passive income, or where we determine
not to deploy significant amounts of cash for active purposes, our risk of becoming a PFIC may substantially increase.
If
we are classified as a PFIC for any taxable year during which a U.S. Holder (as defined in "Item 10. Additional Information —
E. Taxation — U.S. Federal Income Tax Considerations") holds our ordinary shares, the PFIC tax rules discussed under "Item
10. Additional Information — E. Taxation — U.S. Federal Income Tax Considerations—PFIC Rules" will generally
apply to such U.S. Holder for such taxable year and, unless the U.S. Holder makes a "mark-to-market" election, will apply
in future years even if we cease to be a PFIC.
You
may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because
we are incorporated under Cayman Islands law.
We
are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our
amended
and restated
memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law
of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the
fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the
Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman
Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding,
on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman
Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United
States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states,
such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition,
Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United
States.
Shareholders
of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other
than our
amended and restated
memorandum and articles of association, our register of
mortgages and charges and special resolutions of our shareholders) or to obtain copies of lists of shareholders of these companies.
Under Cayman Islands law, the names of our current directors can be obtained from a search conducted at the Registrar of Companies.
Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our
corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may
make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to
solicit proxies from other shareholders in connection with a proxy contest.
34
Certain
corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies
incorporated in other jurisdictions such as the United States.
We are permitted to elect to rely
on home country practice to be exempted from the corporate governance requirements. We have relied on home country practice exemption
with respect to the requirement that a majority of the nominating and corporate governance committee members must be independent directors
within 90 days of listing. We may choose to follow additional home country practice in the future.
As a result, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable
to U.S. domestic issuers.
As
a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions
taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a
company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act
(As Revised) of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders,
see "Item 10. Additional Information — Differences in Corporate Law."
Certain
judgments obtained against us by our shareholders may not be enforceable.
We
are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. Substantially all
of our current operations are conducted in China. In addition, a majority of our current directors and officers are nationals and residents
of countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As
a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in
the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are
successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment
against our assets or the assets of our directors and officers.
We
are a "controlled company" within the meaning of the Nasdaq Stock Market listing rules and, as a result, may rely on exemptions
from certain corporate governance requirements that provide protection to shareholders of other companies.
We
are a "controlled company" as defined under the Nasdaq Stock Market listing rules because Mr. Howard Lee, our founder, chairman
of the Board and CEO, controls more than 50% of our total voting power. For so long as we remain a controlled company under that definition,
we are permitted to elect to rely on, and may rely on, certain exemptions from corporate governance rules, including an exemption from
the rule that a majority of our board of directors must be independent directors. As a result, you will not have the same protection
afforded to shareholders of companies that are subject to these corporate governance requirements.
We
are an emerging growth company and the reduced disclosure requirements applicable to emerging growth companies may make our ordinary
shares less attractive to investors.
We
are an emerging growth company, as defined in the JOBS Act, and may remain an emerging growth company until the last day of the fiscal
year following the fifth anniversary of the completion of our initial public offering. However, if certain events occur prior to the
end of such five-year period, including if we become a "large accelerated filer," our annual gross net revenues exceed $1.235
billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company
prior to the end of such five-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on
exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies.
We cannot predict whether investors will find our ordinary shares less attractive if we rely on these exemptions. If some investors find
our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and the trading price
of our ordinary shares may be reduced or more volatile.
In
addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with
new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until
they would otherwise apply to private companies.
We
are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions
applicable to United States domestic public companies.
Because
we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations
in the United States that are applicable to U.S. domestic issuers, including:
●
the
                                            rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current
                                            reports on Form 8-K with the SEC;
●
the
                                            sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations
                                            in respect of a security registered under the Exchange Act;
●
the
                                            sections of the Exchange Act requiring insiders to file public reports of their stock ownership
                                            and trading activities and liability for insiders who profit from trades made in a short
                                            period of time; and
●
the
                                            selective disclosure rules by issuers of material nonpublic information under Regulation
                                            FD.
We
are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish
our results on a semi-annual basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq. Press releases
relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required
to file with or furnish to the SEC will be less extensive and less timely than that required to be filed with the SEC by U.S. domestic
issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing
in a U.S. domestic issuer.
35
ITEM
4. INFORMATION ON THE COMPANY
A.
History
    and Development of the Company
On
May 17, 2011, we established Lucas Group China Limited, formerly known as Luokeshi Management Consulting Co., Ltd., and commenced our
commercial operations. In April 2016 and May 2016, the Hohhot branch and the Guangzhou branch of Lucas Group China Limited were established,
respectively, to expand our business and research and development. On August 15, 2022, we incorporated Lucas Star Group Limited under
the laws of the Cayman Islands as our offshore holding company to facilitate offshore financing, and later renamed it as Lucas GC Limited
on October 14, 2022. On August 4, 2022, we established Lucas Star Holding Limited, our wholly owned BVI subsidiary and on October 21,
2022, we established Lucas Star Global Limited, the wholly owned Hong Kong subsidiary of Lucas Star Holding Limited.
In
March 2024, we completed our initial public offering and listed our ordinary shares on the Nasdaq Capital Market under the symbol "LGCL."
We raised approximately US$4.0 million of net proceeds from the initial public offering after deducting
underwriting discounts, commissions and expenses.
Our
principal executive offices are located at Room 5A01, 4th Floor, Air China Building, Xiaoyun Road, Sanyuanqiao, Chaoyang District, Beijing
100027, China. Our telephone number at this address is (86) 18500976532. Our registered office is located at ICS Corporate Services (Cayman)
Limited, 3-212 Governors Square, 23 Lime Tree Bay Avenue, P.O. Box 30746, Seven Mile Beach, Grand Cayman KY1-1203, Cayman Islands. Our
agent for service of process in the United States is Cogency Global Inc. located at 122 East 42nd Street, 18th Floor, New York, NY 10168.
SEC
maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC on
www.sec.gov
. You can also find information on our website https://www.lucasgchr.com/. The information
contained on our website is not a part of this annual report.
B.
Business
    Overview
Overview
We
are the largest technology-driven online agent-centric human capital management service provider targeting professionals based on PaaS
in China in terms of the number of active users in the human resources industry as of June 30, 2022 and total net revenues for the year
ended December 31, 2021. As a company empowered by AI, data analytics, and blockchain technologies, we are committed to digitalizing
and intellectualizing the entire human capital management process. We provide a platform to support trusted and private social networks
of professionals, through which we provide services consisting of recruitment services, outsourcing services, and other services such
as information technology services and training services. Our users are primarily professionals who work in human resources related functions.
Our corporate customers are corporations with recruitment, training, sales leads generation and outsourcing demands. As of December 31,
2023, we had approximately 638,020 active registered users on our proprietary platforms, Star Career and Columbus, through which the
users of our platforms will receive customized job recommendations and work as talent scouts to source suitable candidates for our corporate
customers through their own trusted and private social network, as well as receive trainings and other value-added services.
For
the years ended December 31, 2021, 2022 and 2023, our total revenue amounted to RMB652.2 million, RMB766.6 million and RMB1,474.0
million (US$207.6 million), respectively, representing a year-over-year increase of 17.5% and 92.3%, respectively. For the years
ended December 31, 2021, 2022 and 2023, our gross profit amounted to RMB179.1 million, RMB215.2 million and RMB418.6 million
(US$59.0 million), respectively, representing a year-over-year increase of 20.2% and 94.5%, respectively.
Our Business Model
Our major business segments consist
of (i) recruitment services, (ii) outsourcing services and (iii) other services which include information technology services and training
services.
Recruitment
Services
Equipped
with a well-established talent scout network and comprehensive technology infrastructure, our platforms
Columbus
and
Star Career
alleviate our corporate customers from the burden associated with discovering, training, managing and maintaining a sufficient number
of skilled workers, allowing them to better focus on their core businesses.
36
We
have experienced rapid growth of active registered users. As of December 31, 2021, 2022 and 2023, we had approximately 318,970, 431,220
and 638,020 active registered users, respectively. We define active registered users as those who login to the application at least
once within a 30-day period and who may engage in such activities as recommending job opportunities to their friends, providing us
with information on which companies may have job openings that may potentially be our clients, or commenting or forwarding videos or
articles generated on our network to their friends. Our business model is to help our clients who pay us the recruitment fees to
look for qualified candidates who mostly are currently employed but are open to new job opportunities. As such, we do not approach
active job seekers directly. When compared to those traditional recruitment firms who rely on their own in-house consultants to look
for qualified candidates which will normally take an average of 30 to 60 days to close a job assignment, we only need less than half
of the time required, since we use our patented technology and leverage big data to push the client's job assignments only to
those users who are also talent scouts acting as consultants and have suitable candidates in their networks. In addition, since the
users already know the candidates in their friendship networks, it is normally much easier to convince the candidates to consider
the job opportunities and be more active and cooperative in participating in the interview processes whereas a traditional
recruitment firm uses in-house consultants to cold-call candidates who do not know each other, the efficiency is much lower than
ours. Over 80% of our users remain active in a twelve-month period as of December 31, 2023, because our platform is useful for them
to both make money by acting as a part-time talent scout or providing information to us on potential clients, and forward useful
career development related contents developed by our platform to their friends via their social networks so that they can maintain
an active linkage with their friends in a positive way, rather than posting rudimentary information or daily routines, many of which
are uninteresting to their friends. Therefore, our users have high incentives to continue to use our platform in an active
way.
The
recruitment services we provide are based on our profound industry knowledge and in-depth understanding of the unmet demands of both
our corporate customers and the professionals. For instance, our corporate customers want to be at the forefront of business development,
but they do not enjoy the support from high-skilled professionals and sometimes do not have the budget to expand their internal HR department.
Meanwhile, because of the relative scarcity of professional full-time talent scouts and the high costs of money and time in extensive
research for the right talents, HRs have devoted most of their time scanning through resumes that do not match the demands of the hiring
companies. Sometimes, they do not have the supporting infrastructure to manage the hiring process. Thus, to empower HRs and hiring companies,
we provide coordination and execution assistance via our talent scouts in the candidate sourcing and hiring process in daily recruitment
practice to free HRs from the burdensome researching and administrative work.
Our
agent-centric recruitment services are mainly carried out by means of permanent employment recruitment services and flexible
employment recruitment services. For the years ended December 31, 2021, 2022 and 2023, net revenues from our recruitment services
amounted to RMB497.5 million, RMB413.0 million and RMB659.0 million (US$92.8 million), respectively.
Permanent
Employment Recruitment Services
Our
unique deep machine learning algorithm ensures that our users are recommended with job opportunities that they are likely to be interested
by their acquaintances in their private social networks. For example, users who are a senior executive will usually not be recommended
with some entry-level positions because they are more likely to have contacts with veteran professionals looking for higher salaries
while young users will receive recommendations of job openings that are more related to new graduates. This allows us to simultaneously
achieve two seemingly competing goals of being able to offer tailored and focused experience while achieving a full spectrum of user
coverage mainly through one platform.
Besides
the user portraits based on their profiles, our platform also generates and aggregates massive unique data points based on their interests,
behaviors, profiles and historical transaction records within the network to enrich the portrait of their interests, in order to improve
the accuracy of the delivery of job opportunities. Such data points include user feedback, reach-outs, messaging, and scrolling time.
Informed by this rich and growing dataset, we leverage machine learning technologies to build and refine our advanced proprietary algorithms
that enable customized job recommendations for our users at a massive scale. For example, every action and inaction by each user to either
review or ignore a recommendation delivers feedback to our data system. These feedbacks, conveying each individual's current likings
and preferences, are instantly processed by our AI models and immediately reflected in the new job openings or candidates recommended
to the users. Customized matching significantly improves the efficiency of job hunting and recruitment and enhances user experience which
in turn elevates user engagement.
Flexible
Employment Recruitment Services
Our
flexible employment function is a synergetic supplement to our permanent employment recruitment business. The recruitment process for
flexible employment is in large similar to the process for permanent employment recruitment. For flexible employment recruitment services,
in additional to receiving a service fee, we also receive the whole salary package on behalf of the candidate and serve as the delegating
company to pay the candidate who performed the work for our corporate customers. As such, we bear the obligations of paying salaries
and deducting the taxes in due course for the candidate who is most likely a freelancer. Our corporate customers thus have more flexibility
in terms of fulfilling their temporary business needs which may not be stable.
Outsourcing
Services
We
provide outsourcing services, mostly in technology-related projects, to our corporate customers who need a "turnkey solution"
and rely on us to design, develop and deliver the projects within budget and on time with acceptable quality. We were designated as a
"Technologically Advanced Small and Medium-sized Enterprises" by the MIIT of China. We leverage our qualifications, vast
industry knowledge, and expert networks to offer cost-effective solutions to our corporate customers who rely on us to deliver the expected
solutions on time, within budget and of acceptable quality. Our corporate customer will perform acceptance tests on the project which
we will normally only get paid after the client signs off. Our outsourcing services help us build a close partnership with large corporations,
differentiating us from traditional human capital management companies. Attributable to our network of high-skilled freelancers and specialized
companies, our corporate customers are able to delegate certain tasks to third-party contractors through us and focus on developing their
businesses in a more cost-efficient way.
37
For the years ended December 31, 2021, 2022 and 2023, net revenues from
our outsourcing services amounted to RMB113.8 million, RMB301.9 million and RMB714.0 million (US$100.6 million), respectively, representing
a year-over-year growth of 165.3% and 136.5%, respectively.
Our
service fees and the forms of the outsourcing service agreement are usually determined on a case-by-case basis and are subject to market
conditions and mutual negotiations each time an order is placed. Pursuant to the outsourcing service agreement that we sign with the
corporate customers, we will receive scheduled payments upon project acceptance and satisfaction of key performance indicators.
Other
Services
We
launched other services as value-added services in August 2021, which include information technology services and training services.
For the years ended December 31, 2021, 2022 and 2023, net revenues from our other services amounted to RMB41.0 million, RMB51.6
million and RMB101.0 million (US$14.2 million), respectively.
Information
Technology Services
Our
information technology services are aimed at generating sales leads for our corporate customers who offer products and services that
our users and their acquaintances may find interesting. In the information technology services, we leverage our patented technologies
in AI and data analytics by pushing our clients' products or services information accurately to suitable prospects by analyzing
their behaviors and profiles using our proprietary algorithm. The information collected from the prospects will be sent directly to our
corporate customers and we charge our corporate customers service fees for providing such services while we do not directly act as a
selling agent. Currently, the majority of our clients are selling insurance products and healthcare related services on our platforms.
Training
Services
We
empower our users to help their acquaintances develop professional skills that can enhance their career growth by allowing our users
to recommend suitable training courses and certification programs to their acquaintances. In addition to offering our own career-related
certification programs, we partner with leading industry experts, organizations, institutes, and professional training academies to provide
training courses and certification programs that can help professionals realize developments in their careers. We have developed industry-focused
training programs, some of which are developed in-house and others are developed by third-party developers. We charge those who enroll
in training classes enrollment fees that are determined by us based upon our training material development costs or the costs of training
courses sourced from the third-party providers.
Taking
the CCRP certificate training program that is self-developed by us as an example. Users who are interested in taking the courses and
receiving the certificate will enter into a CCRP certification service agreement with us, pursuant to which the user will pay a lump
sum enrollment fee to us, which covers three stages of CCRP certification services, including but not limited to course material fees
(profession and business related certification course materials, law and business related certification course materials, and finance
and business related certification course materials), video classes, official account and enterprise WeChat one-on-one exclusive certification
supervision services, examination and certification.
In
the future, we intend to expand our training portfolio by offering courses in the areas of Industry Digitalization, Applied Artificial
Intelligence in various industries, and Carbon-Neutral Initiatives and Carbon Emission Reduction Programs.
Our Technology
Our
platform is empowered by our AI, machine learning, data analytics and blockchain technologies. Leveraging our extensive access to big
data assets and AI tools, we are able to continuously optimize our products and services recommendation capabilities, personalize our
user experience, refine our matching algorithm and monitor our service quality. Our patented technologies enable us to optimize the matching
accuracy of services among providers and requestors, and to increase the transactions' closing rates. As of the date of this annual
report, we hold ten patents registered in the U.S. and seven patents registered in China, 68 registered trademarks, 74 registered copyrights,
and ten registered domain names along with nine additional patent applications that are pending in the U.S. and China, all in the areas
of artificial intelligence, data analytics and blockchain technologies.
Our
technologies are well recognized by industry peers. For example, in January 2022, we were nominated to be one of the "Technologically
Advanced Small and Medium-sized Enterprises" in the City of Beijing, an honorable designation awarded by the MIIT of China.
According
to Frost & Sullivan, we ranked fourth among the well-known platforms in the human capital management industry in China in terms of
the number of patents we owned as of December 31, 2022. In addition, we ranked first among all these platforms in terms of the total
number of patents registered in the U.S. as of December 31, 2022.
38
The
core pillars that support the foundation of our technologies and platforms are:
●
Artificial
    intelligence and machine learning.
We develop, train, and test our patented machine learning models and AI systems that offer
    industry-specific and actionable insights for our users. Our platforms offer real-time personalized recommendations. Our systems
    match up providers and requestors with the most relevant products and services based on their interests, behaviors, profiles and
    historical transaction records. Our team of human capital management experts and AI/machine learning scientists constantly refine
    the learning models and AI methods. As we process and analyze more data, we uncover more features from data that are used to further
    improve our capabilities.
●
Data
    Analytics.
Our rich set of proprietary and patented data analytics algorithms collaborate with our AI/machine learning models
    to offer advanced, predictive, and prescriptive analytics to our corporate customers.
●
Blockchain.
Our platforms offer two novel services to our users based on our patented blockchain technology. The first one is a secure, reliable,
    and trusted credentials vault for our users. The second one is a fully distributed referral tracking system that monitors referral
    transactions. Thus, the monetization of referrals is possible because the transaction's traceability and transparency foster
    trust among participants. We believe it will have a positive effect on increasing the transaction closing rates.
We
invest substantial resources to improve our technology and data infrastructure, strengthen our data processing and analytic capabilities,
develop new solutions that are complementary to existing ones and find ways to better serve our users and corporate customers. Our research
and development personnel primarily consist of computer scientists, cognitive computing engineers, data scientists, software engineers,
user experience experts, technology infrastructure architects, and specialists and consultants. In addition, our technology team leader
has over 15 years of experience in the big data analytics field and our IP portfolio consultant and executive director Dr. Wong is a
tenured professor of computer science at California State University who is a pioneer in the areas of artificial intelligence and data
analytics with over 35 years in academics and industry.
We
are committed to further developing our expertise in cybersecurity, data security and reliability through research and development in
data infrastructure and utilization of blockchain. We intend to establish a research center in the U.S. to conduct such research and
development activities, to take advantage of the fact that our IP consultant Dr. Wong and our founder, chairman of the Board and CEO,
Mr. Lee, have decades of work and academic experience in the technical field in the U.S.
Sales
and Marketing
Our
business development initiatives are mainly through referrals among our users and to a lesser extent, through direct cold-calling, third-party
sales agents and tendering processes.
Many
of our new clients are acquired through leads generations through users on our platform. In addition, we also acquire clients through
targeted marketing activities to key opinion leaders and direct business developments. Our sales and marketing team prepares marketing
and pitch materials and presents our services, experience and strengths to potential clients. More importantly, our users may also recommend
and endorse our products and services to their peers within their respective industries. Our extensive experience and quality of service
not only secure long-term clients, but also create a word-of-mouth effect for developing new clients.
Quality
Control
We
believe that our ability to maintain the quality of our services is critical to our growth. Our quality assurance measures include the
following:
●
Internal
    quality control regulations and policies
. We have formulated relevant quality control and management measures for different business
    segments, requiring our employees to follow standard procedures and comply with management requirements. Appropriate punishments
    will be imposed on employees who conduct business in violation of such quality control and management measures. With the development
    of our business, we will keep pace with leading companies in the human capital management market and update such regulations and
    policies from time to time.
●
Quality
    assurance requirements to suppliers and users
. We have set up a quality policy for our suppliers, third-party contractors and
    users to assure the quality of services or products from them. We generally make clear stipulations on quality management in the
    agreements with our suppliers, third-party contractors and users. In the course of doing business, we also explicitly pass on our
    quality control principles to third-party contractors and users, in order to expect them to operate with high faith and in a responsible
    manner. If any suppliers, third-party contractors or users fail to meet our quality control standards, we will seek remedies, require
    them to make a correction, or terminate the cooperation.
●
User
    feedbacks and process improvement
. Our sales and marketing team and operations service team work closely with our users throughout
    each transaction. We constantly seek feedbacks from our users on possible areas of improvement and often make changes to our internal
    processes and data analytic models in order to deliver higher quality services and improve the closing rates.
Competition
According
to Frost & Sullivan, as one of the few companies that have built social network targeting professionals based on acquaintances in
China, we believe our business model is unique and our services empower the human capital management value chain. We face competition
in certain aspects of our business. Our ability to compete effectively depends on our unique and holistic platforms to serve and connect
users and corporate customers, empowering them from an integrated perspective. Many factors contribute to our competitiveness, including
an established social network based on acquaintances and linking various users, agent-centric business model to drive the operation of
social networks, low frequency, high price and non-standard services, and continuously improved platform matching efficiency by data
analytics and artificial intelligence technology.
39
As
our business continues to grow rapidly, we face significant competition from a number of online and offline platforms and services to
attract and retain users. According to the Frost & Sullivan report, in the industry of services for professionals market, our main
competitors fall into the following categories:
●
online
    agent-centric service providers;
●
online
    HR service providers;
●
traditional
    staffing companies; and
●
traditional
    workforce solutions providers.
Intellectual Property
We
design, test and update our platforms regularly, and we have both developed our proprietary solutions in-house and outsourced to third
party contractors. We have developed our infrastructure to be highly agile and scalable, allowing us to efficiently expand our platform
and enter new market segments, with patent-compromising quality. As of the date of this annual report, we hold ten patents registered
in the U.S. and seven patents registered in China, 68 registered trademarks, 74 registered copyrights, and ten registered domain names
along with nine additional patent applications that are pending in the U.S. and China.
According
to Frost & Sullivan, we ranked fourth among the well-known platforms in the human capital management industry in China in terms of
the number of patents we owned as of December 31, 2022. In addition, we ranked first among all these platforms in terms of the total
numbers of patents registered in the U.S. as of December 31, 2022.
Our
continued success depends upon our ability to protect our core technology and intellectual property. We rely on a combination of confidentiality
clauses, contractual commitments, trade secret protections, copyrights, trademarks, patents, and other legal rights to protect our intellectual
property and know-how. We enter into confidentiality and proprietary rights agreements with our employees, consultants and business partners,
and we control access to and distribution of our proprietary information. We intend to protect our intellectual properties vigorously,
but there can be no assurance that our efforts will be successful. Even if our efforts are successful, we may incur significant costs
in defending our rights. From time to time, third parties may initiate litigation against us alleging infringement of their proprietary
rights or declaring their non-infringement of our intellectual property rights.
Data Security
Our
platform is based on analyzing the behaviors, profiles and interests of our users and their acquaintances in their own private mobile
networks. Unless their acquaintances actively register themselves on our platform, either through our
Star Career
or
Columbus
applications or Tencent's mini-program, we do not collect personal information about our users' acquaintances. We use
our patented technologies in AI, data analytics and blockchain and a proprietary algorithm to analyze users' and their acquaintances
behaviors, profiles, historical transaction records and interests, in order to recommend products or services suitable for them and within
their areas of interest. The goal is to increase the closing rate of transactions through precision-targeted marketing.
We
use third-party cloud-based services to host our platform, striving to run on the latest and most modern cloud technologies. Our research
and development capabilities paired with our development tools allow us to develop and deploy new products reliably without disruptions
to our operations. We have also embedded extensive monitoring and alerting infrastructure into our platform to maintain reliability and
platform performance.
We
protect our users' data through a combination of internal audits, processing procedures and technology tools, and we are focused
on making our platform more trustworthy. We monitor our server infrastructure for external hacking attempts by flagging suspicious activities,
utilize tools that scan site content, and dedicate teams to investigate if any irregularities are detected. In addition, we conduct regular
tests for any internal or external unauthorized access to our systems and correct any known weaknesses in our systems. To ensure confidentiality
and integrity of the personal information and data we collect, we follow the Administrative Measures for the Graded Protection of Information
Security. We have obtained ISO 27001 Information Security Management System Certification, and SOC 1, SOC 2 and SOC 3 reports issued
by independent auditors as in compliance with global industry standards. Meanwhile, we are conducting the evaluation of classified protection
of cybersecurity on our information systems. Furthermore, we have established comprehensive policies for the collection, processing,
sharing, disclosure authorization and other aspects of data and privacy and taken necessary measures to comply with all applicable laws
and regulations regarding cybersecurity, data security and personal information protection.
We
believe our policies and practice with respect to data privacy and security are in compliance with applicable laws and with prevalent
industry practice. As of the date of this annual report, we have not received any claim from any third party against us on the ground
of infringement of such party's right to data protection as provided by the PRC Civil Code or any applicable laws and regulations
in the PRC, nor have we been subject to any administrative penalties due to violation of applicable data protection and privacy laws
and regulations in China.
40
Insurance
We
participate in various government statutory social security plans, including a pension contribution plan, a medical insurance plan, an
unemployment insurance plan, a work-related injury insurance plan, a maternity insurance plan and a housing provident fund. We currently
do not have any business liability or disruption insurance.
Our
insurance coverage does not violate any mandatory provisions of PRC laws. We believe that such coverage is in line with industry
norms in the PRC and is adequate and sufficient for our current operations. See "Item 3. Key Information — D. Risk
Factors — Risks Related to Our Business and Industry — Our insurance coverage may not be adequate, which could expose us
to significant costs and business disruptions."
Regulations
This
section sets forth a summary of the most significant rules and regulations that affect our business activities in China or the rights
of our shareholders to receive dividends and other distributions from us.
Regulations
Relating to Foreign Investment
Negative
List Relating to Foreign Investment
Investment
activities in the PRC by foreign investors are principally governed by the Guidance Catalogue of Industries for Foreign Investment, or
the Negative List, promulgated and as amended from time to time by the Ministry of Commerce of the PRC, or MOFCOM, and NDRC. The NDRC
and the MOFCOM promulgated the 2021 Negative List on December 27, 2021, which took effect on January 1, 2022 and uniformly set forth
the ownership requirements, requirements for senior executives, and other special administrative measures for the access of foreign investment,
and requires that, any domestic enterprise engaging in businesses prohibited by the 2021 Negative Lists, to issue securities and list
and trade shares overseas must obtain pre-approval consent from relevant competent regulators; overseas investors must not engage in
the operation and management of the enterprise, and the percentage of foreign shareholding is subject to the relevant provisions in the
administrative measures for domestic securities investments by foreign investors.
Our
current business, human resource and other related services, are not included in the current Negative List or other categories that PRC
laws and regulations restricting foreign investment.
The
PRC Foreign Investment Law
On
March 15, 2019, the National People's Congress of the PRC, or the NPC, approved the Foreign Investment Law of the PRC, or the Foreign
Investment Law, which has taken effect on January 1, 2020, and replaced three existing laws on foreign investments in China, namely,
the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested
Enterprise Law, together with their implementation rules and ancillary regulations. The Foreign Investment Law embodies a regulatory
trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts
to unify the corporate legal requirements for foreign and domestic invested enterprises in China. The Foreign Investment Law establishes
the basic framework for the access to and the promotion, protection, and administration of foreign investments in view of investment
protection and fair competition.
According
to the Foreign Investment Law, "foreign investment" refers to investment activities directly or indirectly conducted by one
or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as "foreign
investor") within China, and the investment activities include the following situations: (i) a foreign investor, individually or
collectively with other investors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares,
equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually
or collectively with other investors, invests in a new project within China; and (iv) investments in other means as provided by laws,
administrative regulations, or the State Council.
According
to the Foreign Investment Law, the State Council will publish or approve to publish a catalogue for special administrative measures,
or the "negative list." The Foreign Investment Law grants national treatment to foreign- invested entities, except for those
foreign-invested entities that operate in industries deemed to be either "restricted" or "prohibited" in the
"negative list". Because the "negative list" has yet to be published, it is unclear whether it will differ from
the Negative List as currently in effect. The Foreign Investment Law provides that foreign invested entities shall not operate foreign
prohibited industries and foreign invested entities operating in foreign restricted industries shall meet the investment conditions stipulated
under the negative list.
41
In
addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments
in the PRC, including, among others, that local governments shall abide by their commitments to the foreign investors; foreign-invested
enterprises are allowed to issue stocks and corporate bonds; except for special circumstances, in which case statutory procedures shall
be followed, and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of
foreign investors is prohibited; mandatory technology transfer is prohibited; and the capital contributions, profits, capital gains,
proceeds out of asset disposal, licensing fees of intellectual property rights, indemnity or compensation legally obtained, or proceeds
received upon settlement by foreign investors within China, may be freely remitted inward and outward in RMB or a foreign currency.
On
December 26, 2019, the State Council promulgated the Implementation Regulations on the Foreign Investment Law which came into effect
on January 1, 2020. It further requires that foreign-invested enterprises and domestic enterprises shall be treated equally with respect
to policy making and implementation.
According
to the Foreign Investment Law, foreign investors or foreign-invested enterprises shall submit investment information to the competent
commerce departments. On December 30, 2019, MOFCOM and SAMR, jointly issued the Measures for Reporting of Foreign Investment Information,
or the Foreign Investment Information Measures, which came into effect on January 1, 2020 and replaced the Interim Administrative Measures
for the Record-filing of the Establishment and Modification of Foreign-invested Enterprises. Starting from January 1, 2020, for foreign
investors carrying out investment activities directly or indirectly in the PRC, foreign investors or foreign-invested enterprises shall
submit investment information through the Enterprise Registration System and the National Enterprise Credit Information Publicity System
operated by SAMR. Foreign investors or foreign-invested enterprises shall disclose their investment information by submitting reports
for their establishments, modifications and cancellations and their annual reports in accordance with the Foreign Investment Information
Measures. If a foreign-invested enterprise investing in the PRC has submitted reports for its establishment, modification and cancellation,
as well as its annual reports, the relevant information will be shared by the competent market regulation department with the competent
commercial department, and such foreign-invested enterprise is not required to submit the reports separately.
Regulations
Relating to Talent Intermediary Services
The
Employment Promotion Law of the People's Republic of China, or the Employment Promotion Law, promulgated by SCNPC, on August 30,
2007 and latest amended on April 24, 2015 stipulates that employment intermediary agencies shall register and seek approval from the
competent labor administrative department after their corporation. Any entity that has not obtained a license and registered in accordance
with the law shall be prohibited from engaging in employment intermediary activities. No employment agency shall provide false employment
information or provide recruitment services to any institution that is not legally incorporated or licensed (if applicable). Any unlicensed
and unregistered institution that, in violation of the provisions aforementioned, engages in unauthorized employment intermediary services,
may be subject to the closure of business. Any illegal gains shall be confiscated and a fine from RMB10,000 to RMB50,000 may be imposed.
Talent
intermediary services agencies including us in China are mainly regulated by the Ministry of Human Resources and Social Security of the
PRC, or the MOHRSS. Pursuant to the Provisions on Talent Market Administration, jointly promulgated by the PRC Ministry of Personnel
and the PRC State Administration for Industry and Commerce on September 11, 2001 and latest amended on December 31, 2019, any entity
providing talent intermediary services in China must obtain a human resource services license from the local branch of MOHRSS. In addition,
this regulation also reiterates the requirements under the Employment Promotion Law that as a talent intermediary service agency, we
are prohibited from providing fake information, making false promises and publishing fake recruitment advertisement.
On
June 29, 2018, the State Council issued the Interim Regulations for the Human Resources Market, effective on October 1, 2018, according
to which, the human resources services (the "HR services") providers include public HR service providers established by the
relevant PRC governmental authorities and commercial HR service providers. Commercial HR service providers engaging in employment agency
activities are required to obtain a human resource services license, when such HR services are provided through the Internet, laws and
regulations relating to network security and the management of Internet information services shall also be complied. For any commercial
HR service providers engaging in the services such as collection and release of HR supply and demand information, HR management consulting,
HR assessment, HR training, or HR outsourcing services, it shall file with the competent department of MOHRSS within 15 days of the date
it starts the operation. The HR service providers providing recruitment or other HR services as entrusted by an employer shall not resort
to fraud, violence, coercion or other improper means, shall not seek improper interests in the name of recruitment or introduce entities
or individuals to engage in illegal activities. Commercial HR service providers shall expressly specify certain matters, among others,
including the business license, charging standards, and human resource services licenses in their premises, which are subject to the
supervision and inspection by the PRC governmental authorities such as the SAMR.
According
to the Contract Law of the PRC, or the Contract Law, promulgated on March 15, 1999 and nullified since January 1, 2021, and the Civil
Code of the PRC, or the Civil Code, promulgated on May 28, 2020 and effective on January 1, 2021, an intermediation contract is defined
as a contract whereby an intermediary presents to its client an opportunity for entering into a contract or provides the client with
other intermediary services in connection with the conclusion of a contract, and the client pays the intermediary service fees. Pursuant
to the Contract Law and the Civil Code, an intermediary must provide authentic information relating to the proposed contract. If an intermediary
intentionally conceals any material fact or provides false information in connection with the performance of the proposed contract, which
results in harm to the client's interests, the intermediary may not claim service fees and is liable for the damages caused. Our
business of connecting individual users with business customers constitutes an intermediary service, and our contracts with business
customers are intermediation contracts under the Contract Law and the Civil Code, as a result, the performances, explanation and disputes
under such contacts shall be regulated by the Contract Law and the Civil Code.
42
We
have obtained such human resource services licenses which remain in full force and effect as of the date of this annual report.
Regulations
Relating to Mobile Internet Apps
According
to the Provisions on the Administration of Information Services of Mobile Internet Apps (2022 Revision) which was promulgated in 2022
and came into effect on August 1, 2022, the term "information services of Apps" means the activities of providing users with
production, copying, publishing, spreading and other services of text, picture, voice, video and other information through Apps, including
instant messaging, news, knowledge Q&A, forums, online live broadcast, e-commerce, online audio and video, life services and other
types. In addition, Apps providers shall not use Apps to carry out activities prohibited by laws and regulations, such as those endangering
national security, disrupting social order, and infringing upon the legitimate rights and interests of others. And an App provider providing
internet information services that must be subject to examination and approval of the competent authority or have obtained relevant permit
in accordance with the law may only provide services upon examination and approval of the competent authority or with the relevant permit.
Regulations
Relating to Internet Information Security and Privacy Protection
Internet
content in China is regulated and restricted from a state security standpoint. The SCNPC enacted the Decisions on the Maintenance of
Internet Security on December 28, 2000, which was latest amended on August 27, 2009, providing that the following activities conducted
through the internet are subject to criminal liabilities: (i) gaining improper entry into any of the computer information networks relating
to state affairs, national defensive affairs, or cutting-edge science and technology; (ii) violation of relevant provisions of the State
in the form of unauthorized interruption of any computer network or communication service, as a result of which the computer network
or communication system cannot function normally; (iii) spreading rumor, slander or other harmful information via the internet for the
purpose of inciting subversion of the state political power; (iv) stealing or divulging state secrets, intelligence or military secrets
via internet; (v) spreading false or inappropriate commercial information; or (vi) infringing on the intellectual property.
On
November 7, 2016, the SCNPC promulgated the Cyber Security Law of the PRC, which became effective on June 1, 2017, pursuant to which,
network operators shall comply with laws and regulations and fulfill their obligations to safeguard security of the network when conducting
business and providing services. Those who provide services through networks including us, as a network operator operating mobile applications
and providing certain internet services mainly through our mobile applications, shall take technical measures and other necessary measures
pursuant to laws, regulations and compulsory national requirements to safeguard the safe and stable operation of the networks, respond
to network security incidents effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality and usability
of network data, and the network operator shall prevent network data from being divulged, stolen or falsified. In addition, any network
operator to collect personal information shall follow the principles of legitimacy, rationality and necessity and shall not collect or
use any personal information without due authorization of the person whose personal information is collected, and network operators of
key information infrastructure shall store within the territory of the PRC all the personal information and important data collected
and produced within the territory of PRC. Any violation of the Cyber Security Law may subject the internet information service provider
to warnings, fines, confiscation of illegal gains, revocation of licenses, shutdown of websites or criminal liabilities.
On
December 28, 2021, CAC, NDRC, MIIT and other ten promulgation authorities issued the 2022 Cybersecurity Review Measures, effective on
February 15, 2022, which stipulate that the cybersecurity review shall focus on the evaluation of possible risks to national security
caused by the purchase of the network product or service by a critical information infrastructure operator, or by an online platform
operator conducts data processing, also provide for more detailed rules regarding cybersecurity review requirements. An online platform
operator who has more than a million users' personal information must report to the Cybersecurity Review Office for cybersecurity
review when going public abroad. If a member entity of the working mechanism for cybersecurity reviews deems that a network product or
service or a data processing activity may affect or potentially affect national security, the Cybersecurity Review Office shall submit
it to the Central Cyberspace Affairs Commission for approval according to the procedures before conducting a review in accordance with
the provisions of above Measures.
Pursuant
to the Civil Code, the personal information of a natural person shall be protected by the law. Any organization or individual that need
to obtain personal information of others shall obtain such information legally and ensure the safety of such information, and shall not
illegally collect, use, process or transmit personal information of others, or illegally purchase or sell, provide or make public personal
information of others.
43
On
August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC, or the Personal Information Protection Law,
which became effective on November 1, 2021, pursuant to which, personal information processors shall be responsible for their personal
information processing activities, and take necessary measures to guarantee the security of the personal information they process. An
individual's consent shall be obtained for processing his or her personal information unless otherwise specified. Where a personal
information processor truly needs to provide personal information to any party outside the territory of the PRC for business or other
needs, it or he shall meet any of the following conditions: (i) it or he has passed the security assessment organized by the national
cyberspace administration in accordance with Personal Information Protection Law; (ii) it or he has been subject to the personal information
protection certification by a specialized institution in accordance with the provisions issued by the national cyberspace administration;
(iii) it or he has entered into a contract with the overseas recipient in accordance with the model contract developed by the national
cyberspace administration, agreeing on both parties' rights and obligations; and (iv) it or he meets other conditions provided
in laws or administrative regulations or by the national cyberspace administration. Where any international treaty or agreement concluded
or acceded to by the PRC provides for the conditions on the provision of personal information to any party outside the territory of the
People's Republic of China, such provisions may apply. Where a personal information processor provides personal information to
any party outside the territory of the PRC, it or he shall notify individuals of the overseas recipient's name and contact information,
purposes and methods of processing, categories of personal information, the methods and procedures for individuals' exercise of
the rights provided in this Law over the overseas recipient, and other matters, and obtain individuals' separate consent.
On
July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Outbound Data Transfer, which became effective on September
1, 2022, pursuant to which, to provide data abroad, including where the data collected and generated by data handlers are stored in China
and can be accessed or invoked by overseas institutions, organizations or individuals, under any of the following circumstances, a data
processor shall apply to the national cyberspace administration for the security assessment of the outbound data transfer through the
local provincial cyberspace administration: (i) the data processor provides important data abroad; (ii) the critical information infrastructure
operator or the data processor that has processed the personal information of over one million people provides personal information abroad;
(iii) the data processor that has provided the personal information of over 100,000 people or the sensitive personal information of over
10,000 people cumulatively since January 1 of the previous year provides personal information abroad; and (iv) any other circumstance
where an application for the security assessment of outbound data transfer is required by the national cyberspace administration.
On
March 22,2024, the CAC promulgated the Provisions on Promoting and Regulating Cross-border Data Flows, which stipulate that, if the data
have not been informed or publicly announced as important data by relevant PRC departments or regions, data processors are not required
to apply for security assessment for cross-border provision of the data as important data. Besides, to provide data abroad under any
of the following circumstances, a data processor shall apply to the national cyberspace administration for the security assessment of
the outbound data transfer through the local provincial cyberspace administration: (i) where a critical information infrastructure operator
provides personal information or important data abroad; or (ii) where any data processor other than a critical information infrastructure
operator provides important data abroad or, as of January 1 of the current year, provides personal information (excluding sensitive personal
information) of not less than 1 million people or sensitive personal information of not less than 10,000 people in aggregate to overseas
parties. In case of any discrepancy between the Provisions on Promoting and Regulating Cross-border Data Flows and the relevant provisions
such as the Security Assessment of Outbound Data Transfer, or the Data Transfer Measures promulgated on July 7, 2022 and the Measures
on Standard Contracts for Cross-border Provision of Personal Information promulgated on February 22, 2023, the provisions under the Provisions
on Promoting and Regulating Cross-border Data Flows shall prevail.
Regulations
Relating to Intellectual Property Rights
Trademark
Pursuant
to the Trademark Law of the PRC which was promulgated on August 23, 1982 and latest amended on April 23, 2019 and came into effect on
November 1, 2019, the Implementation Regulations of the Trademark Law of PRC which was issued on August 3, 2002 and latest amended on
April 29, 2014, the Trademark Office under the State Administration for Industry and Commerce of the PRC, or the Trademark Office, shall
handle trademark registrations and grant a term of ten years to registered trademarks, which may be renewed for additional ten year period
upon request from the trademark owner. The Trademark Law of the PRC has adopted a "first-to-file" principle with respect
to trademark registration. Where an application for trademark for which application for registration has been made is identical or similar
to another trademark which has already been registered or is under preliminary examination and approval for use on the same kind of or
similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration
of a trademark may not prejudice the existing right of others, nor may any person register in advance a trademark that has already been
used by another party and has already gained a "sufficient degree of reputation" through such party's use.
Patent
Pursuant
to the Patent Law of the PRC, or the Patent Law, which was issued by the SCNPC on March 12, 1984, and latest revised on October 17, 2020
and to be effective as of June 1, 2021, a patentable invention, utility model or design must meet three conditions: novelty, inventiveness
and practical applicability. A patent is valid for a twenty-year term in the case of an invention and a ten-year term in the case of
a utility model, starting from the application date. A third-party user must obtain consent or a proper license from the patent owner
to use the patent except for certain specific circumstances provided by law. Otherwise, the use will constitute an infringement of the
patent rights.
Copyright
Copyright
in the PRC, including software copyright, is principally protected under the Copyright Law of the PRC, or the Copyright Law, promulgated
in December 2001 and latest amended on November 11, 2020, which took effect June 1, 2021, and related rules and regulations. Under the
Copyright Law, the term of protection for software copyright is 50 years.
44
Domain
Name
Domain
names are protected under the Administrative Measures for Internet Domain Names, or the Domain Name Measures, promulgated by the MIIT,
effective on November 1, 2017. MIIT is the major regulatory body responsible for the administration of the PRC internet domain names.
The Domain Names Measures has adopted a "first-to-file" principle with respect to the registration of domain names.
Regulations
Relating to Foreign Exchange
Regulations
on Foreign Currency Exchange
The
principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, as latest amended
on August 5, 2008, or the Foreign Exchange Regulations. Pursuant to the Foreign Exchange Regulations, international payments in foreign
exchange and the transfer of foreign exchange under the current account items shall not be subject to any state control or restriction
when complying with certain procedural requirements. In contrast, the settlement of foreign currency for the purpose of certain capital
account items, such as direct equity investments, loans and repatriation of investment, requires prior approval from SAFE or its local
branches.
On
January 12, 2017, the PBOC, promulgated the Notice of the People's Bank of China on Matters concerning the Macro-Prudential Management
of Full-Covered Cross-Border Financing, which stipulated that, for foreign debts of enterprises, the PBOC or the SAFE shall not adopt
advance approval, but adopt advance recordation of the conclusion of contracts for enterprises. In addition, the limit of foreign debts
for enterprises shall be calculated based on the following formula: the limit of foreign debt, or the Net Assets Limit equals to net assets times
cross-border financing leverage ratio times macro-prudent regulation parameter. "Net assets" is calculated as the net assets
value stated in the relevant entity's latest audited financial statement. The cross-border financing leverage ratio for enterprises
is two. The macro-prudent regulation parameter is one. A one-year transitional period is set for foreign-funded enterprises and during
such a transitional period, foreign-funded enterprises may apply either the current cross-border financing management mode, that is the
maximum amount of the aggregate of foreign debt of a foreign-invested enterprise shall not exceed the difference between its total investment
and its registered capital, or the Net Assets Limit mode in this Notice. After the end of the transitional period, the cross-border financing
management mode for foreign-funded enterprises will be determined by the PBOC and the SAFE after assessment based on the overall implementation
of this Notice. However, as of the date of this annual report, neither the PBOC nor SAFE has issued any new regulations regarding the
appropriate means of calculating the maximum amount of foreign debt for foreign-invested enterprises. According to the announcement promulgated
by the PBOC and the SAFE on July 20, 2023, the macro-prudent regulation parameter is raised to 1.5.
According
to the Circular of the State Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange
Settlement of Capital Accounts, which was promulgated and implemented by the SAFE on June 9, 2016, the tentative percentage of foreign
exchange settlement for foreign currency earnings in capital account of domestic institutions is 100%, subject to adjustment of the SAFE
in due time in accordance with international revenue and expenditure conditions. The use of foreign exchange incomes of capital accounts
by domestic institutions shall follow the principles of authenticity and self-use within the business scope of enterprises. The foreign
exchange incomes of capital accounts and capital in RMB obtained by the domestic institutions from foreign exchange settlement shall
not be used for the following purposes: (i) directly or indirectly used for the payment beyond the business scope of the enterprises
or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities or financial
schemes other than bank guaranteed products unless otherwise provided by relevant laws and regulations; (iii) used for granting loans
to non-connected enterprises, unless otherwise permitted by its business scope; and (iv) used for the construction or purchase of real
estate that is not for self-use (except for the real estate enterprises).
According
to the Circular of the State Administration of Foreign Exchange on Further Promoting Cross-Border Trade and Investment Facilitation,
which was promulgated and implemented by the SAFE on October 23, 2019, non-investment foreign-funded enterprises are allowed to lawfully
make domestic equity investments by using their capital on the premise of no violation of the Negative List and the authenticity and
compliance with the regulations of domestic investment projects.
According
to the Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business, or Circular
8 issued by the SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments by using their capital funds, foreign
credits and the income under capital accounts of overseas listing, with no need to provide the evidentiary materials concerning authenticity
of such capital for banks on a transaction-by-transaction basis in advance, provided that their capital use shall be authentic and in
line with provisions, and conform to the prevailing administrative regulations on the use of income under capital accounts. The concerned
bank shall conduct spot checking in accordance with the relevant requirements.
Regulations
on Foreign Exchange Registration of Overseas Investment by PRC Domestic Residents
Pursuant
to the Administrative Measures for the Outbound Investment of Enterprises issued by the NDRC on December 26, 2017 and became effective
on March 1, 2018, non-sensitive projects carried out by investors to make direct investment with assets and equities or provide financing
or a guarantee subject to record-filing administration and the authority in charge of record-filing shall be the development and reform
authority under the provincial government at the place where the investor is registered if the investor is a local enterprise and the
amount of investment made by the Chinese investor is less than US$300 million. Where a project is carried out by two or more investors
together, the investor making a larger amount of investment shall be responsible for applying for the approval or record-filing after
obtaining the consent of other investors.
45
Pursuant
to the Administrative Measures on Overseas Investment issued by MOFCOM on September 6, 2014 and became effective on October 6, 2014,
where the outbound investment carried out by an enterprise involves sensitive countries and regions and sensitive industries, verification
management shall be implemented, and archive filing management shall be implemented for other circumstances of outbound investment of
an enterprise. For outbound investments subject to archive filing, a central enterprise shall report its outbound investments to the
Ministry of Commerce for filing and a local enterprise to the provincial department in charge of commerce at its locality. Where two
or more enterprises jointly make an outbound investment, the relatively major shareholder shall be responsible for going through the
archive filing or verification procedures after acquiring the written consent of other investors. If investors are not within the same
administrative jurisdiction, the MOFCOM or the department in charge of commerce, which is responsible for handling the verification and
archive filing, shall notify the departments in charge of commerce of the place where other investors are located of the relevant results.
Pursuant
to the Circular of the State Administration of Foreign Exchange on Relevant Issues concerning Foreign Exchange Administration of Overseas
Investment and Financing and Return Investments Conducted by Domestic Residents through Overseas Special Purpose Vehicles, issued by
SAFE on July 14, 2014, offshore enterprise directly established or indirectly controlled by the PRC resident individuals with their legally
owned onshore or offshore assets and equity, for the purposes of investment and financing shall be subject to foreign exchange registration
for offshore investment with SAFE. In the event of any change of basic information of the registered overseas special purpose companies
such as the individual shareholder, name, operation term, or if
there is a capital increase/decrease,
equity transfer or swap, merge, spin-off or other amendment of the material items, the domestic resident shall complete foreign exchange
alteration of the registration formality for offshore investment with SAFE in a timely manner. Foreign-invested enterprises established
in return investments shall be subject to completion of relevant foreign exchange registration formality in accordance with the effective
provisions on the foreign exchange administration of direct investment of foreign investors, and shall disclose the de facto controller
and other relevant information of the shareholders. After a special purpose company has completed overseas financing, if the funds raised
are repatriated to China for use, relevant Chinese provisions on foreign investment and external debt management shall be complied with.
Pursuant
to the Notice of the State Administration of Foreign Exchange on Issuing the Provisions on the Foreign Exchange Administration of the
Overseas Direct Investment of Domestic Institutions promulgated by the SAFE on July 13, 2009, a domestic institution shall, on the basis
of the approval document issued by the competent administrative department of overseas direct investment and the foreign exchange registration
certificate for overseas direct investment, handle the formalities for the outward remittance of funds for overseas direct investment
at a designated foreign exchange bank. The designated foreign exchange bank shall handle the formalities for the domestic institution
after an authenticity check.
Pursuant
to the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign
Exchange Administration Policies, promulgated on February 13, 2015 and implemented on June 1, 2015 and last amended and implemented on
December 30 2019, the SAFE decided to further simplify and improve policies for the foreign exchange administration of direct investment
around the entire nation, by cancelling two administrative approval items: confirmation of foreign exchange registration under domestic
direct investment and confirmation of foreign exchange registration under overseas direct investment and, instead, banks shall directly
examine and handle foreign exchange registration under domestic direct investment and foreign exchange registration under overseas direct
investment, and the SAFE and its branch offices shall indirectly regulate the foreign exchange registration of direct investment through
banks and simplifying the procedures for some foreign exchange transactions under direct investment.
Regulations
on Dividend Distribution
The
principal laws and regulations regulating the dividend distribution of dividends by foreign-invested enterprises in the PRC are the PRC
Company Law as amended in 1999, 2004, 2005, 2013, 2018 and 2023. Under the current regulatory regime in the PRC, foreign-invested enterprises
in the PRC may pay dividends only out of their retained earnings, if any, determined in accordance with PRC accounting standards and
regulations. A PRC company is required to set aside as statutory reserves funds at least 10% of its after-tax profit, until the cumulative
amount of such reserve funds reaches 50% of its registered capital. A PRC company shall not distribute any profits until any losses from
prior fiscal years have been offset and statutory reserves have been set aside. Profits retained from prior fiscal years may be distributed
together with distributable profits from the current fiscal year.
Regulations
Relating to Tax in the PRC
Income
Tax
The
PRC Enterprise Income Tax Law, or the EIT Law, imposes a uniform enterprise income tax rate of 25% on all PRC resident enterprises, including
foreign-invested enterprises, unless they qualify for certain exceptions. The enterprise income tax is calculated based on the PRC resident
enterprise's global income as determined under PRC tax laws and accounting standards Non-resident enterprises which have established
institutions or places of business in the PRC are subject to enterprise income tax for all incomes generated from such institutions or
places of business in the PRC and all incomes generated outside the PRC which are actually related to the institutions or places of business
established in the PRC at the rate of 25%. The EIT Law and its implementation rules permit certain "high and new technology enterprises
strongly supported by the state" that
independently own core intellectual property and meet
statutory criteria, to enjoy a reduced 15% enterprise income tax rate. In January 2016, the State Administration of Taxation, or SAT,
the Ministry of Science and Technology, and the Ministry of Finance, or MOF, jointly issued the Administrative Rules for the Certification
of High and New Technology Enterprises, specifying the criteria and procedures for the certification of High and New Technology Enterprises.
46
Regulations
Relating to Dividend Withholding Tax
Pursuant
to the EIT Law and its implementation rules, if a non-resident enterprise has not set up an organization or establishment in the PRC
or has set up an organization or establishment but the income derived has no actual connection with such organization or establishment,
it will be subject to a withholding tax on its PRC-sourced income at a rate of 10%. Pursuant to the Arrangement between the Mainland
of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Tax Evasion
With Respect to Taxes On Income, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise
is reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise. Pursuant
to the Notice of the SAT on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, a Hong Kong resident enterprise
must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it must directly own the required
percentage of equity interests and voting rights in the PRC resident enterprise; and (ii) it must have directly owned such percentage
in the PRC resident enterprise throughout the 12 consecutive months prior to receiving the dividends. There are also other conditions
for enjoying the reduced withholding tax rate according to other relevant tax rules and regulations. And based on the Announcement on
Certain Issues with Respect to the "Beneficial Owner" in Tax Treaties issued by the SAT on February 3, 2018 and effective
from April 1, 2018, if an applicant's business activities do not constitute substantive business activities, it could result in
the negative determination of the applicant's status as a "beneficial owner", and consequently, the applicant could
be precluded from enjoying the above-mentioned reduced income tax rate of 5% under the Double Tax Avoidance Arrangement.
Regulations
on PRC Value-Added Tax
According
to the Interim Regulation of PRC on Value Added Tax promulgated by the State Council on December 13, 1993 and last revised on November
19, 2017, the VAT rate to be imposed on HR services shall be 6%.
Regulations
Relating to Labor Protection in the PRC
Labor
Contract Law
The
PRC Labor Contract Law, or the Labor Contract Law, which became effective on January 1, 2008 and was amended on December 28, 2012, is
primarily aimed at regulating rights and obligations of employer and employee relationships, including the establishment, performance
and termination of labor contracts. Pursuant to the Labor Contract Law, labor contracts shall be concluded in writing if labor relationships
are to be or have been established between employers and the employees. Employers are prohibited from forcing employees to work above
certain time limit and employers shall pay employees for overtime work in accordance to national regulations. In addition, employee wages
shall be no lower than local standards on minimum wages and must be paid to employees in a timely manner.
Labor
Law
According
to the Labor Law of the PRC (2018 Amendment) issued by the SCNPC on December 29, 2018, the employing units must establish and improve
the system of labor safety and health, strictly implement the national regulations and standards on labor safety and health, educate
workers on labor
safety and health, prevent accidents in the process of labor and reduce occupational
hazards employers shall develop and improve their rules and regulations to ensure that workers enjoy their labor rights and perform their
labor obligations.
Social
Insurance and Housing Fund
As
required under the PRC Social Insurance Law implemented on July 1, 2011 and amended on December 29, 2018, employers are required to provide
their employees in the PRC with welfare benefits covering pension insurance, unemployment insurance, maternity insurance, labor injury
insurance and medical insurance. These payments are made to local administrative authorities. Any employer that fails to make social
insurance contributions may be ordered to rectify the non-compliance and pay the required contributions within a prescribed time limit
and be subject to a late fee. If the employer still fails to rectify the failure to make the relevant contributions within the prescribed
time, it may be subject to a fine ranging from one to three times the amount overdue. In accordance with the Regulations on the Management
of Housing Fund which was promulgated by the State Council in 1999 and amended in 2002 and 2019, employers must register at the designated
administrative centers and open bank accounts for depositing employees' housing funds. Where an employer fails to make deposit
registration of the housing accumulation fund or fails to open a housing accumulation fund account for its employees, it shall be ordered
by the housing accumulation fund management center to make up the procedures within a time limit; if it fails to make up the procedures
within the time limit, it shall be given a fine of RMB10,000 to 50,000. The employer shall make full contribution to the housing provident
fund on time and no delay or under-contribution is allowed. Where an employer fails to pay or fully pay the housing provident fund, the
housing provident fund management center shall order it to make payment within the prescribed period; if it fails to make payment within
such prescribed period, the center may apply to the people's court for enforcement.
47
Regulations
on Stock Incentive Plans
SAFE
promulgated the Notice of Issues Related to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive
Plan of Overseas Listed Company, or SAFE Circular 7, on February 15, 2012. Under SAFE Circular 7, employees, directors, supervisors,
and other senior management who participate in any stock incentive plan of a publicly-listed overseas company and who are PRC citizens
or non-PRC citizens residing in China for a continuous period of no less than one year, subject to a few exceptions, are required to
entrust a qualified domestic agent to register with SAFE through the domestic company, which may be a PRC subsidiary of such overseas
listed company, and complete certain other procedures. In addition, the SAT has issued certain circulars concerning employee stock options
and restricted shares. Under these circulars, employees working in the PRC who exercise stock options will be subject to PRC individual
income tax. The PRC subsidiaries of an overseas listed company are required to file documents related to employee stock options with
relevant tax authorities and to withhold individual income taxes of employees who exercise their stock option. If the employees fail
to pay or the PRC subsidiaries fail to withhold income tax in accordance with relevant laws and regulations, the PRC subsidiaries may
face sanctions imposed by the tax authorities or other PRC governmental authorities.
Regulations
on M&A and Overseas Listings
MOFCOM,
CSRC, SAFE and three other PRC governmental and regulatory agencies jointly adopted the Regulations on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors, or the M&A Rules, which became effective in September 2006 and was amended in June 2009. The M&A
Rules, among other things, require that if a domestic company, domestic enterprise, or a domestic individual, through an overseas company
established or controlled by it/him/her, acquires a domestic company which is affiliated with it/him/her, an approval from the MOFCOM
is required. The M&A Rules further requires that an offshore special purpose vehicle, or the SPV, that is controlled directly or
indirectly by the PRC companies or individuals and that has been formed for overseas listing purposes through acquisitions of
PRC
domestic interest held by such PRC companies or individuals, shall obtain the approval of CSRC prior to overseas listing and trading
of such SPV's securities on an overseas stock exchange.
On
February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies,
or the Trial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated
No. 1 to No. 5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of
Overseas Listings by Domestic Companies and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively,
the Guidance Rules and Notice. Under the Trial Measures and the Guidance Rules and Notice, initial public offerings or listings in overseas
markets by domestic companies, either in direct or indirect form, shall be filed with the CSRC pursuant to the requirements of the Trial
Measures within three working days after the relevant application is submitted overseas. The companies that have already been listed
on overseas stock exchanges prior to March 31, 2023 or the companies that have obtained the approval from overseas supervision administrations
or stock exchanges for its offering and listing prior to March 31, 2023 and will complete their overseas offering and listing prior to
September 30, 2023 are not required to make immediate filings for its listing yet need to make filings for subsequent offerings in accordance
with the Trial Measures. The companies that have already submitted an application for an initial public offering to overseas supervision
administrations but have not yet obtained the approval from overseas supervision administrations or stock exchanges for the offering
and listing prior to March 31, 2023 may arrange for the filing within a reasonable time period and should complete the filing procedure
before such companies' overseas issuance and listing.
On
February 24, 2023, the CSRC, MOF, National Administration of State Secrets Protection and National Archives Administration of China jointly
revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing which
was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009, or
the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality and Archives Administration
of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023 with the Trial Measures. One
of the major revisions to the revised Provisions is expanding its application to cover indirect overseas offering and listing, as is
consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a) a domestic company that plans
to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including
securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or
working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy
administrative department at the same level; and (b) domestic company that plans to, either directly or through its overseas listed entity,
publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas
regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly
fulfill relevant procedures stipulated by applicable national regulations.
On
or after March 31, 2023, any failure or perceived failure by the Company or PRC subsidiaries to comply with the above confidentiality
and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in that the relevant
entities would be held legally liable by competent authorities, and referred to the judicial organ to be investigated for criminal liability
if suspected of committing a crime.
48
E.
Organizational
    Structure
The
following diagram illustrates our corporate structure as of the date of this annual report.
Note:
(1)
Our
    founder, chairman of the Board, and CEO, Mr. Howard Lee, owns approximately 61.9% equity interest in our Company through his wholly
    owned company, HTL Lucky Holding Limited, as of the date of this annual report. 51job, Inc. owns approximately 18.2% equity interest
    in our Company and MLT Holding Limited owns approximately 8.1% equity interest in our Company as of the date of this annual report.
(2)
The
    English names of our PRC business entities are directly translated from Chinese and may be different from their names shown on their
    respective records filed with relevant PRC authorities.
We do not
currently use, and have not used in the past, a variable interest entity structure. Lucas GC Limited is not a Chinese operation company
but a Cayman Island holding company with operations primarily conducted through its PRC subsidiaries.
F.
Property, Plant and Equipment
Our
corporate headquarters are located in Beijing, China. As of December 31, 2023, the approximate gross floor area of our leased properties
was 612 square meters in aggregate and we did not have self-held properties. We lease our premises from unrelated third parties under operating
lease agreements. We believe that our existing facilities are generally adequate to meet our current needs, but we expect to seek additional
space as needed to accommodate future growth.
ITEM
4A. UNRESOLVED STAFF COMMENTS
Not
applicable.
ITEM
5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Overview
We
are the largest technology-driven online agent-centric human capital management service provider targeting professionals based on PaaS
in China in terms of the number of active users in the human resources industry as of June 30, 2022 and total net revenues for the
year ended December 31, 2021. As a company empowered by AI, data analytics and blockchain technologies, we are committed to digitalizing
and intellectualizing the entire human capital management process. We define active users as those who login to our proprietary platforms,
Star
Career
and
Columbus,
at least once within a 30-day period. As of December 31, 2022 and December 31,
2023, we had approximately 431,220 and 638,020 active registered users, respectively. Through our proprietary platforms,
Star
Career
and
Columbus,
the active registered users will receive customized job recommendations and work as talent
scouts to source suitable candidates for our corporate customers through their own trusted and private social network, as well as receive
trainings and other value-added services. We have developed into a comprehensive social network platform providing various services targeting
professionals spanning multiple industries in China, including recruitment services, outsourcing services, information technology services
and training services. Please see the section entitled "Business" for more details.
Since
the launch of our platforms, we have experienced rapid growth. Our net revenues surged approximately from RMB766.6 million for the
year ended December 31, 2022 to RMB1,474.0 million (US$207.6 million) for the year ended December 31, 2023 representing a year-over-year increase
of 92.3%. Our gross profits increased approximately from RMB215.2 million for the year ended December 31, 2022 to RMB418.6 million
(US$59.0 million) for the year ended December 31, 2023, representing a year-over-year increase of 94.5%.
Key
Factors that Affect Operating Results
General
Factors Affecting Our Results of Operations
Our
results of operations and financial condition are affected by general factors driving the market of services for professionals, including
(i) economic factors, including global economic conditions which affect our supply and demands, as well as domestic economic growth,
especially in tertiary industry, the fluctuation in Index of Service Production, or ISP, and Services Producer Price Indices, or SPPI,
(ii) technology factors, such as development of artificial intelligence and data analytics, and the rate of platform penetration
in China, and (iii) labor factors, such as rising labor costs in China. Unfavorable changes in any of these general factors could
materially and adversely affect our business and results of operations.
49
Specific
Factors Affecting Our Results of Operations
While
our business is influenced by general factors affecting the on-demand employment services market and workforce operational
solution market in China generally, our results of operations are also directly affected by certain company-specific factors, including
the following major factors:
Our
ability to expand our portfolio of users through delivering services with higher efficiency for human capital management
Our
core competitive strengths derive from our massive multidimensional data insights, powerful AI algorithm and big data capacity which
enable us to effectively process the data and continuously improve our two-way matching accuracy. Accurate matching results
allow us to attract more users and accumulate more data, which in turn improve the matching efficiency and optimize the user experience,
creating a positive feedback loop. Our results of operations have shown that this synergistic and thriving business model allows us to
penetrate the recruitment market at scale without direct salesforce.
Our
ability to attract, retain and connect potential job seekers cost-effectively
Our
operational cost is affected by the number of users on our platform and the amount of service fees we paid to flexible workers and third-party
labor service companies. Our continued growth depends in part on our ability to cost-effectively attract, retain and connect potential
users in labor market, especially our ability to cultivate a flexible workforce and deploy the same workers across different industry
settings by having them serve multiple roles offered on our platform to optimize our operational cost. We have focused on offering better
earning opportunities and career prospects and enhancing the social network among the workforce of professionals. Our ability to attract,
retain and connect potential users cost-effectively can be affected by a number of factors, including the quality of our training programs,
the value-added services we provide, the attractiveness of the earning opportunities and career prospects we offer, and other macroeconomic,
social and political factors that may affect labor cost, supply or migration.
Our
ability to diversify service offerings and industry coverage
We
have been dedicated to expanding and diversifying our service offerings to cover a comprehensive range of activities in the human capital
management process. By further leveraging our growing database and powerful AI-enabled technologies, we are able to analyze
user behavior and intent more precisely, address corporate customers' in-depth needs in a broader array of business scenarios,
and introduce new functions to better serve the entire workforce spectrum. We have made, and will continue to make, significant investments
to improve our technology infrastructure and enhance user experience.
Our
results of operations have been, and will continue to be, affected by the size and diversity of our service offerings. Since our inception,
we have introduced various value-added services built around our customers' recruitment needs and have successfully expanded our
service offerings. These efforts have effectively helped us attract more users and broaden revenue channels, thus driving our business
and revenue growth.
50
Our
ability to control costs and expenses and enhance operational efficiency
Our
results of operations have been, and will continue to be, affected by our ability to control costs and expenses and enhance our operational
efficiency. We take pride in our platforms,
Star Career
and
Columbus
, which serve as our proprietary technology
infrastructure that centralizes our operational management and streamlines our solution process. Our capability to constantly innovate
remains an important differentiator as we continue to deliver new functions on our platforms. Thus, research and development expenses
have historically represented a large portion of our total costs and expenses, consisting primarily of services fees paid to third-parties
professional technology developers. General and administrative expenses and selling and marketing expenses are important components of
our costs. We have been always mindful of the balance between rapid business expansion and costs and expenses. We will continue to make
efforts to manage our user acquisition cost and improve our user retention rate. In addition, as our business grows, we will continue
to further improve our operational efficiency by developing technologies and infrastructure across different business functions. We expect
to achieve greater operating leverage and increase the productivity of our personnel, allowing us to acquire customers and suppliers
more cost-effectively and achieve higher operational efficiency.
Continued
investment in our technology infrastructure and professional talents
We
continue to invest in our proprietary platforms, including
Star Career
and
Columbus
, to accommodate the
expanded scope and heightened complexity of our operations. An enhanced technology infrastructure based on
Star Career
and
Columbus
will
allow us to continually optimize our operational efficiency, refine our products and services through improved data-driven
analytics, and facilitate our footprints into new geographical markets and industries. We also continue to invest in talents,
particularly experienced marketing personnel, research and development engineers and other tech-related talents to support our
market expansion strategies. Our ability to maintain and improve the functionality of our technology infrastructure in line with our
business scale will be a key driver for our sustainable growth.
Impact
of COVID-19 on Our Operations and Financial Performance
The
COVID-19 pandemic has severely impacted China and the rest of the world, and it has resulted in quarantines, travel
restrictions, and the temporary closure of offices and facilities in China and many other countries. Since the beginning of 2022,
various cities in China, especially the first-tier cities like Beijing and Shanghai, were confronted with the bounce back
of COVID-19 pandemic. Lockdown policies and travel restrictions hindered the proceeding of recruitment process of many
corporates. In addition, people's willingness to change jobs has shown a declined trend over 2022, due to a lack of job
opportunities in the overall downward macroeconomic environment impacted by the COVID-19 pandemic and other global events.
Our revenue growth, especially in our recruitment services, has been negatively impacted. For the year ended December 31, 2022, net
revenues from recruitment services decreased by approximately RMB84.4 million, or 17.0%, compared to net revenues of
RMB497.5 million for the year ended December 31, 2021.
Additionally,
the weakness in the overall financial markets may cause us difficulties in securing additional financing, and the weakened financial
conditions of our clients, suppliers, and business partners may prevent them from honoring their obligations to us. During the
severe pandemic time, some of our customers were confronted with great financial pressure, unable to pay on time and then extended
the payment schedule for the accounts receivable. We considered the collectability based on the cautious estimation, and made credit
losses of RMB0.1 million and RMB11.5 million (US$1.6 million) for the year ended December 31, 2022 and 2023, respectively. We
continued to keep close monitor to the collection of its accounts receivable and manage the credit losses.
51
In
December 2022, Chinese government declared to treat COVID-19 as Category B disease, and authorities dropped quarantine measures
against people infected with COVID-19 and stopped designating high-risk and low-risk areas. The macroeconomic in
China and the financial performance of our customers are recovering. As a result, our net revenues from recruitment services increased
by approximately RMB246.0 million, or 59.6%, to RMB659.0 million for the year ended December 31, 2023, compared to RMB413.0 million
for the year ended December 31, 2022.
However,
the ultimate impact of COVID-19 and other global disasters on its business, results of operations, financial condition, and
cash flows is dependent on future developments, including natural forces and government responses which are uncertain and beyond its
prediction at this time. We will pay close attention to the development of these macroeconomic risks, and assess and take measures to
minimize their impacts.
Key
Components of Our Results of Operations
Net
revenues
We
generate revenues from (i) recruitment services including flexible employment recruitment services and permanent employment recruitment
services, (ii) outsourcing services, and (iii) other services including information technology services and training services.
As a human capital management service provider, we are dedicated to innovating and diversifying our offerings for corporate customers
in the recruitment and employment process based on the PaaS platforms, big data analytics and artificial intelligence technologies. Our
net revenues are presented net of business tax and surcharges. The following table sets forth a breakdown of our net revenues both in
absolute amount and as a percentage of our total net revenues for the periods presented:
For
    the years ended December 31,
2021
2022
2023
RMB
%
RMB
%
RMB
US$
%
(In
    thousands, except percentages)
Net
    revenues:
Recruitment
    service
497,486
76.3
413,047
53.9
659,049
92,825
44.7
Outsourcing
    service
113,774
17.4
301,890
39.4
713,957
100,559
48.4
Others
40,985
6.3
51,634
6.7
100,952
14,219
6.9
Total
    revenues
652,245
100.0
766,571
100.0
1,473,958
207,603
100.0
Recruitment
services
Recruitment
services consist of flexible employment recruitment services and permanent employment recruitment services. We derive net revenues from
service fees paid by corporate customers for arranging flexible workers with corresponding abilities and qualifications on demand and
sourcing eligible candidates for opening jobs to fulfill their various operation and employment needs.
Outsourcing
services
We
derive net revenues from service fees paid by corporate customers for providing overall outsourcing solutions, mostly IT-related services,
based on their specific requirements.
52
Other services
We
launched other services as value-added services in August 2021, which is to provide information technology services and training services
for corporate customers.
Cost of revenues
The
following table sets forth a breakdown of our cost of revenues both in absolute amount and as a percentage of our total net revenues for
the periods presented:
For the years ended December 31,
2021
2022
2023
RMB
%
RMB
%
RMB
US$
%
(In thousands, except percentages)
Cost of revenues:
Recruitment service
373,206
57.2
316,724
41.3
513,390
72,309
34.8
Outsourcing service
74,561
11.4
200,962
26.2
476,474
67,110
32.3
Others
25,386
3.9
33,687
4.4
65,542
9,232
4.5
Total cost of revenues
473,153
72.5
551,373
71.9
1,055,406
148,651
71.6
Cost related
to our recruitment services primarily consists of service fees paid to flexible workers, talent scouts, other third-party service providers
involved in the service process.
Cost
related to our outsourcing services and other services primarily consists of service fees paid to workers and third-party service providers
engaged in the solution process.
Gross profit and gross
profit margin
Our
gross profit is primarily affected by our ability to generate revenue and control cost. The following table sets forth the breakdown of
our gross profit and gross profit margin by revenue streams for the periods indicated:
For the years ended December 31,
2021
2022
2023
RMB
%
RMB
%
RMB
US$
%
(In thousands, except percentages)
Gross profits:
Recruitment service
124,280
25.0
96,323
23.3
145,659
20,516
22.1
Outsourcing service
39,213
34.5
100,928
33.4
237,483
33,449
33.3
Others
15,599
38.1
17,947
34.8
35,410
4,987
35.1
Total gross profits
179,092
27.5
215,198
28.1
418,552
58,952
28.4
53
Operating
expenses
Our
operating expenses include general and administrative expenses, research and development expenses and selling and marketing expenses.
The following table sets forth the components of operating expenses, in absolute amounts and as a percentage of our total net revenues
for the periods indicated:
For the years ended December 31,
2021
2022
2023
RMB
%
RMB
%
RMB
US$
%
(In thousands, except percentages)
Operating expenses
Selling and marketing expenses
33,304
5.1
55,974
7.3
84,917
11,960
5.8
General and administrative expenses
38,428
5.9
47,733
6.2
108,376
15,264
7.4
Research and development expenses
70,246
10.8
79,868
10.4
157,543
22,189
10.7
Total operating expenses
141,978
21.8
183,575
23.9
350,836
49,413
23.9
Selling
and marketing expenses
Our
selling and marketing expenses mainly consist of advertising expenses and market promotion expenses for promotion activities that directly
contribute to new user growth and acquisition of customer leads. We expect our selling and marketing expenses will also continue to increase
in absolute amount as we diversify, optimize and leverage our marketing channels to expand user community and explore more potential
customers.
General
and administrative expenses
Our
general and administrative expenses mainly consist of (i) payroll expenses, (ii) users support operation expenses, (iii) rental and depreciation
expenses related to general and administrative functions, (iv) professional service fees including those related to IPO activities,
(v) credit impairment losses and (vi) office and miscellaneous expenses. We expect that our general and administrative expenses will
continue to increase in absolute amount in the foreseeable future as we further grow our existing business lines, and we will incur increased
costs related to complying with our reporting obligations as we became a public company under U.S. securities laws. We also seek to optimize
the cost structure of our company to control the relative level of general and administrative expenses as a percentage of our net revenues.
Research
and development expenses
Our
research and development expenses mainly consist of (i) payroll expenses, (ii) technologies service expenses related to platform development
and data analysis to support our business operations, and (iii) other expenses related to research and development functions. We believe
that our continued investment in research and development is critical to our growth and expect that our research and development expenses
will continue to increase in absolute amount as we seek to upgrade our PaaS platform and AI-enabled technologies to support our business
growth.
Other
income, net
Other
income, net consists of other non-operating income, net and financial expenses, net. Other non-operating income, net mainly consists
of (i) additional deduction of VAT; and (ii) investment income, proceeds of interest from maturities of short-term investments. Financial
expenses mainly consist of interest income and expense, bank charges and exchange gain or loss.
54
Results
of Operations
For
the years ended December 31, 2022 and 2023
The
following tables set forth a summary of our consolidated results of operations, in absolute amount and as a percentage of our net revenues
for the years ended December 31, 2022 and 2023. This information should be read together with our consolidated financial statements and
related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of the
results that may be expected for any future period.
For the years ended December 31,
Variance
2022
2023
Amount
Percentage
RMB
%
RMB
US$
%
RMB
%
(In thousands, except percentages)
Total revenues
766,571
100.0
1,473,958
207,603
100.0
707,387
92.3
Cost of revenues
(551,373
)
(71.9
)
(1,055,406
)
(148,651
)
(71.6
)
(504,033
)
91.4
Gross profit
215,198
28.1
418,552
58,952
28.4
203,354
94.5
Operating expenses
Selling and marketing expenses
(55,974
)
(7.3
)
(84,917
)
(11,960
)
(5.8
)
(28,943
)
51.7
General and administrative expenses
(47,733
)
(6.2
)
(108,376
)
(15,264
)
(7.4
)
(60,643
)
127.0
Research and development expenses
(79,868
)
(10.4
)
(157,543
)
(22,189
)
(10.7
)
(77,675
)
97.3
Total operating expenses
(183,575
)
(23.9
)
(350,836
)
(49,413
)
(23.8
)
(167,261
)
91.1
Operating profit
31,623
4.2
67,716
9,539
4.6
36,093
114.1
Other income/(expenses)
Financial income/(expenses), net
63
-
(893
)
(126
)
(0.1
)
(956
)
(1,517.5
)
Other income, net
4,130
0.5
3,478
490
0.2
(652
)
(15.8
)
Total other income, net
4,193
0.5
2,585
364
0.1
(1,608
)
(38.3
)
Income before income tax expense
35,816
4.7
70,301
9,903
4.7
34,485
96.3
Income tax benefit
595
0.1
7,880
1,110
0.5
7,285
1,224.4
Net income
36,411
4.8
78,181
11,013
5.2
41,770
114.7
Net
revenues
Our
net revenues increased by approximately RMB707.4 million, or 92.3%, from RMB766.6 million for the year ended December 31, 2022 to RMB1,474.0
million (US$207.6 million) for the year ended December 31, 2023, primarily attributable to a surge increase of net revenues from both
outsourcing services and recruitment service. Our net revenues are presented net of business tax and surcharge. The following table sets
forth a breakdown of our net revenues, each expressed in the absolute amount and as a percentage of our total net revenues, for the periods
indicated:
For the years ended December 31,
Variance
2022
2023
Amount
Percentage
RMB
%
RMB
US$
%
RMB
%
(In thousands, except percentages)
Net revenues:
Recruitment service
413,047
53.9
659,049
92,825
44.7
246,002
59.6
Outsourcing service
301,890
39.4
713,957
100,559
48.4
412,067
136.5
Others
51,634
6.7
100,952
14,219
6.9
49,318
95.5
Total revenues
766,571
100.0
1,473,958
207,603
100.0
707,387
92.3
55
Net
revenues from recruitment services increased by approximately RMB246.0 million, or 59.6%, from RMB413.0 million for the year ended December
31, 2022 to RMB659.0 million (US$92.8 million) for the year ended December 31, 2023. The increase was primarily attributable to that
the Chinese government lifted the control on Covid-19 and economy started to recover. The operation-suspended entities re-commenced their
business and the accumulated labor needs during lock-down were released, leading to the increased net revenues. Industry such as accommodation
and catering, leasing and business services experienced notable growth. The recovery of these industries required a substantial workforce,
thereby increasing the demand for recruitment services.
Net
revenues from outsourcing services increased by approximately RMB412.1 million, or 136.5%, from RMB301.9 million for the year ended December
31, 2022 to RMB714.0 million (US$100.6 million) for the year ended December 31, 2023. The increase was primarily driven by the increase
of our corporate customers, which was attributable to (i) our continuing marketing efforts in business line expansion; (ii) the growing
demands of corporate customers to develop IT system to optimize the business processes and reduce labor cost; and (iii) our diversified
products can meet the needs of different customers.
Net
revenues from other services increased by RMB49.3 million, or 95.5%, from RMB51.6 million for the year ended December 31, 2022 to RMB101.0
million (US$14.2 million) for the year ended December 31, 2023. The increase was mainly because of the business expansion on insurance
data collection and promotion services.
Cost
of revenues
Our
cost of revenues increased by approximately RMB504.0 million, or 91.4%, from RMB551.4 million for the year ended December 31, 2022 to
RMB1,055.4 million (US$148.7 million) for the year ended December 31, 2023, primarily attributable to the increase in cost related to
recruitment services and outsourcing services as a result of our business growth. The following table sets forth a breakdown of our cost
of revenues by revenue streams, expressed as an absolute amount and as a percentage of the total cost of revenues, for the periods indicated.
For the years ended December 31,
Variance
2022
2023
Amount
Percentage
RMB
%
RMB
US$
%
RMB
%
(In thousands, except percentages)
Cost of revenues:
Recruitment service
316,724
41.3
513,390
72,309
34.8
196,666
62.1
Outsourcing service
200,962
26.2
476,474
67,110
32.3
275,512
137.1
Others
33,687
4.4
65,542
9,232
4.5
31,855
94.6
Total cost of revenues
551,373
71.9
1,055,406
148,651
71.6
504,033
91.4
Cost
related to recruitment services increased by approximately RMB196.7 million, or 62.1%, from RMB316.7 million for the year ended December
31, 2022 to RMB513.4 million (US$72.3 million) for the year ended December 31, 2023, primarily attributable to the increase in cost paid
to flexible workers, talent scouts and other third-party services providers, generally in line with our revenue growth in recruitment
services.
56
Cost
related to outsourcing services increased by approximately RMB275.5 million, or 137.1%, from RMB201.0 million for the year ended December
31, 2022 to RMB476.5 million (US$67.1 million) for the year ended December 31, 2023, primarily attributable to the increase in cost paid
to workers and third-party services providers engaged in the solution process, generally in line with our revenue growth in outsourcing
services.
Cost
related to other services increased by approximately RMB31.9 million, or 94.6%, from RMB33.7 million for the year ended December 31,
2022 to RMB65.5 million (US$9.2 million) for the year ended December 31, 2023, primarily attributable to the increase in cost paid to
workers in preparation of expansion on insurance data collection and promotion services, generally in line with our revenue growth in
other services.
Gross
profits and margin
The
following table sets forth a breakdown of our gross profit, margin by revenue streams, expressed as an absolute amount and as a percentage
of the total gross profit for the periods indicated.
For the years ended December 31,
Variance
2022
2023
Amount
Percentage
RMB
%
RMB
US$
%
RMB
%
(In thousands, except percentages)
Gross profits:
Recruitment service
96,323
23.3
145,659
20,516
22.1
49,336
51.2
Outsourcing service
100,928
33.4
237,483
33,449
33.3
136,555
135.3
Others
17,947
34.8
35,410
4,987
35.1
17,463
97.3
Total gross profits
215,198
28.1
418,552
58,952
28.4
203,354
94.5
As
a result of the foregoing, we recorded a gross profit of RMB215.2 million and RMB418.6 million (US$59.0 million) for the years ended
December 31, 2022 and 2023, respectively, representing gross profit margin of 28.1% and 28.4% in 2022 and 2023, respectively.
Operating
expenses
Our
operating expenses increased from RMB183.6 million for the year ended December 31, 2022 to RMB350.8 million (US$49.4 million) for the
year ended December 31, 2023, representing a year-over-year increase of 91.1%, primarily due to the following:
General
and administrative expenses
Our
general and administrative expenses increased by 127.0% from RMB47.7 million for the year ended December 31, 2022 to RMB108.4 million
(US$15.3 million) for the year ended December 31, 2023, which was primarily attributable to an increase of RMB60.1 million (US$8.5 million)
in Certified Career Resources Planner Certificate user support operation expenses as the user number increased and more experts from
various industries were invited to maintain activity level of users; offset by an increase in productivity of operations resulting
in a decrease of RMB7.9 million (US$1.1 million) in professional service fee.
57
Research
and development expenses
Our
research and development expenses increased by 97.3% from RMB79.9 million for the year ended December 31, 2022 to RMB157.5 million (US$22.2
million) for the year ended December 31, 2023, which was primarily attributable to (i) an increase of RMB74.0 million (US$10.4 million)
in technologies services expenses resulting from the continuous investments in AI-enabled technologies including Generative Pre-trained
Transformer (GPT) and related artificial intelligence generated content technologies (AIGC), and investments in our proprietary
platforms,
Star Career and Columbus
, which gave us a cutting edge in business expansion and market competition; and (ii) a total
increase of RMB3.4 million (US$0.5 million) in other expenses related to research and development functions.
Selling
and marketing expenses
Our
selling and marketing expenses increased by 51.7% from RMB56.0 million for the year ended December 31, 2022 to RMB84.9 million (US$12.0
million) for the year ended December 31, 2023, as a result of continuous investment in brand promotion of our proprietary platforms,
Star Career
and
Columbus
for promotion activities that directly contribute to new user growth and acquisition of customer
leads
.
Other
income, net
Total
other income, net decreased by 38.3% from RMB4.2 million for the year ended December 31, 2022 to RMB 2.6 million (US$0.4 million) for
the year ended December 31, 2023.
Our
other non-operating income, net increased from approximately RMB4.1 million for the year ended December 31, 2022 to approximately RMB3.5
million (US$0.5 million) for the year ended December 31, 2023, which was primarily attributable to the increased additional VAT deduction.
Financial
expenses mainly consist of interest income and expense, bank charges and exchange gain or loss. Our financial expenses, changed from
RMB62,777 for the year ended December 31, 2022 to financial income of RMB0.9 million (US$0.1 million) for the year ended December 31,
2023 primarily due to the increased bank interest expenses.
Income
taxes
Our
income tax benefits were RMB0.6 million and RMB7.9 million (US$1.1 million) for the years ended December 31, 2022 and 2022, respectively.
This increase was primarily attributable to the increase of recognized of deferred tax assets for net operating loss carry forward due
to the additional deduction of research and development expenses.
Net
income
As
a result of the foregoing, our net income increased by RMB41.8 million, from RMB36.4 million for the year ended December 31, 2022 to
RMB78.2 million (US$11.0 million) for the year ended December 31, 2023.
58
For
the years ended December 31, 2021 and 2022
The
following tables set forth a summary of our consolidated results of operations, in absolute amount and as a percentage of our net revenues
for the years ended December 31, 2021 and 2022. This information should be read together with our consolidated financial statements and
related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of the
results that may be expected for any future period.
For the years ended December 31,
Variance
2021
2022
Amount
Percentage
RMB
%
RMB
US$
%
RMB
%
(In thousands, except percentages)
Total revenues
652,245
100.0
766,571
107,969
100.0
114,326
17.5
Cost of revenues
(473,153
)
(72.5
)
(551,373
)
(77,659
)
(71.9
)
(78,220
)
16.5
Gross profit
179,092
27.5
215,198
30,310
28.1
36,106
20.2
Operating expenses
Selling and marketing expenses
(33,304
)
(5.1
)
(55,974
)
(7,884
)
(7.3
)
(22,670
)
68.1
General and administrative expenses
(38,428
)
(5.9
)
(47,733
)
(6,723
)
(6.2
)
(9,305
)
24.2
Research and development expenses
(70,246
)
(10.8
)
(79,868
)
(11,249
)
(10.4
)
(9,622
)
13.7
Total operating expenses
(141,978
)
(21.8
)
(183,575
)
(25,856
)
(23.9
)
(41,597
)
29.3
Operating profit
37,114
5.7
31,623
4,454
4.2
(5,491
)
(14.8
)
Other (expenses) income
Financial (expenses) income, net
(68
)
—
63
9
—
131
(192.6
)
Other income, net
2,514
0.4
4,130
582
0.5
1,616
64.3
Total other income, net
2,446
0.4
4,193
591
0.5
1,747
71.4
Income before income tax benefit
39,560
6.1
35,816
5,045
4.7
(3,744
)
(9.5
)
Income tax benefit
243
—
595
84
0.1
352
144.9
Net income
39,803
6.1
36,411
5,129
4.8
(3,392
)
(8.5
)
59
Net
revenues
Our
net revenues increased by approximately RMB114.3 million, or 17.5%, from RMB652.2 million for the year ended December 31, 2021 to RMB766.6
million for the year ended December 31, 2022, primarily attributable to a surge increase of net revenues from outsourcing
services. Our net revenues are presented net of business tax and surcharge. The following table sets forth a breakdown of our net revenues,
each expressed in the absolute amount and as a percentage of our total net revenues, for the periods indicated:
For the years ended December 31,
Variance
2021
2022
Amount
Percentage
RMB
%
RMB
US$
%
RMB
%
(In thousands, except percentages)
Net revenues:
Recruitment service
497,486
76.3
413,047
58,176
53.9
(84,439
)
(17.0
)
Outsourcing service
113,774
17.4
301,890
42,520
39.4
188,116
165.3
Others
40,985
6.3
51,634
7,273
6.7
10,649
26.0
Total revenues
652,245
100.0
766,571
107,969
100.0
114,326
17.5
Net
revenues from recruitment services decreased by approximately RMB84.4 million, or 17.0%, from RMB497.5 million for the year ended December
31, 2021 to RMB413.0 million for the year ended December 31, 2022. The decrease was primarily attributable to that
(i) since the beginning of 2022, a few waves of COVID-19 outbreaks have emerged in various regions of China, and varying levels of travel
restrictions and lock-down policies were reinstated, especially in first-tier cities like Beijing and Shanghai, where our target customers
located. These restrictions and policies hindered the proceeding of recruitment process of many corporates, and thus adversely affected
our recruitment operations in 2022; (ii) in-service group's intention of career change had shown a declined trend over 2022, due
to a lack of job opportunities in the overall downward macroeconomic environment impacted by COVID-19 pandemic and other global events.
Net
revenues from outsourcing services increased by approximately RMB188.1 million, or 165.3%, from RMB113.8 million for the year ended December
31, 2021 to RMB301.9 million for the year ended December 31, 2022. The increase was primarily driven by the increase
of our corporate customers, which was attributable to (i) our marketing efforts in business line expansion; and (ii) the growing demands
of corporate customers to develop IT system to optimize the business processes and reduce labor cost.
Net
revenues from other services increased by RMB10.6 million, or 26.0%, from RMB41.0 million for the year ended December 31, 2021 to RMB51.6
million for the year ended December 31, 2022. We launched technology information services and training services in August
2021, and continuously tapped into different geographic markets in China to diversify our offerings for corporate customers in the human
capital management process.
Cost
of revenues
Our
cost of revenues increased by approximately RMB78.2 million, or 16.5%, from RMB473.2 million for the year ended December 31, 2021 to
RMB551.4 million for the year ended December 31, 2022, primarily attributable to the increase in cost related to outsourcing
services and other services as a result of our business growth. The following table sets forth a breakdown of our cost of revenues by
revenue streams, expressed as an absolute amount and as a percentage of the total cost of revenues, for the periods indicated.
For the years ended December 31,
Variance
2021
2022
Amount
Percentage
RMB
%
RMB
US$
%
RMB
%
(In thousands, except percentages)
Cost of revenues:
Recruitment service
373,206
78.8
316,724
44,609
57.5
(56,482
)
(15.1
)
Outsourcing service
74,561
15.8
200,962
28,305
36.4
126,401
169.5
Others
25,386
5.4
33,687
4,745
6.1
8,301
32.7
Total cost of revenues
473,153
100.0
551,373
77,659
100.0
78,220
16.5
60
Cost
related to recruitment services decreased by approximately RMB56.5 million, or 15.1%, from RMB373.2 million for the year ended December
31, 2021 to RMB316.7 million for the year ended December 31, 2022, primarily attributable to the decrease in cost paid
to flexible workers, talent scouts and other third-party services providers, generally in line with our revenue decrease in recruitment
services due to travel restrictions and lock-down policies in response to COVID-19 outbreaks.
Cost
related to outsourcing services and other services increased by approximately RMB134.7 million, or 134.8%, from RMB99.9 million for the
year ended December 31, 2021 to RMB234.6 million for the year ended December 31, 2022, primarily attributable to the
increase in cost paid to workers and third-party services providers engaged in the solution process, generally in line with our revenue
growth in outsourcing services and other services.
Gross
profits and margin
The
following table sets forth a breakdown of our gross profit, margin by revenue streams, expressed as an absolute amount and as a percentage
of the total gross profit for the periods indicated.
For the years ended December 31,
Variance
2021
2022
Amount
Percentage
RMB
%
RMB
US$
%
RMB
%
(In thousands, except percentages)
Gross profits:
Recruitment service
124,280
25.0
96,323
13,567
23.3
(27,957
)
(22.5
)
Outsourcing service
39,213
34.5
100,928
14,215
33.4
61,715
157.4
Others
15,599
38.1
17,947
2,528
34.8
2,348
15.1
Total gross profits
179,092
27.5
215,198
30,310
28.1
36,106
20.2
As
a result of the foregoing, we recorded a gross profit of RMB179.1 million and RMB215.2 million for the years ended
December 31, 2021 and 2022, respectively, representing gross profit margin of 27.5% and 28.1% in 2021 and 2022, respectively.
Operating
expenses
Our
operating expenses increased from RMB142.0 million for the year ended December 31, 2021 to RMB183.6 million for the
year ended December 31, 2022, representing a year-over-year increase of 29.3%, primarily due to the following:
General
and administrative expenses
Our
general and administrative expenses increased by 24.2% from RMB38.4 million for the year ended December 31, 2021 to RMB47.7 million for the year ended December 31, 2022, which was primarily attributable to (i) an increase of RMB8.0 million in professional service fees; (ii) an increase of RMB2.5 million in user support operation expenses; and (iii) an increase
of RMB4.2 million in other general and administrative expenses as a result of business expansion; offset by a decrease
of RMB5.2 million in credit impairment losses due to effective receivables collection.
61
Research
and development expenses
Our
research and development expenses increased by 13.7% from RMB70.2 million for the year ended December 31, 2021 to RMB79.9 million for the year ended December 31, 2022, which was primarily attributable to (i) an increase of RMB7.4 million in technologies services expenses resulting from the continuous investment in our proprietary platforms,
Star Career
and
Columbus
,
and AI-enabled technologies which gave us cutting edge in business expansion and market competition; and (ii) a total increase of RMB2.0
million in other expenses related to research and development functions.
Selling
and marketing expenses
Our
selling and marketing expenses increased by 68.1% from RMB33.3 million for the year ended December 31, 2021 to RMB56.0 million for the year ended December 31, 2022, as a result of continuous investment in brand promotion of our proprietary platforms,
Star Career
and
Columbus
for promotion activities that directly contribute to new user growth and acquisition of customer
leads
.
Other
income, net
Total
other income, net increased by 71.4% from RMB2.4 million for the year ended December 31, 2021 to RMB4.2 million for
the year ended December 31, 2022.
Our
other non-operating income, net increased from approximately RMB2.5 million for the year ended December 31, 2021 to approximately RMB4.1
million for the year ended December 31, 2022, which was primarily attributable to the increased additional VAT deduction.
Financial
expenses mainly consist of interest income and expense, bank charges and exchange gain or loss. Our financial expenses, changed from
RMB68,210 for the year ended December 31, 2021 to financial income of RMB62,777 for the year ended December 31, 2022 primarily
due to the increased exchange loss.
Income
taxes
Our
income tax benefits were RMB0.2 million and RMB0.6 million for the years ended December 31, 2021 and 2022, respectively.
This increase was primarily attributable to the increase of recognized of deferred tax assets for net operating loss carry forward due
to the additional deduction of research and development expenses.
Net
income
As
a result of the foregoing, our net income decreased by RMB3.4 million, from RMB39.8 million for the year ended December 31, 2021 to RMB36.4
million for the year ended December 31, 2022.
62
B.
Liquidity and Capital
  Resources
In
assessing our liquidity, we monitor and analyze our cash on-hand and our operating and capital expenditure commitments. To date, we have
financed our working capital requirements from cash flow from operations, debt financings and capital contributions from our existing
shareholders.
We
had cash and cash equivalents of RMB48.5 million and RMB30.1 million (US$4.2 million), and restricted cash of RMB0.8 million and RMB0.1
million (US$14) as of December 31, 2022 and 2023, respectively. Our working capital was approximately RMB136.1 million (US$19.2 million)
as of December 31, 2023. The cash and cash equivalents and restricted cash disaggregated by currency denomination are as follows:
As of December 31, 2022
As of December 31, 2023
Amount
RMB
equivalent
Amount
RMB
equivalent
(In thousands)
Cash, cash equivalents and restricted cash:
RMB
48,312
48,312
30,014
30,014
USD
-
-
-
2
HKD
181
161
118
107
Restricted cash:
USD
-
-
14
100
RMB
841
841
-
-
Total
49,314
30,223
We
believe our current working capital is sufficient to support our operations for the next twelve months. Our future capital requirements
depend on many factors including our growth rate, the continuing market acceptance of our offerings, the timing and extent of spending
in research and development, our efforts to strengthen our service abilities, the expansion of sales and marketing activities, and the
expansion and penetration of our business into different geographies and markets. We may, however, need additional cash resources in
the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities for
investment, acquisition, capital expenditure or similar actions. If we determine that our cash requirements exceed the amount of cash
and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities. The issuance
and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased
fixed obligations and could result in operating covenants that would restrict our operations. Our obligation to bear credit risk for
certain financing transactions we facilitate may also strain our operating cash flow.
Current
foreign exchange and other regulations in the PRC may restrict our PRC entities in their ability to transfer their net assets to us and
our subsidiaries in Hong Kong. However, as of the date of this annual report, these restrictions have no impact on the ability of these
PRC entities to transfer funds to us as we do not anticipate declaring or paying any dividends in the foreseeable future, as we plan
to retain our retained earnings to continue to grow our business. In addition, these restrictions have no impact on the ability for us
to meet our cash obligations.
63
To
utilize the proceeds, we may make additional capital contributions to our PRC subsidiary, establish new PRC subsidiaries and make capital
contributions to these new PRC subsidiaries, or make loans to the PRC subsidiaries. However, most of these uses are subject to PRC regulations.
Foreign direct investment and loans must be approved by and/or registered with SAFE, or its local branches, or banks. The total amount
of loans we can make to our PRC subsidiary cannot exceed statutory limits and must be registered with the local counterpart of SAFE.
The statutory limit for the total amount of foreign debts of a foreign-invested company, based on its discretionary application, is either
the difference between the amount of total investment and the amount of registered capital or three times of the amount of the net assets
of such foreign- invested company.
We
are permitted under PRC laws and regulations to provide funding to our PRC subsidiary only through loans or capital contributions,
and only if we satisfy the applicable government registration and approval requirements. The relevant filing and registration
processes for capital contributions typically take approximately eight weeks to complete. The filing and registration processes for
loans typically take approximately four weeks or longer to complete. While we currently see no material obstacles to completing the
filing and registration procedures with respect to future capital contributions and loans to our PRC subsidiaries, we cannot assure
you that we will be able to complete these filings and registrations on a timely basis, or at all. See "Risk Factors —
Risks Relating to Doing Business in China — PRC regulation of loans to and direct investment in PRC entities by offshore
holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of this offering
to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity
and our ability to fund and expand our business." We are able to use all of the net proceeds from this offering for investment
in our PRC operations by funding our PRC subsidiary through capital contributions, which is not subject to any statutory limit on
the amount under PRC laws and regulations. See "Regulations — Regulations Relating to Foreign Exchange." We expect
approximately 20% of the net proceeds from this offering to be used to fund operations of our offshore subsidiaries and 80% of the
net proceeds to be used to fund operations of our subsidiaries in the PRC in the form of RMB. Therefore, our PRC subsidiaries will
need to convert any capital contributions or loans from U.S. dollars into Renminbi in accordance with applicable PRC laws and
regulations.
Cash
Flows
For
the years ended December 31, 2021, 2022 and 2023
For the years ended December 31,
Variances
2021
2022
2023
Amount
Percentage
RMB
RMB
RMB
US$
RMB
%
(In thousands, except for percentages)
Net cash provided by/ (used in) operating activities
60,625
(15,120
)
(36,408
)
(5,128
)
(21,288
)
140.8
Net cash (used in)/ provided by investing activities
(47,849
)
16,819
(12,097
)
(1,703
)
(28,916
)
(171.9
)
Net cash provided by financing activities
26,500
3,418
29,422
4,143
26,004
760.8
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(81
)
148
(8
)
(1
)
(156
)
(105.4
)
Net increase/(decrease) in cash, cash equivalents and restricted cash:
39,195
5,265
(19,091
)
(2,689
)
(24,356
)
(462.6
)
Cash, cash equivalents and restricted cash at the beginning of year
4,854
44,049
49,314
6,946
5,265
12.0
Cash, cash equivalents and restricted cash at the end of year
44,049
49,314
30,223
4,257
(19,091
)
(38.7
)
64
Operating
activities
For
the year ended December 31, 2023, our net cash used in operating activities was RMB36.4 million (US$5.1 million), which was primarily
attributable to (i) net income of RMB78.2 million (US$11.0 million), adjusted for depreciation of software and equipment of RMB4.3 million
(US$0.6 million), provision for credit losses of RMB11.7 million (US$1.7 million), and amortization of right-of-use assets of RMB0.7 million
(US$0.1 million); (ii) a net increase of advance to supplier of RMB125.4 million (US$17.7 million), and decrease of accounts payable
of RMB51.8 million (US$7.3 million), due to the increase of prepayment for technology outsourcing service, recruitment service and brand
promotion as market demand recovery; (iii) a decrease in contract liabilities of RMB11.2 million (US$1.6 million) due to less recognition
of contract obligation with advance payments; (iv) an increase in deferred tax assets, net of RMB7.9 million (US$1.1 million) as we expanded
R&D investment for new products; offset by a decrease of accounts receivable of RMB63.7million (US$9.0 million) due to collection from
customers.
For
the year ended December 31, 2022, our net cash used in operating activities was RMB15.1 million, which was primarily
attributable to (i) net income of RMB36.4 million, adjusted for depreciation of software and equipment of RMB3.3 million, and amortization of right-of-use assets of RMB0.6 million; (ii) a net decrease of advance to supplier
of RMB4.5 million, net of the decrease of accounts payable, due to the decrease of prepayment for technology outsourcing
service, recruitment service and brand promotion, and timely payment for accounts payable, offset by (i) an increase of accounts receivable
of RMB44.9 million due to continuously increased corporate customers as a result of business expansion and higher penetration
in market; (ii) a decrease of contract liabilities of RMB9.8 million due to less recognition of contract obligation
with advance payments; and (iii) a decrease of accrued expenses and other current liabilities of RMB2.3 million due
to timely repayment.
For
the year ended December 31, 2021, our net cash provided by operating activities was RMB60.6 million, which was primarily attributable
to (i) net income of RMB39.8 million, adjusted for depreciation of software and equipment of RMB1.5 million, and provision for doubtful
accounts of RMB5.3 million; (ii) an increase of contract liabilities of RMB34.4 million, partially offset by an increase of accounts
receivable of RMB22.9 million due to continuously increased corporate customers as a result of business expansion and higher penetration
in market; and (iii) an increase of accounts payable of RMB60.1 million, offset by an increase of advance to suppliers of RMB59.6 million
due to the increased service procurement from flexible workers, talent scouts and third-party service providers, as well as increased
expenses in platform development and AI-enabled technologies.
65
Investing
activities
For
the year ended December 31, 2023, our net cash used in investing activities was RMB12.1 million (US$1.7 million), which was primarily
attributable to purchase of software and equipment of RMB12.1 million (US$1.7 million).
For
the year ended December 31, 2022, our net cash provided by investing activities was RMB16.8 million, which was primarily
attributable to sales of short-term investments of RMB82.3 million, offset by (i) purchases of short-term investment
of RMB52.2 million and (ii) purchase of software and equipment of RMB13.7 million.
For
the year ended December 31, 2021, our net cash used in investing activities was RMB47.8 million, which was primarily attributable to
(i) purchase of software and equipment of RMB24.1 million; and (ii) sales of short-term investments of RMB26.8 million and purchases
of short-term investment of RMB50.6 million.
Financing
activities
For
the year ended December 31, 2023, our net cash provided by financing activities was RMB29.4 million (US$4.1 million), which was primarily
attributable to proceeds from proceeds from short-term borrowings of RMB63.3 million (US$8.9 million), and offset by repayments of short-term
borrowings of RMB29.8 million (US$4.2 million), and payment for deferred offering cost of RMB4.0 million (US$0.6 million).
For
the year ended December 31, 2022, our net cash provided by financing activities was RMB3.4 million, which was primarily
attributable to proceeds from proceeds from short-term borrowings of RMB9.1 million, repayments of short-term borrowings
of RMB3.1 million, and payment for deferred offering cost of RMB2.5 million.
For
the year ended December 31, 2021, our net cash provided by financing activities was RMB26.5 million, which was primarily attributable
to proceeds from issuance of preferred shares issued by our operating subsidiary in the PRC, Lucas Group China Limited, of RMB26.5 million.
Contingencies
From
time to time, we may become involved in litigation relating to claims arising in the ordinary course of the business. There are no claims
or actions pending or threatening against us that, if adversely determined, would in our judgment have a material adverse effect on us.
Capital
Expenditures
We
made capital expenditures of RMB24.1 million, RMB13.7 million and RMB12.1 million (US$1.7 million) for the years ended December 31, 2021,2022
and 2023, respectively. Our capital expenditures consisted primarily of expenditures related to software and equipment to support our
platform-based operation. We plan to fund our future capital expenditures with our existing cash balance and proceeds from the Initial
Public Offering. We will continue to make capital expenditures to meet the expected growth of our business.
Off-Balance
Sheet Commitments and Arrangements
We
have not entered into any off-balance sheet financial guarantees or other off-balance sheet commitments to guarantee the payment obligations
of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder's
equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest
in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have
any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages
in leasing, hedging or product development services with us.
66
Contractual
Obligations
Payments due by period
Total
Within one year
Within 1-3 years
Total
Within one year
Within 1-3 years
(In RMB thousands)
(In USD thousands)
Bank borrowings
39,381
39,381
-
5,547
5,547
-
Operating lease payment
191
191
-
27
27
Total
39,572
39,572
-
5,574
5,574
-
Other
than as shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December
31, 2023.
Holding
Company Structure
Lucas
GC Limited, a Cayman Islands exempted company, is our holding company and has no material operations of its own. We conduct a substantial
majority of our operations through our operating subsidiaries in China. As a result, our ability to pay dividends depends largely upon
dividends paid by our subsidiaries including our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt
on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition,
our subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance
with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries in China are required to set aside 10% of its
after-tax profits each year, if any, to fund certain statutory reserves funds until such reserve funds reach 50% of its registered capital.
In addition, our subsidiaries in China may allocate a portion of its after-tax profits based on PRC accounting standards to a discretionary
common reserve at their discretion. The statutory reserves funds and the discretionary funds are not distributable as cash dividends.
Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. Our
PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements
for statutory reserves funds. None of our subsidiaries has made any dividend payment or distribution to the holding company as of the
date this annual report, and they have no plans to make any distribution or dividend payment to the holding company in the near future.
In
utilizing the proceeds of Initial Public Offering, we, as an offshore holding company, are permitted under PRC laws and regulations to
provide funding to our PRC subsidiaries, which are treated as "foreign-invested enterprises" under PRC laws, through loans
or capital contributions. However, loans by us to our PRC subsidiaries to finance their activities cannot exceed statutory limits and
must be registered with the local counterpart of SAFE and capital contributions to our PRC subsidiaries are subject to the requirement
of making necessary registration with competent governmental authorities in the PRC.
67
We
may be unable to use these proceeds to grow our business until our PRC subsidiaries receive such proceeds in the PRC. Any transfer of
funds by us to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by
or registration or filing with relevant governmental authorities in China. Any foreign loans procured by our PRC subsidiaries is required
to be registered with SAFE or its local branches or satisfy relevant requirements, and our PRC subsidiaries may not procure loans which
exceed the difference between their respective total investment amount and registered capital (for a foreign-invested company) or three
times (which may be varied year by year due to the change of PRC's national macro-control policy) of the net assets of our PRC
subsidiary. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions to our PRC subsidiaries
are subject to the registration with State Administration for Market Regulation in its local branches, and registration with a local
bank authorized by SAFE.
To
remit the proceeds of the offering, we must take the steps legally required under the PRC laws, for example, we will open a special foreign
exchange account for capital account transactions, remit the offering proceeds into such special foreign exchange account and apply for
settlement of the foreign exchange. The timing of the process is difficult to estimate because the efficiencies of different SAFE branches
can vary materially.
In
light of the various requirements imposed by PRC regulations on loans to, and direct investment in, PRC entities by offshore holding
companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government
approvals on a timely basis, if at all, with respect to future loans by us to our PRC subsidiary or with respect to future capital contributions
by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds from
this offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely
affect our liquidity, our ability to fund and expand our business and our ordinary shares.
Inflation
Since
our inception, inflation in China has not materially affected our results of operations. According to the National Bureau of Statistics
of China, the year-over-year percent changes in the consumer price index for 2021, 2022 and 2023, were an increase of 1.5%, 1.8% and
2.0%, respectively. Although we have not been materially affected by inflation in the past, we may be affected if China experiences higher
rates of inflation in the future.
Taxation
Cayman
Islands
We
are a company incorporated in the Cayman Islands and conduct our primary business operations through the subsidiaries in the PRC.
Under the current laws of the Cayman Islands, we are not subject to tax on income or capital gain arising in the Cayman Islands.
Additionally, upon payments of dividends to our shareholders, no Cayman Islands withholding tax will be imposed.
British
Virgin Islands
Our
subsidiary, Lucas Star Holding Limited is incorporated in the British Virgin Islands and conducts its primary business operations through
the subsidiaries in the PRC. Under the current laws of the British Virgin Islands, Lucas Star Holding Limited is not subject to tax on
income or capital gains. Additionally, upon payments of dividends to our shareholders, no BVI withholding tax will be imposed.
68
Hong
Kong
Our
subsidiaries, Lucas GC Limited (HK) is incorporated in Hong Kong and is subject to Hong Kong profits tax rate.
Under the two-tiered profits tax rates regime, the first two million Hong Kong Dollar ("HKD") of profits of the qualifying
group entity will be taxed at 8.25%, and profits above HKD2 million will be taxed at 16.5%. Additionally, upon payments of dividends
to our shareholders, no HK withholding tax will be imposed.
PRC
Under
the PRC Enterprise Income Tax Law (the "EIT Law"), the standard enterprise income tax rate for domestic enterprises and
foreign invested enterprises is 25%. EIT grants preferential tax treatment to High and New Technology Enterprises
("HNTEs") at a rate of 15%, subject to a requirement that they re-apply for HNTE status every three years. For the
Group's subsidiaries, Lucas China obtained the high-tech certificate in December 2020 and November 2023, and enjoyed a
preferential income tax rate at 15% from 2020 to 2025. Luogaoshi Technology (Beijing) Co., Ltd. obtained the high-tech certificate
in December 2021, and enjoyed a preferential income tax rate at 15% from 2021 to 2023.
From January 1, 2021 to December 31, 2021, 12.5% of the first RMB 1.0 million of the assessable profit before tax
is subject to preferential tax rate of 20% and the 50% of the assessable profit before tax exceeding RMB 1.0 million but not exceeding
RMB 3.0 million is subject to preferential tax rate of 20%. From January 1, 2022 to December 31, 2022, 12.5% of the first RMB 1.0 million
of the assessable profit before tax is subject to preferential tax rate of 20% and the 25% of the assessable profit before tax exceeding
RMB 1.0 million but not exceeding RMB 3.0 million is subject to preferential tax rate of 20%. From January 1, 2023 to December 31, 2027,
25% of the first RMB 3.0 million of the assessable profit before tax is subject to the tax rate of 20% for the Company's subsidiaries
that are qualified as "Small Profit Enterprises".
C.
Research
    and Development, Patents and Licenses, etc.
See
"Item 4. Information on the Company—B. Business Overview—Our Technology."
D.
Trend
    Information
Other
than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for
the period from January 1, 2023 to December 31, 2023 that are reasonably likely to have a material and adverse effect on our net
revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily
indicative of future results of operations or financial conditions.
E.
Critical Accounting Policies and Estimates
We
prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions.
To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations
would be affected. We base our estimates and assumptions on our own historical data and other assumptions that we believe are reasonable
after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates
and assumptions on an ongoing basis.
Our
expectations regarding the future are based on available information and assumptions that we believe to be reasonable and accurate, which
together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates
is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting
policies require a higher degree of judgment than others in their application.
69
The
critical accounting policies, judgments and estimates that we believe to have the most significant impact on our consolidated financial
statements are described below, which should be read in conjunction with our consolidated financial statements and accompanying notes
and other disclosures included in this annual report. When reviewing our financial statements, you should consider:
●
our
    selection of critical accounting policies;
●
the
    judgments and other uncertainties affecting the application of such policies;
●
the
    sensitivity of reported results to changes in conditions and assumptions.
We
consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were
highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from
period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact
on our financial condition or results of operations. We consider our critical accounting estimates include (i) allowance for doubtful
accounts for accounts receivable; (ii) useful lives of software; (iii) valuation allowance of deferred tax assets, and (iv) valuation
of redeemable preferred shares of non-controlling interest.
Accounts
receivable, net
Accounts
receivable, net are stated at the original amount less allowances for doubtful accounts. Accounts receivable are recognized in the period
when we have provided services to customers and we have an unconditional right to consideration. We review the accounts receivable on
a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. Our estimation
of allowance for doubtful accounts considers factors such as the age of the amounts due, the customer's payment history, credit-worthiness
and other specific circumstances related to the accounts. An allowance for doubtful accounts is recorded in the period in which a loss
is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted.
Adoption
of Accounting Standards Update ("ASU") 2016-13
In
June 2016, the FASB issued ASU 2016-13: Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected
credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and
supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial
assets measured at amortized cost. The Group adopted ASU 2016-13 from January 1, 2023 using modified-retrospective transition approach
with a cumulative-effect adjustment to shareholders' equity amounting to RMB617 recognized as of January 1, 2023.
We
recognized RMB5.3 million, RMB0.1 million and RMB11.5 million (US$1.6 million) credit losses for accounts receivable for the years ended
December 31, 2021, 2022 and 2023. A 10% increase in our credit losses would have decreased our net income before tax by 1.3%, 0.0% and
1.5% for the years ended December 31, 2021, 2022 and 2023, respectively.
70
Revenue
recognition
We
recognize revenue pursuant to ASC 606, Revenue from Contracts with Customers ("ASC 606"). In accordance with ASC 606, we
should recognize revenue to depict the transfer of promised services to customers in an amount that reflects the consideration to we
expect to receive in exchange for those services, reduced by value added tax. Net revenues are presented net of business tax and surcharges.
The following five steps are applied to achieve the core principle of this standard:
1.
Identification
    of the contract, or contracts, with the customer;
2.
Identification
    of the performance obligations in the contract;
3.
Determination
    of the transaction price;
4.
Allocation
    of the transaction price to the performance obligations in the contract; and
5.
Recognition
    of the revenue when, or as, a performance obligation is satisfied.
Recruitment
services
Recruitment
services consist of flexible employment recruitment services and permanent employment recruitment services.
Flexible
employment recruitment services
We
enter into contracts with corporate customers to provide flexible employment recruitment services, arranging flexible workers with corresponding
abilities and qualifications on demand to fulfill corporate customers' various operation needs. We identify only one performance
obligation in flexible employment recruitment services as the contract comprises of a series of distinct services that are substantially
the same and have the same pattern of transfer to the corporate customers, which is to provide flexible workers in accordance with the
demand orders.
The
contract consideration is determined by the days flexible workers have worked times their workday pay rate. Revenue from flexible employment
services is recognized over time as the customers can simultaneously receive and consume the benefits in the period the flexible workers
provide the service.
The
contract payment is not subject to any variable consideration, refund, cancellation, or termination provision. Customers generally make
the payment within one or two months after the monthly reconciliation of service considerations with us.
Permanent
employment recruitment services
We
enter into contracts with corporate customers to provide permanent employment services. We identify one performance obligation in permanent
employment services, which is to place a qualified and acceptable employee in accordance with customer specifications. The probation
period of the candidate is typically three months, a period for the customer to evaluate and confirm the acceptance of candidate replacement.
During the probation period, the customer is entitled to request candidate replacement if dissatisfaction of the performance of candidate
cannot be resolved after all means implemented, and we also keep close track of the performance of the candidate to see if they meet
the customer's defined standard, and deals with the customer's feedback or complaint about the performance of candidate.
Upon the completion of the probation period, the customer accepts the qualified candidate and we have fulfilled our obligation of permanent
candidate placement. Hence, revenue from permanent employment services is recognized at a point of time when the candidate passes the
probation period.
71
The
contract consideration is based on a fixed percentage of the candidate's pretax annual income agreed upon with the customers in
advance. Customers generally consider the candidates for the full probation period, and we are not entitled to any consideration for
the services provided until the candidates pass the probation period. Except for this, the contract payment is not subject to any variable
consideration, refund, cancellation, or termination provision. Customers generally make the payment within one or two months after the
completion of candidates' probation period and acceptance of billing from us.
Outsourcing
services
We
enter into contracts with corporate customers to provide outsourcing services, mostly IT-related services, including construction of
IT system, development of module or software with specific functions. Although third- party services providers will be involved in the
solution process, we still take on primary responsibility to coordinate project schedule, check the quality of deliverables, conduct
quality testing and handle feedback and complaints from corporate customers. We identify only one performance obligation with a fix total
consideration to deliver the IT project with functions under the agreed-upon specifications with customers. Customers cannot control
the IT projects in progress as the IT projects are not developed in the customers' location or IT environment, and before the successful
completion of the IT projects, customers cannot simultaneously receive or consume the benefits provided by our service, because the IT
projects in progress are only dispersed computer codes, which neither provide any function for the customer, nor are delivered to customers
until the successful completion.
Customers
generally make the payment within one or two months upon the successful delivery of IT projects and acceptance. We do not have an enforcement
right to payment for services provided to date if the projects eventually fail. Except for this, the contract payment is not subject
to any variable consideration, refund, cancellation, or termination provision.
We
recognize revenue at a point in time when the outsourcing services, mostly IT projects, are successfully completed, delivered and accepted
by customers.
Other
services
We
also provide information technology services to corporate customers and training services to platform users. Information technology services
include data collection and analysis, marketing channel optimization and other information technology services altogether that could
contribute to customers' business development. Training services are mainly to provide training courses and career-related certification
programs for platform users to help them realize professional developments. We identify only one performance obligation to provide those
services and recognize revenue over time based on the amount of a fixed total price, or a fixed unit price times key performance indicators
or hours charged.
The
contract payment is not subject to any variable consideration, refund, cancellation, or termination provision. Customers generally make
the payment within one or two months after monthly reconciliation of service considerations with us.
72
Principal
versus agent considerations
For
all the services provided, we consider ourselves the principal and recognizes revenue on a gross basis as we control the services through
the following key considerations:
●
We
    reserve the right to accept or reject the contracts or orders with the customers without involvement of the third parties, and direct
    the selected third-parties to provide services to the customers on our behalf. There is no direct cooperation relationship between
    third parties and the customers. We assume responsibility for receiving and resolving the complaints over the quality of the services.
    If the third-party service providers fail to deliver their work and thus affect our performance obligation to the corporate customers,
    we should bear the loss of the corporate customers for breach of contract on our own, and then independently claim for compensation
    from third-party service providers for its loss.
●
We
    have discretion in setting up the price. The involved third parties are entitled to a fixed service fee agreed upon in advance irrespective
    of the consideration we collect from the customers.
●
We
    bear the credit risk as we pay the consideration due to third-parties irrespective of whether the customers have paid the service
    consideration to us.
Useful
lives of software
Our
software consists of external purchased technology attached to our proprietary platforms,
Columbus and Star Career.
We apply judgments
in determining the useful lives of the software, considering technology and competition of the software pursuant to ASC 350-40-35-5.
On an ongoing basis, we assess if the estimated remaining useful lives of software continue to be reasonable based on the remaining expected
benefit and usage. If the remaining useful lives of software are revised, it is accounted for as a change in estimate and the remaining
unamortized cost of the underlying asset is amortized prospectively over the updated remaining useful life.
Valuation
allowance of deferred tax assets
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. We consider positive and negative evidence when determining whether a portion or all
of its deferred tax assets will more likely than not be realized. Our assessment considers, among other matters, the nature, frequency
and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, its
experience with tax attributes expiring unused, and its tax planning strategies. The ultimate realization of deferred tax assets is dependent
upon its ability to generate sufficient future taxable income within the carry-forward periods provided for in the tax law and during
the periods in which the temporary differences become deductible. When assessing the realization of deferred tax assets, we have considered
possible sources of taxable income including (i) future reversals of existing taxable temporary differences, (ii) future taxable income
exclusive of reversing temporary differences and carry-forwards, (iii) future taxable income arising from implementing tax planning strategies,
and (iv) specific known trend of profits expected to be reflected within the industry.
As
of December 31, 2021, 2022 and 2023, we recognized valuation allowance of deferred tax assets of RMB1.7 million, RMB3.4 million and RMB3.0
million (US$0.4 million), respectively.
73
Valuation
of redeemable preferred shares of non-controlling interest
From
year 2018 to 2021, Lucas Group China Limited, the operating subsidiary of the Group in the PRC, issued a series of shares to investors.
Share purchase agreement in 2021 ("2021 SPA") modified the redemption rights and corresponding calculation formula of redemption
value, clarified the dividend rights to different investors under share purchase agreement in 2020 ("2020 SPA"), See Note
10 "Redeemable preferred shares of non-controlling interest" to the consolidated financial statements for more details. We
estimate the fair value of redeemable preferred shares of non- controlling interest immediately before and after the amendment under
2021 SPA to determine whether the amendment constituted a modification or an extinguishment. We made the valuation of fair value of redeemable
preferred shares of non-controlling interest with the assistance from an independent third-party valuation firm. The fair value valuation
of the redeemable preferred shares of non-controlling interest was conducted in accordance with the guidance provided by the American
Institute of Certified Public Accountants – Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities
Issued as Compensation.
To
estimate the fair value of the redeemable preferred shares of non-controlling interest immediately before and after the amendment under
2021 SPA, we firstly derived the total equity value of Lucas Group China Limited using market approach. The market approach, specifically
the Backsolve Method, is adopted when preferred share transactions with unrelated parties occurred close to the valuation dates.
We
then derived the value of each class of shares (including the ordinary shares and redeemable preferred shares) by allocating equity value
to each class of shares under a hybrid framework which includes a probability weighted option pricing model (OPM) and an analysis assuming
an IPO as a possible future event, we considered the following different scenarios under this hybrid framework: (1) liquidation scenario,
(2) redemption scenario and (3) IPO conversion scenario. Under the liquidation and redemption scenarios, since holders of redeemable
preferred shares would have priority over ordinary shares or receive a redemption amount, respectively, the Option Pricing Method was
used to allocate equity value.
Option
Pricing Method treats the preferred and ordinary shares as call options with distinct claims on Lucas Group China Limited's total
equity value on liquidation preference or redemption amount of the preferred shares. The option's exercise price is based on a
comparison with the total equity value, which is determined based on the liquidation preference or redemption amount under the applicable
scenario. The characteristics of each class of shares, including the redemption provision and any liquidation preference of the preferred
shares, determine the class of share's claim on the equity value. Black-Scholes model was used to price the call option. After
deriving the values of the preferred and ordinary shares under each of the scenarios, by the method described above, probabilities of
each scenario were applied to arrive at the probability weighted value of each class of shares.
After
deriving the values of the preferred and ordinary shares under each of the scenarios, by the method described above, probabilities of
each scenario were applied to arrive at the probability weighted value of each class of shares.
The
option-pricing method was used to allocate equity value of Lucas Group China Limited to preferred and ordinary shares, taking into account
the guidance prescribed by the AICPA Audit and Accounting Practice Aid. This method requires making estimates of the anticipated timing
of a potential liquidity event, such as a sale of our company or an initial public offering, and estimates of the volatility of our equity
securities. The anticipated timing is based on the plans of our board and management. The volatility used in calculating the fair value
of preferred and ordinary shares was determined with reference to the volatility of a set of comparable companies.
Pursuant
to valuation report, the change of fair value of redeemable preferred shares of non-controlling interest immediately before and after
the amendment was less than 10%. Therefore, the amendment under 2021 SPA should be accounted for as a modification, and the difference
between the fair value of redeemable preferred shares of non-controlling interest immediately before and after the modification should
be recognized as reduction of accumulated deficit as a deemed dividend.
74
ITEM
6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.
Directors and Senior Management
The
following table sets forth information regarding our directors and executive officers as of the date of this annual report. Unless otherwise stated, the business address for our directors and executive officers is that of our principal executive
offices at Room 5A01, 4th Floor, Air China Building, Xiaoyun Road, Sanyuanqiao, Chaoyang District, Beijing 100027, China.
Directors
    and Executive Officers
Age
Position
Howard
    Lee
55
Founder,
    Chairman of the Board and CEO
Brian
    Lin
40
CFO
Harry
    Tang
40
CTO
Wang-chan
    Wong
69
Director
Jeremy
    Wegerer
53
Independent
    Director
Stanley
    Ho
56
Independent
    Director
Michael
    Carter
78
Independent
    Director
Mr.
Howard Lee
has been our chairman of the board of directors since 2022. He is also our chairman of the board of directors and
chief executive officer. From 2016 to present, he has been the CEO in our operating subsidiary in China, Lucas Group China Limited. From
2010 to 2016, Mr. Lee worked at Western Digital Corporation, most lately as the vice president of corporate development. From 2008 to
2010, Mr. Lee worked at Sun Microsystems Inc. as the general manager of Asian operations of its SUN Equity Partners Program. From 2003
to 2005, Mr. Lee worked for Alcatel Corporation as the general manager of APAC enterprise data business unit and CEO of one of its joint
ventures in China, and prior to expatriating to Asia, Mr. Lee worked in the U.S. for Alcatel Corporation as Director of Strategy from
2000 to 2002 and in Xylan Corporation (acquired by Alcatel) as Financial Planning Manager from 1997 to 2000. Mr. Lee holds ten U.S. patents
and six Chinese patents, all in the areas of Artificial Intelligence, Data Analytics and Blockchain. Mr. Lee is also a Chartered Financial
Analyst, or CFA, charter holder and received his charter in 2000. Mr. Lee received a bachelor's degree in Chemical Engineering
(Systems Process Engineering) in 1991 and a master's degree in Civil Engineering (Environmental Modeling and Systems) in 1993,
both from the University of California at Los Angeles (UCLA), and a master's degree in Engineering and Management (Strategy in
High Tech Companies) in 1995 from Stanford University.
Mr.
Brian Lin
has served as our Chief Financial Officer since March 2024. Mr. Lin is a certified public accountant in China with
rich financial and accounting experiences and has served as our head of finance in Lucas Group China Limited since 2022. Prior to joining
us, Mr. Lin was a financial director at G7 Networks Limited from 2021 to 2022, a leading SaaS company using internet of things technology
in the road freight industry. From 2018 to 2021, Mr. Lin served as the vice president at Pure International Cultural Development (Beijing)
Co., Ltd. From 2016 to 2018, he served as the financial director of Beijing Time Limited, a company that is a recommendation system product
based on data mining that recommends valuable, personalized information to users in China. From 2015 to 2016, he worked as the financial
director of Beijing RTMAP Technology Co., Ltd., a company that providing technology for indoor positioning and navigation for shopping
malls and airports. From 2011 to 2015, Mr. Lin worked as the CFO and general manager of the strategic investment department of HNA Culture
Holding Group Co., LTD, a company that has been developing in the fields of airport and aviation media business. He also worked in PricewaterhouseCoopers
Zhong Tian LLP as a junior auditor and later promoted to senior auditor and auditor manager from 2004 to 2011. Mr. Lin is familiar with
SaaS business, media and social technology and has deep involvement of various kinds of investment and financing mergers and acquisitions.
He has been a member of Chinese Institute of Certified Public Accountant since 2010. Mr. Lin received a bachelor's degree in Accounting
from Renmin University of China in 2004.
Mr.
Harry Tang
has served as our Chief Technology Officer since March 2024. Mr. Tang has served as our head of research and development
in Lucas Group China Limited since 2022. Before joining us, Mr. Tang has approximately 17 years of management experience in the research
and development section of the Internet industry. From 2013 to 2022, Mr. Tang was the director of the research and development department
and senior architect of Beijing Facishare Technology Co., Ltd., a company that provides PaaS based Mobile CRM Software and Services.
From 2006 to 2013, he worked as the senior research and development manager and senior engineer in Feinno Communication Tech Co., Ltd,
in charge of developing Fetion, an instant message service product developed by the company. Mr. Tang received a bachelor's degree
in Information Technology at Beijing University of Aeronautics and Astronautics in 2005.
Dr.
Wang-chan Wong
has served as our director since March 2024. Dr. Wang-chan Wong has been serving as the IP consultant to Lucas
GC Limited (HK) since August 2020. He has also served as the founder, ex-CEO, chairman, and director of KBQuest Group, a global IT service
provider with offices in Hong Kong, Shanghai and the U.S. He was a technical advisor to Pacific Software Inc., a Canadian company listed
on OTC, focusing on Blockchain-as-a-Service platform to support international trade, and Wearable Health Solutions, another OTC listed
company focusing on healthcare wearable devices and monitoring services. He was an advisor to California Institute of Food and Agricultural
Research at the University of California Davis from 2014 to 2019. He served as an Executive Director of Asia Commercial Holdings, a public
company listed in the Hong Kong Stock Exchange from 2001 to 2005. He also served on the board of ACT 360, a public company listed in
the TSX Venture Toronto from 2005 to 2012. Dr. Wong is a tenured professor of computer science and a tenured professor of information
systems at California State University with over 35 years of teaching and academic research in Computer Science and in Information Systems.
He has published 45 papers in prestigious journals and presented many of them in international conferences. He holds 11 U.S. patents
and six Chinese patents. Dr. Wong received his bachelor's degree of Business Administration (with honor) from the Chinese University
of Hong Kong, and his master's degree in Business and master's degree in Computer Science and Ph.D. in Computer Science from
University of California at Irvine.
75
Mr.
Jeremy Wegerer
has been our independent director since 2022. Mr. Wegerer is a certified public account with more than ten years
of financial accounting experience in China and the U.S. Before joining us, Mr. Wegerer spent 15 years working as a pioneer in digital
education and PaaS industry. Since 2007, he has been serving as the managing director in Greater China operations of Reallyenglish, a
certified digital education publisher providing English training courseware and services in the cloud to markets worldwide. From 2006
to 2007, he also worked as the business development director in Bleum Software Development Corp., which is a certified provider of software
services specializing in dedicated offshore development centers. From 2002 to 2003, Mr. Wegerer worked as the vice president on China
operations in KBQuest Group, Inc, a U.S. based IT service provider. He also worked as the director of the product development from 2000
to 2001 and deputy general manager from 2000 to 2000 of Tianjin branch, respectively, in Meetworldtrade, a leading online B2B trading
company based in Shanghai. He served as an accountant in Copyright, Inc. from 1995 to 1997, an accounting analyst in Tran Union from
1994 to 1995, and a senior accountant in PSI, Inc. from 1992 to 1994. Mr. Wegerer has also been actively involved in charitable activities
with a focus on public health and education. Mr. Wegerer received a bachelor's degree in Accounting at Northern Illinois University
in 1992. Mr. Wegerer also received a master's degree in Classical Chinese Literature at University of Colorado at Boulder in 2006.
Mr.
Stanley Ho
has served as our independent director since March 2024. Mr. Ho has served as the vice president of Nextech Electronics
Ltd. from 2010 to present. Prior to joining Nextech, he has served as a director of channel operation in Netprinciples Software from
2001 to 2009 and as a business development manager in Digital Ventures Asia from 1999 to 2001. From 1994 to 1999, Mr. Ho served as a
sales engineer in Skynet Electronics. He received his master's degree in Civil Engineering in 1993 from University of California,
Los Angeles and his bachelor's degree in Civil Engineering in 1991 from University of California, Irvine.
Dr.
Michael Carter
has served as our independent director since March 2024. Dr. Carter has decades of experience in designing and
developing learning solutions based on emerging technologies, particularly those involving games. He directed education research in Apple's
advanced technology group, produced Oxford, Stanford and Yale's online offerings to their alumni, and edited and published research
on digital media and
learning with the MIT Press. Dr. Carter has designed and produced learning
games about ecology, conservation, and endangered species and a complete online developmental mathematics curriculum for the Hewlett
and Gates Foundations. He led the design of games for victims of traumatic brain injury for the Program in Rehabilitation Neuroscience
at UCSF/Berkeley and created lessons in Python for Yurok middle schoolers. From 2015 to present, Dr. Carter has been serving as the co-founder
and director of Textgenome.org, a non-profit literacy initiative that helps over five million students master key vocabulary on every
school day in partnership with Gates Ventures and Readworks.org. Dr. Carter served as a director of special projects of Monterey Institute
for Technology and Education from 2006 to 2009. From 1983 to 1993, he served as director of education research and advanced technology
group of Apple Computer, Inc. and served as a special advisor to Steve Jobs. From 1988 to 1991, he worked as a consulting associate professor
at Stanford University School of Education. He worked as the director of instruction and research information systems of Stanford University
from 1980 to 1989 and as the assistant professor of history at Dartmouth College from 1973 to 1980. Dr. Carter received his bachelor's
degree of History in 1968, master's degree of History in 1971 and doctoral degree of History in 1974, all from Stanford University.
Board
Diversity
The
table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.
Board
    Diversity Matrix
Country
    of Principal Executive Offices
People's
    Republic of China
Foreign
    Private Issuer
Yes
Disclosure
    Prohibited under Home Country Law
No
Total
    Number of Directors
5
Female
Male
Non-Binary
Did Not Disclose Gender
Part I: Gender Identity
Directors
0
5
0
0
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
0
LGBTQ+
0
Did Not Disclose Demographic Background
0
B.
Compensation
For
the year ended December 31, 2023, we paid an aggregate of approximately RMB1.0 million (US$0.1 million) in cash and benefits to our directors
and executive officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive
officers and directors. Our PRC subsidiaries are required by law to make contributions equal to certain percentages of each employee's
salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident
fund.
Employment Agreements
and Indemnification Agreements
We have
entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed
for a specified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts
of the executive officer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest
acts to our detriment, or misconduct or a failure to perform agreed duties. We may also terminate an executive officer's employment
without cause upon advance written notice. In such case of termination by us, we will provide severance payments to the executive officer
as expressly required by applicable law of the jurisdiction where the executive officer is based. The executive officer may resign at
any time with an advance written notice.
Each
executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence
and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable
law, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective
clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive,
develop or reduce to practice during the executive officer's employment with us and to assign all right, title and interest in them
to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.
In addition,
each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment
and typically for two years following the last date of employment. Specifically, each executive officer has agreed not to (i) approach
our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity
as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with
these persons or entities; (ii) assume employment with or provide services to any of our competitors, or engage, whether as principal,
partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seek directly or indirectly, to solicit
the services of any of our employees who is employed by us on or after the date of the executive officer's termination, or in the
year preceding such termination, without our express consent.
We have
also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify
our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made
by reason of their being a director or officer of our Company.
Clawback
Policy
In
April 2024,  we adopted a clawback policy in compliance with the SEC rules and the Nasdaq Stock Market listing standards to recover any
excess incentive-based compensation from current and former executive officers after an accounting restatement. See Exhibit 97.1.
76
C.
Board Practices
Board
of Directors
Our
board of directors consists of five directors. A director is not required to hold any shares in our company to qualify to serve as a
director. A director may vote with respect to any contract, proposed contract, or arrangement in which he or she is materially
interested
subject to the
Nasdaq Stock Market Listing R
ules
and disqualification by the chairperson of the relevant board meeting
. The directors may exercise all the powers of the company to borrow money, mortgage or charge its assets, property and
uncalled capital and issue debentures or other securities whenever money is borrowed or as security for any obligation of the
company or of any third party.
Committees
of the Board of Directors
We
have established an audit committee, a compensation committee and a nominating and corporate governance committee under the board of
directors. We have adopted a charter for each of the three committees. Each committee's members and functions are described below.
Audit
Committee
.
Our audit committee consists of Jeremy Wegerer, Stanley Ho, and Michael Carter, and is chaired by Jeremy Wegerer.
Jeremy Wegerer, Stanley Ho, and Michael Carter satisfy the "independence" requirements of Rule 5605(c)(2) of the Listing
Rules of the Nasdaq and meet the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended. We have
determined that Jeremy Wegerer qualifies as an "audit committee financial expert." The audit committee oversees our accounting
and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for,
among other things:
●
selecting the independent
    registered public accounting firm and pre-approving all auditing and
non-auditing
services permitted to be performed by the independent registered public accounting firm;
●
reviewing with the independent
    registered public accounting firm any audit problems or difficulties and management's response;
●
reviewing and approving
    all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;
●
discussing the annual audited
    financial statements with management and the independent registered public accounting firm;
●
reviewing major issues
    as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies;
●
annually reviewing and
    reassessing the adequacy of our audit committee charter;
●
meeting separately and
    periodically with management and the independent registered public accounting firm; and
●
reporting regularly to
    the board of directors.
Compensation
Committee
.
Our compensation committee consists of Stanley Ho, Jeremy Wegerer and Michael Carter, and is chaired by Stanley Ho.
Stanley Ho, Jeremy Wegerer and Michael Carter satisfy the "independence" requirements of Rule 5605(a)(2) of the Listing Rules
of the Nasdaq. The compensation committee assists the board of directors in reviewing and approving the compensation structure, including
all forms of compensation, relating to our directors and executive officers. Our executive officers may not be present at any committee
meeting during which their compensation is deliberated upon. The compensation committee is responsible for, among other things:
●
reviewing the total compensation
    package for our executive officers and making recommendations to the board of directors with respect to it;
●
approving and overseeing
    the total compensation package for our executives other than the three most senior executives;
●
reviewing the compensation
    of our directors and making recommendations to the board of directors with respect to it; and
●
periodically reviewing
    and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, and employee
    pension and welfare benefit plans.
Nominating
and Corporate Governance Committee.
Our nominating and corporate governance committee consists of Michael Carter, Stanley Ho,
and Jeremy Wegerer, and is chaired by Michael Carter. Stanley Ho, Michael Carter, and Jeremy Wegerer satisfy the "independence"
requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq. The nominating and corporate governance committee assists the board
of directors in selecting individuals qualified to become our directors and in determining the composition of the board of directors
and its committees. The nominating and corporate governance committee is responsible for, among other things:
●
recommending nominees to
    the board of directors for election or re-election to the board of directors, or for appointment to fill any vacancy on the board
    of directors;
●
reviewing annually with
    the board of directors the current composition of the board of directors with regards to characteristics such as independence, age,
    skills, experience and availability of service to us;
77
●
selecting and recommending
    to the board of directors the names of directors to serve as members of the audit committee and the compensation committee, as well
    as of the nominating and corporate governance committee itself; and
●
monitoring compliance with
    our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
Duties
of Directors
Directors
and officers generally owe fiduciary duties to our Company, and not to our Company's individual shareholders. Our shareholders
may not have a direct cause of action against our directors. Under Cayman Islands law, our directors have a fiduciary duty to act
honestly, in good faith and with a view to our best interests. Our directors also owe to our Company a duty to act with skill and
care. It was previously considered that a director needs not exhibit in the performance of his duties a greater degree of skill than
may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved
towards an objective standard with regard to the required skill and care and these authorities are likely to
be
followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our
amended
and restated
memorandum and articles of association, as amended and restated from time to time, and the rights vested
thereunder in the holders of the shares. Our Company has the right to seek damages if a duty owed by our directors is
breached.
Terms
of Directors and Officers
Our
board of directors has the power from time to time and at any time to appoint any person as a director to fill a casual vacancy on the
board or as an addition to the existing board. Our directors are not subject to a term of office and will hold their offices until such
time as they are removed from office by the affirmative vote of a simple majority of the other directors present and voting at a board
meeting. In addition, the office of any of our directors shall be vacated if the director (a) becomes bankrupt or makes any arrangement
or composition with his creditors; (b) dies or is found to be or becomes of unsound mind; (c) gives notice in writing to our company
that he or she resigns the office of director; (d) without special leave of absence from the board of directors, is absent from meetings
of the board of directors for three consecutive meetings and the board of directors resolves that his or her office be vacated; or (e)
is removed from office pursuant to our amended and restated memorandum and articles of association. An appointment of a director
may be on terms that the director shall automatically retire from office (unless he or she has sooner vacated office) at the next or
a subsequent annual general meeting or upon any specified event or after any specified period in a written agreement between the director
and us, if any; but no such term shall be implied in the absence of express provision.
Our
officers are elected by and serve at the discretion of the board of directors.
78
D.
Employees
As
of December 31, 2023, we had 361 full time employees, permanent and contractors included, all of whom are based in China. The following
table sets forth the numbers of our employees categorized by function as of December 31, 2023.
Function
As of December 31, 2023
Number
% of Total
Employees
Research and Development
103
28.5
%
Sales and Marketing
78
21.6
%
Operations
159
44.1
%
General Administration
21
5.8
%
Total
361
100.0
%
As
required by regulations in China, we participate in various government statutory social security plans, including a pension
contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan, a maternity
insurance plan and a housing provident fund for permanent employees. We are required under PRC law to contribute to social security
plans at specified percentages of the salaries, bonuses and certain allowances of our permanent employees up to a maximum amount
specified by the local government from time to time. For risk in relation to our contribution for employee social security plans,
see "Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in China — Our insurance
coverage may not be adequate, which could expose us to significant costs and business disruptions."
We
typically enter into standard employment and confidentiality agreements with our senior management and core personnel. These contracts
include a standard non-compete covenant that prohibits the employee from competing with us, directly or indirectly, during his or her
employment and for 12 months after the termination of the employment, provided that we pay compensation equal to half a month's
salary.
We
maintain a good working relationship with our employees, and we have not experienced any material labor disputes. None of our employees
are represented by labor unions.
E.
Share Ownership
The
following table sets forth information concerning the beneficial ownership of our ordinary shares as of the date of this annual report
by:
●
each of our directors and
    executive officers; and
●
each person known to us
    to beneficially own more than 5% of our ordinary shares.
Beneficial
ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of ordinary shares beneficially
owned by a person and the percentage ownership of that person, we have included ordinary shares that the person has the right to acquire
within 60 days, including through the exercise of any option, warrant, or other right or the conversion of any other security. These
ordinary shares, however, are not included in the computation of the percentage ownership of any other person.
The
percentage of beneficial ownership of our ordinary is based on 79,563,300 ordinary shares issued and outstanding as of the date of this
annual report. See "— B. Compensation" of this subsection for more details on options and restricted shares granted
to our directors and executive officers.
Number of
ordinary shares
Percentage of beneficial ownership
Directors and Executive Officers*
Howard Lee
(1)
49,219,966
61.9
%
Brian Lin
—
—
Harry Tang
—
—
Wang-chan Wong
—
—
Jeremy Wegerer
—
—
Stanley Ho
—
—
Michael Carter
—
—
All Directors and Executive Officers as a Group
49,219,966
61.9
%
Principal Shareholders:
HTL Lucky Holding Limited
(1)
49,219,966
61.9
%
51job, Inc.
(2)
14,498,220
18.2
%
MLT Holding Limited
(3)
6,418,580
8.1
%
Notes:
*
For each person and group included in this table, percentage
    ownership is calculated by dividing the number of shares beneficially owned by such person or group by 79,563,300, being the number
    of ordinary shares as of the date of this annual report.
**
For each person or group included in this column, percentage
    of total voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of
    all of our ordinary shares as a single class.
†
Except as otherwise indicated below, the business address
    of our directors and executive officers is Room 5A01, 4th Floor, Air China Building, Xiaoyun Road, Sanyuanqiao, Chaoyang District,
    Beijing 100027, China.
(1)
Represents 49,219,966 ordinary shares held by HTL Lucky
    Holding Limited, a British Virgin Islands company, which is a wholly owned subsidiary of HTL Star Holding Limited. HTL Star Holding
    Limited is wholly owned by Mr. Howard Lee. The registered address of HTL Lucky Holding Limited is ICS Corporate Services (BVI) Limited,
    Sea Meadow House, P.O. Box 116, Road Town, Tortola, British Virgin Islands. HTL Lucky Holding Limited acquired 29,284,260 ordinary
    shares from the Company on August 15, 2022 and acquired 19,935,706 ordinary shares from WXS Holding Limited on November 7, 2022.
79
(2)
Represents 14,498,220 ordinary shares held by 51job,
    Inc., a Cayman Islands company. The only natural person who has over 5% voting or dispositive power with respect to the shares held
    by 51job, Inc. is Mr. Rick Yan, who indirectly owns less than 10% in our Company. The registered address of 51job, Inc. is Ogier
    Global (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman, Cayman Islands KY1-9009.
(3)
Represents 6,418,580 ordinary shares held by MLT Holding
    Limited, a British Virgin Islands company. MLT Holding Limited is wholly owned by Ms. Luting Meng. The registered address of MLT
    Holding Limited is ICS Corporate Services (BVI) Limited, Sea Meadow House, P.O. Box 116, Road Town, Tortola, British Virgin Islands.
None
of our shareholders has informed us that it is affiliated with a registered broker-dealer or is in the business of underwriting securities.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
To
our knowledge, except as disclosed elsewhere in this annual report, we are not directly or indirectly owned or controlled by another
corporation, any foreign government or any other natural or legal person, severally or jointly.
F.
Disclosure of a Registrant's Action to
    Recover Erroneously Awarded Compensation
Not
applicable.
ITEM
7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
Major Shareholders
Please
refer to "Item 6. Directors, Senior Management and Employees—E. Share Ownership."
B.
Related Party Transactions
Employment
Agreements and Indemnification Agreements
See
"Item 6. Directors, Senior Management and Employees — B. Compensation — Employment Agreements and Indemnification Agreements."
Other
Related Party Transactions
The
Company had the following significant related party transactions for the years ended December 31, 2022 and 2023:
For the years ended December 31,
2021
2022
2023
RMB
RMB
RMB
Technology services received from:
Beagledata (i)
320
1,480
-
Recruitment services provided to:
Beagledata (ii)
6,230
9,697
7,417
Outsourcing services provided to:
Beagledata
1,200
-
566
(i)
Beagledata
    provided technology services for the years ended December 31, 2022 and 2023, and the Company recorded it as research and development
    expenses in the consolidated statements of income and comprehensive income.
(ii)
The
    Company provided recruitment services to Beagledata, including flexible staffing services and permanent recruitment services for
    the years ended December 31, 2022 and 2023.
Balances
with related parties:
Balances
with related parties consisted of the following for the periods indicated:
As of December 31,
2022
2023
RMB
RMB
Amounts due to related parties:
Beagledata (i)
2,120
2,479
Mr. Howard Lee (ii)
36
618
Total
2,156
3,097
(i)
As
    of December 31, 2022 and 2023, amounts due to Beagledata consisted of technology services fees payable of RMB2,120 and RMB2,120,
    respectively, and contract liabilities of nil and RMB359, respectively.
(ii)
Amounts
    due to Mr. Howard Lee represented expensed paid on behalf of the Company.
C.
Interests of Experts and Counsel
Not
applicable.
ITEM
8. FINANCIAL INFORMATION
A.
Consolidated Statements and Other Financial Information
We
have appended consolidated financial statements filed as part of this annual report.
Legal
Proceedings
Other
than disclosed in this annual report, we are currently not a party to any material legal or administrative proceedings. We may from time
to time be subject to various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or
any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our
resources, including our management's time and attention.
80
Dividend
Policy
Our
board of directors has discretion on whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely
that our Company may only pay dividends out of profits or share premium, and provided always that we are able to pay our debts as they
become due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency and amount
will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions
and other factors that the board of directors may deem relevant.
Since
inception, we have not declared or paid any dividends on our ordinary shares. We do not have any present plan to declare any cash dividends
on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future
earnings to operate and grow our business.
We
are a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiaries in China for our cash
requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC
subsidiaries to pay dividends to us. For example, under PRC laws and regulations, we are permitted to use the net proceeds of our
subsequent offerings to provide funding to our PRC subsidiaries only through loans or capital contributions. Subject to satisfaction
of necessary registrations with government authorities and required governmental approvals, we may extend inter-company loans or
make additional capital contributions to our PRC subsidiaries. We cannot assure you that we will be able to make such registrations
or obtain such approvals in a timely manner, or at all. See "Item 3. Key Information — D. Risk Factors — Risks
Related to Doing Business in China — PRC regulation of loans to and direct investment in PRC entities by offshore holding
companies and governmental control of currency conversion may delay or prevent us from using the proceeds of our subsequent
offerings to make loans or additional capital contributions to our PRC subsidiaries in China, which could materially and adversely
affect our liquidity and our ability to fund and expand our business."
B.
Significant Changes
Except
as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated
financial statements included in this annual report.
ITEM
9. THE OFFER AND LISTING
A.
Offering and Listing Details
See
"—Markets." of this subsection.
B.
Plan of Distribution
Not
applicable.
C.
Markets
Our
ordinary shares have been listed on the Nasdaq Capital Market since March 5, 2024 under the symbol "LGCL."
D.
Selling Shareholders
Not
applicable.
E.
Dilution
Not
applicable.
F.
Expenses of the Issue
Not
applicable.
ITEM
10. ADDITIONAL INFORMATION
A.
Share Capital
Not
applicable.
B.
Memorandum and Articles of Association
We
are a Cayman Islands exempted company and our affairs are governed by our amended and restated memorandum which took effect
immediately
prior to the completion of our initial public offering
and articles of association and the Companies Act (As Revised) of the
Cayman Islands, referred to as the Companies Act below. The following are summaries of material provisions of our amended and
restated memorandum and articles of association, as well as the Companies Act insofar as they relate to the material
terms of our ordinary shares.
81
Registered
Office and Objects
Our
registered office in the Cayman Islands is at ICS Corporate Services (Cayman) Limited, 3-212 Governors Square, 23 Lime Tree Bay Avenue,
P.O. Box 30746, Seven Mile Beach, Grand Cayman KY1-1203, Cayman Islands.
Under
our amended and restated memorandum and articles of association, the objects of our company are unrestricted, and we have full power
and authority to carry out any object not prohibited by the law of the Cayman Islands.
Board
of Directors
See
"Item 6. Directors, Senior Management and Employees — C. Board Practices."
Ordinary
Shares
General.
All of our issued and outstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares
are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their shares.
Transfer
Agent and Registrar.
Our transfer agent and registrar for our ordinary shares is Vstock Transfer, LLC.
Dividends.
The
holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors subject to the Companies
Act and to our
amended and restated
memorandum and articles of association. In
addition, our shareholders may declare dividends by ordinary resolution, but no dividend shall exceed the amount recommended by our
directors. Under the laws of the Cayman Islands, our company may pay a dividend out of either profit or share premium account;
provided that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they
fall due in the ordinary course of business.
Voting
Rights.
Holders of our ordinary shares shall, at all times, vote together as one class on all matters submitted to a vote by
our shareholders at any general meeting of our company. Each ordinary share shall be entitled to one (1) vote on all matters subject
to a vote at general meetings of our company. At any general meeting a resolution put to the vote of the meeting shall be decided on
a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by the chairman of the meeting
or any shareholder present in person or by proxy.
General
meetings of shareholders.
A quorum required for a meeting of shareholders consists of at least one or more shareholders
present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative, who hold in
aggregate a majority of the votes attaching to all issued and outstanding shares of our company. We are not obliged by the Companies
Act to call shareholders' annual general meetings. Our
amended and
restated
memorandum and articles of association provide that we may (but are not obliged to) in each year hold a general
meeting as our annual general meeting in which case we shall specify the meeting as such in the notices calling it, and the annual
general meeting shall be held at such time and place as may be determined by our director. Extraordinary general meetings may be
held at such times as may be determined by our board of directors and may be convened by a majority of our board of directors or the
chairman of the board on its/his own initiative or on a requisition by shareholders holding in the aggregate 10% of
all votes attaching to all issued
and outstanding shares of the Company
. Advance notice of at least seven (7) calendar days is required for the convening of our annual general meeting and other
shareholders' meetings. An ordinary resolution to be passed by the shareholders requires the affirmative vote of a simple
majority of the votes attaching to the ordinary shares cast in a general meeting, while a special resolution requires the
affirmative vote of no less than two-thirds of the votes attaching to the ordinary shares cast in a general meeting. A special
resolution is required for important matters such as amendments to our memorandum and articles of association and a change of name.
Holders of the ordinary shares may effect certain changes by ordinary resolution, including increasing the amount of our authorized
share capital, consolidating and dividing all or any of our share capital into shares of larger amount than our existing shares, and canceling any unissued shares.
Transfer
of Shares.
Subject to the restrictions of our amended and restated memorandum and articles of association set out below,
as applicable, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual
or
common
form or any other form approved by our board of directors.
Our
board of directors may, in its sole discretion, decline to register any transfer of any ordinary share which is not fully paid up or
on which we have a lien. Our directors may also decline to register any transfer of any ordinary share unless (a) the instrument of transfer
is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of
directors may reasonably require to show the right of the transferor to make the transfer; (b) the instrument of transfer is in respect
of only one Class of Shares; (c) the instrument of transfer is properly stamped, if required; (d) in the case of a transfer to joint
holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; or (e) a fee of such maximum
sum as the Nasdaq may determine to be payable, or such lesser sum as our board of directors may from time to time require, is paid to
us in respect thereof.
82
If
our directors refuse to register a transfer they shall, within three calendar months after the date on which the instrument of transfer
was lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, after compliance
with any notice required of the Nasdaq, be suspended and the register closed at such times and for such periods as our board of directors
may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed
for more than 30 calendar days in any calendar year.
Liquidation.
On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of shares), if the assets
available for distribution among the holders of ordinary shares shall be more than sufficient to repay the whole of the share capital,
the surplus shall be distributed among the holders of the ordinary shares in proportion to the par value of the shares held by them subject
to a deduction from those shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise.
If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets shall be distributed so that,
as nearly as may be, the losses are borne by our shareholders in proportion to the par value of the shares held by them.
Calls
on Shares and Forfeiture of Shares.
Our board of directors may from time to time make calls upon shareholders for any amounts
unpaid on their shares in a notice served to such shareholders at least 14 calendar days prior to the specified time and place of payment.
The shares that have been called upon and remain unpaid on the specified time are subject to forfeiture.
Redemption
of Shares
.
Subject to the provisions of the Companies Act, we may issue shares on terms that are subject to redemption, at
our option or at the option of the holders, on such terms and in such manner, as may be determined before the issue of such shares,
either by our board of directors or by a special resolution of our shareholders. Our company may also repurchase any of our shares
(including any redeemable shares) provided that the manner and terms of such repurchase have been approved by our board of directors
or by ordinary resolution of our shareholders, or are otherwise authorized by our
amended
and restated
memorandum and articles of association. Under the Companies Act, the redemption or repurchase of any share may
be paid out of our company's profits or out of the proceeds of a fresh issue of shares made for the purpose of such redemption
or repurchase, or out of capital (including share premium account and capital redemption reserve) if the company can, immediately
following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no
such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there
being no shares outstanding, or (c) if the company has commenced liquidation. In addition, our company may accept the surrender of
any fully paid share for no consideration.
Variations
of Rights of Shares.
Whenever the capital of our company is divided into different classes of shares, the rights attached to
any such class may, subject to any rights or restrictions for the time being attached to any class, only be materially adversely
varied either with the written consent of the holders of a simple majority of the issued shares of that class or with the sanction of
a resolution passed at a separate meeting of the holders of the shares of that class by the holders of a simple majority of the issued
shares of that class.
83
Inspection
of Books and Records.
Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or
obtain copies of our list of shareholders or our corporate records (other than our
amended
and restated
memorandum and articles of association, special resolutions of our shareholders, and our register of mortgages
and charges).
Changes
in Capital.
Our company may from time to time by ordinary resolution:
●
increase our share capital
    by new shares of such amount as we think expedient;
●
consolidate and divide
    all or any of our share capital into shares of a larger amount than our existing shares;
●
sub-divide
    our existing shares, or any of them into shares of an amount smaller than that fixed by our
amended
    and restated
memorandum of association, provided that in the subdivision the proportion between the amount paid and the
    amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is
    derived; and
●
cancel any shares that,
    at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of
    our share capital by the amount of the shares so canceled.
Subject
to the Companies Act and our amended and restated memorandum and articles of association we may, by special resolution, reduce
our share capital and any capital redemption reserve in any manner authorized by the Companies Act.
Issuance
of Additional Shares.
Our
amended and restated
memorandum and articles
of association authorizes our board of directors to issue additional ordinary shares from time to time as our board of directors
shall determine, to the extent there are available authorized but unissued shares, without the need for any approval or consent from
our shareholders.
Our
amended and restated
memorandum and articles of association authorizes our board
of directors, without the need for any approval or consent from our shareholders, to establish from time to time one or more series
of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series,
including:
●
designation of the series;
●
the number of shares of
    the series;
●
the dividend rights, conversion
    rights and voting rights; and
●
the rights and terms of
    redemption and liquidation preferences.
The
issuance of preferred shares may be used as an anti-takeover device without further action on the part of the shareholders. Issuance
of these preferred shares may dilute the voting power of holders of ordinary shares.
Anti-Takeover
Provisions.
Some provisions of our
amended and restated
memorandum and
articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may
consider favorable, including provisions that:
●
authorize our board of
    directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions
    of such preferred shares without any further vote or action by our shareholders; and
●
limit the ability of shareholders
    to requisition and convene general meetings of shareholders.
However,
under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our
amended
and restated
memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the
best interests of our company.
Exempted
Company.
We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary
resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside
of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the
same as for an ordinary company except that an exempted company:
●
does not have to file an
    annual return of its shareholders with the Registrar of Companies;
●
is not required to open
    its register of members for inspection;
●
does not have to hold an
    annual general meeting;
●
may issue shares with no
    par value;
●
may obtain an undertaking
    against the imposition of any future taxation (such undertakings are usually given for 30 years in the first instance);
●
may register by way of
    continuation in another jurisdiction and be deregistered in the Cayman Islands;
●
may register as a limited
    duration company; and
●
may
    register as a segregated portfolio company.
"Limited
liability" means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the
company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper
purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
84
Register
of Members
.
Under the Companies Act, we must keep a register of members and there should be entered therein:
●
the
    names and addresses of our members, together with a statement of the shares held by each member, and such statement shall confirm (i) the amount paid or agreed to be
    considered as paid, on the shares of each member, (ii) the number and category of shares held by a member, and (iii) whether each relevant category of shares held by a member carries voting
    rights under the articles of association of the company, and if so, whether such voting rights are conditional;
●
the date on which the name
    of any person was entered on the register as a member; and
●
the date on which any person
    ceased to be a member.
Under
Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out therein (i.e. the register
of members will raise a presumption of fact on the matters referred to above unless rebutted) and a member registered in the register
of members is deemed as a matter of Cayman Islands law to have legal title to the shares as set against its name in the register of members.
We will perform the procedure necessary to immediately update the register of members to record and give effect to any issuance of shares
by us. Once our register of members has been updated, the shareholders recorded in the register of members will be deemed to have legal
title to the shares set against their name.
If
the name of any person is incorrectly entered in or omitted from our register of members, or if there is any default or unnecessary delay
in entering on the register the fact of any person having ceased to be a member of our company, the person or member aggrieved (or any
member of our company or our company itself) may apply to the Grand Court of the Cayman Islands for an order that the register be rectified,
and the Court may either refuse such application or it may, if satisfied of the justice of the case, make an order for the rectification
of the register.
Differences in Corporate Law
The
Companies Act is modeled after companies acts of England and Wales but does not follow recent United Kingdom statutory enactments.
In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is
a summary of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies
incorporated in the State of Delaware.
Mergers
and Similar Arrangements
.
The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman
Islands companies and non-Cayman Islands companies. For these purposes, (a) "merger" means the merging of two or more constituent
companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company and (b) a
"consolidation" means the combination of two or more constituent companies into a consolidated company and the vesting of
the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation,
the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (i)
a special resolution of the shareholders of each constituent company and (ii) such other authorization, if any, as may be specified in
such constituent company's articles of association. The plan of merger or consolidation must be filed with the Registrar of Companies
together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each
constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors
of each constituent company and published in the
Cayman Islands Gazette. Dissenting shareholders
have the right to be paid the fair value of their shares (which, if not agreed between the parties, will be determined by the Cayman
Islands court) if they follow the required procedures, subject to certain exceptions. Court approval is not required for a merger or
consolidation effected in compliance with these statutory procedures.
In
addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of
arrangement between a company and its members (or any class of them), or between the company and its creditors (or any class
of them), provided that the arrangement is approved by (a) 75% in value of the shareholders or class of shareholders, as the
case may be, or (b) a majority in number representing 75% in value of the creditors or each class of creditors, as the case may be,
with whom the arrangement is to be made, that are, in each case, present and voting either in person or by proxy at a meeting, or
meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand
Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction
ought not to be approved, the Grand Court of the Cayman Islands can be expected to approve the arrangement if it determines that:
●
the statutory provisions
    as to the required majority vote have been met;
●
the shareholders have been
    fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to
    promote interests adverse to those of the class;
●
the arrangement is such
    that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and
●
the arrangement is not
    one that would more properly be sanctioned under some other provision of the Companies Act.
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The
Companies Act also contains a statutory power of compulsory acquisition which may facilitate the "squeeze out" of dissentient
minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90% of the shares affected within four
months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the
remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the
Cayman Islands, but it is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad
faith or collusion.
If
an arrangement and reconstruction by way of scheme of arrangement is thus approved, or if a tender offer is made and accepted, a
dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover offer may apply to the
Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion to make,
which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive
payment in cash for the judicially determined value of the shares.
Shareholders'
Suits.
In principle, we will normally be the proper plaintiff and as a general rule a derivative action may not be brought
by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the
Cayman Islands, the Cayman Islands courts can be expected to apply and follow common law principles (namely the rule in Foss v.
Harbottle and the exceptions thereto) that permit a minority shareholder to commence a class action against the company or a
derivative action in the name of the company to challenge certain acts, including the following:
●
a company acts or proposes
    to act illegally or ultra vires;
●
the act complained of,
    although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained;
    and
●
those who control the company
    are perpetrating a "fraud on the minority."
Indemnification
of Directors and Executive Officers and Limitation of Liability.
Cayman Islands law does not limit the extent to which a company's
memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision
may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the
consequences of committing a crime.
Our
amended and restated
memorandum and articles of association permit
indemnification of officers and directors for actions, proceedings, costs, charges, expenses, losses, damages or liabilities
incurred in their capacities as such other than by reason of the dishonesty, fraud or willful default of such directors or officers,
in or about the conduct of our company's business or affairs (including as a result of any mistake of judgment) or in the
execution or discharge of such person's duties, powers, authorities or discretions, including without prejudice to the
generality of the foregoing, any costs, expenses, losses or liabilities incurred by such Indemnified Person in defending (whether
successfully or otherwise) any civil proceedings concerning our company or its affairs in any court whether in the Cayman Islands or
elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware
corporation. In addition, we intend to enter into indemnification agreements with our directors and senior executive officers that
will provide such persons with additional indemnification beyond that provided in our
amended
and restated
memorandum and articles of association.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling
us under the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
Directors'
Fiduciary Duties
.
Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation
and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director
act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director
must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction.
The duty of loyalty requires that a director act in a manner he or she reasonably believes to be in the best interests of the corporation.
He or she must not use his or her corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and
mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer
or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been
made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation.
However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning
a transaction by a director, a director must prove the procedural fairness of the transaction, and that the transaction was of fair value
to the corporation.
As
a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company
and therefore it is considered that he owes the following duties to the company—a duty to act bona fide in the best interests of
the company, a duty not to make a profit based on his or her position as director (unless the company permits him to do so) and a duty
not to put himself in a position where the interests of the company conflict with his or her personal interest or his or her duty to
a third party. A director of a Cayman Islands company owes to the company a duty to exercise the skill they actually possess and such
care and diligence that a reasonably prudent person would exercise in comparable circumstances. It was previously considered that a director
needs not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of
his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to
the required skill and care and these authorities are likely to be followed in the Cayman Islands.
86
Shareholder
Action by Written Consent.
Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders
to act by written consent by amendment to its certificate of incorporation. Cayman Islands law and our amended and restated articles
of association provide that shareholders may approve corporate matters by way of a unanimous written resolution signed by or on
behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being
held.
Shareholder
Proposals.
Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting
of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board
of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special
meetings.
The
Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders
with any right to put any proposal before a general meeting. However, these rights may be provided in a company's articles of
association. Our amended and restated articles of association allow our shareholders holding in the aggregate 10% of all votes
attaching to all issued and outstanding shares of our company to requisition an extraordinary general meeting of the shareholders,
in which case the directors are obliged to call such meeting and to put the resolutions so requisitioned to a vote at such meeting.
However, our amended and restated articles do not provide our shareholders with any right to put any proposals before annual general
meetings or extraordinary general meetings not called by such shareholders.
As
an exempted Cayman company, we are not obliged by the Companies Act to call shareholders' annual general meetings. Our amended and restated articles
of association provides that we may (but shall not be obliged to) in each year to hold a general meeting as our annual general meeting,
and to specify the meeting as such in the notice calling it.
Cumulative
Voting
.
Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the
corporation's certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation
of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder
is entitled on a single director, which increases the shareholder's voting power with respect to electing such director. There
are no prohibitions in relation to cumulative voting under Cayman Islands law, but our amended and restated articles of association do
not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders
of a Delaware corporation.
Removal
of Directors.
Under the Delaware General Corporation Law, a director of a corporation with a classified board of directors may
be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation
provides otherwise. Under our amended and restated articles of association, directors may be removed by the affirmative vote of a simple majority of
the other directors present and voting at a board meeting. An appointment of a director may be on terms that the director shall automatically
retire from office (unless he or she has sooner vacated office) at the next or a subsequent annual general meeting or upon any specified
event or after any specified period in a written agreement between the director and us. In addition, a director's office shall
be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found to
be or becomes of unsound mind; (iii) resigns his office by notice in writing; (iv) without special leave of absence from our board, is
absent from meetings of our board for three consecutive meetings and our board resolves that his office be vacated; or (v) is removed
from office pursuant to any other provision of our amended and restated articles of association.
Transactions
with Interested Shareholders.
The Delaware General Corporation Law contains a business combination statute applicable to Delaware
corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate
of incorporation, it is prohibited from engaging in certain business combinations with an "interested shareholder" for three
years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group
who or which owns or owned 15% or more of the target's outstanding voting stock within the past three years. This has the effect
of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated
equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder,
the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested
shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with
the target's board of directors.
Cayman
Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business
combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders,
it does provide that such transactions must be entered into bona fide in the best interests of the company for a proper corporate purpose
and not with the effect of constituting a fraud on the minority shareholders.
Restructuring.
A company may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on the
grounds that the company:
(a)
is or is likely to become unable to pay its debts; and
(b)
intends to present a compromise or arrangement to its creditors (or classes thereof) either pursuant to the Companies Act, the law of
a foreign country or by way of a consensual restructuring.
87
The
Grand Court may, among other things, make an order appointing a restructuring officer upon hearing of such petition, and any
restructuring officer so appointed shall have such powers and carry out only such functions as the court may order. At any time (i)
after the presentation of a petition for the appointment of a restructuring officer but before an order for the appointment of a
restructuring officer has been made, and (ii) when an order for the appointment of a restructuring officer is made, until such order
has been discharged, no suit, action or other proceedings (other than criminal proceedings) shall be proceeded with or commenced
against the company, no resolution to wind up the company shall be passed, and no winding up petition may be presented against the
company, except with the leave of the court and subject to such terms as the court may impose. However, notwithstanding the presentation of a petition for the appointment of a
restructuring officer or the appointment of a restructuring officer, a creditor who has security over the whole or part of the
assets of the company is entitled to enforce the security without the leave of the court and without reference to the restructuring
officer appointed.
Dissolution;
Winding up.
Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution
must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the
board of directors may it be approved by a simple majority of the corporation's outstanding shares. Delaware law allows a Delaware
corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated
by the board of directors.
Under
the Companies Act, a Cayman Islands company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution
of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has
authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable
to do so.
Variation
of Rights of Shares.
Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with
the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise.
Under our
amended and restated
memorandum and articles of association, and as
permitted by Cayman Islands law, whenever our share capital is divided into more than one class of shares, we may materially adversely
vary the rights attached to any class either with the written consent of the holders of at least a simple majority of the issued
shares of that class or with the sanction of a resolution passed at a separate meeting of the holders of the shares of that class by
the holders of a simple majority of the issued shares of that class.
Amendment
of Governing Documents.
Under the Delaware General Corporation Law, a corporation's governing documents may be amended
with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides
otherwise. Under Cayman Islands law, our
amended and restated
memorandum and
articles of association may only be amended by special resolution of our shareholders.
Inspection
of Books and Records.
Under the Delaware General Corporation Law, any shareholder of a corporation may for any proper purpose
inspect or make copies of the corporation's stock ledger, list of shareholders and other books and records.
Holders of our shares will have no
general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records (save for our
memorandum and articles of association, our register of mortgages and charges and special resolutions of our shareholders).
Anti-takeover
Provisions in Our Memorandum and Articles of Association.
Some provisions of our amended and restated memorandum and articles of association
may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including
a provision that authorizes our board of directors to issue preference shares in one or more series and to designate the price, rights,
preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders.
Such
shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management
more difficult. If our board of directors decides to issue these preference shares, the price of our ordinary shares may fall and the
voting and other rights of the holders of our ordinary shares may be materially and adversely affected.
However,
under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our
amended
and restated
memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the
best interests of our company.
Rights
of Non-resident or Foreign Shareholders.
There are no limitations imposed by our
amended
and restated
memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise
voting rights on our shares. In addition, there are no provisions in our
amended and
restated
memorandum and articles of association that require our company to disclose shareholder ownership above any
particular ownership threshold.
C.
Material Contracts
Other
than in the ordinary course of our business and other than those described under this item, in "Item 7. Major Shareholders and Related Party Transactions
— B. Related Party Transactions," or elsewhere in this annual report, we have not entered into any material contract during
the two years immediately preceding the date of this annual report.
D.
Exchange Controls
The
Cayman Islands currently has no exchange control restrictions. See also "Item 4. Information on the Company — B.
Business Overview — Regulations — Regulations on Foreign Currency Exchange."
E.
Taxation
The
following summary of the material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our ordinary shares
is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change.
This summary does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences
under U.S. state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands, PRC and the United States.
To the extent that the discussion relates to matters of Cayman Islands tax law, it represents the opinion of Maples and Calder (Hong
Kong) LLP, our special Cayman Islands counsel.
88
Cayman
Islands Taxation
The
Cayman Islands currently levies no taxes on individuals or corporations based on profits, income, gains or appreciation and there is
no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government
of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within
the jurisdiction or produced before a court of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are
applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman
Islands.
Payments
of dividends and capital in respect of our ordinary shares will not be subject to taxation in the Cayman Islands and no withholding
tax will be required on the payment of a dividend or capital to any holder of our ordinary shares, nor will gains derived from the
disposal of our ordinary shares be subject to Cayman Islands income or corporation tax.
PRC
Taxation
Under
the EIT Law, which became effective on January 1, 2008 and latest revised in 2018, an enterprise established outside the PRC with "de
facto management bodies" within the PRC is considered a "resident enterprise" for PRC enterprise income tax purposes
and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. In 2009, the SAT issued SAT Circular 82
(latest revised in 2017), which provides certain specific criteria for determining whether the "de facto management body"
of a PRC controlled enterprise that is incorporated offshore is located in China. Further to SAT Circular 82, in 2011, the SAT issued
SAT Bulletin 45 (latest revised in 2018) to provide more guidance on the implementation of SAT Circular 82. In 2014, the SAT issued the
Announcement of the State Administration of Taxation on Issues Concerning the Determination of Resident Enterprises on the Basis of Their
Actual Management Bodies that provides more guidance on the implementation of Circular 82.
According
to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered a
PRC resident enterprise by virtue of having its "de facto management body" in China and will be subject to PRC enterprise
income tax on its worldwide income only if all of the following conditions are met: (a) the senior management and core management departments
in charge of its daily operations function have their presence mainly in the PRC; (b) its financial and human resources decisions are
subject to determination or approval by persons or bodies in the PRC; (c) its major assets, accounting books, company seals, and minutes
and files of its board and shareholders' meetings are located or kept in the PRC; and (d) more than half of the enterprise's
directors or senior management with voting rights habitually reside in the PRC. Although SAT Circular 82 and SAT Bulletin 45 only apply
to offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups and not those controlled by PRC individuals
or foreigners, the determination criteria set forth therein may reflect the SAT's general position on how the term "de facto
management body" could be applied in determining the tax resident status of offshore enterprises, regardless of whether they are
controlled by PRC enterprises, individuals or foreigners.
We
believe that we do not meet all of the criteria described above. We believe that neither we nor our subsidiaries outside of China are
PRC tax resident enterprises, because neither we nor they are controlled by a PRC enterprise or PRC enterprise group, and because our
records and their records (including the resolutions of the respective boards of directors and the resolutions of shareholders) are maintained
outside the PRC. However, as the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties
remain with respect to the interpretation of the term "de facto management body" when applied to our offshore entities, we
may be considered as a resident enterprise and therefore may be subject to PRC enterprise income tax at 25% on our worldwide income.
In addition, if the PRC tax authorities determine that we are a PRC resident enterprise for PRC enterprise income tax purposes, dividends
we pay to non-PRC resident enterprise holders may be subject to PRC withholding tax, and gains realized on the sale or other disposition
of ordinary shares may be subject to PRC tax, at a rate of 10% in the case of non-PRC resident enterprises or 20% in the case of non-PRC
individuals unless a reduced rate is available under an applicable tax treaty, if such dividends or gains are deemed to be from PRC sources.
Any such tax may reduce the returns on your investment in the ordinary shares.
If
we are considered a "non-resident enterprise" by the PRC tax authorities, the dividends we receive from our PRC subsidiaries
will be subject to a 10% withholding tax. The EIT Law and its implementation rules also imposes a withholding income tax of 10% on dividends
distributed by a foreign invested enterprise to its immediate holding company outside of China, if such immediate holding company is
considered as a non-resident enterprise without any establishment or place within China or if the received dividends have no connection
with the establishment or place of such immediate holding company within China, unless such immediate holding company's jurisdiction
of incorporation has a tax treaty with China that provides for a different withholding arrangement. Under the Arrangement Between the
PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect
to Taxes on Income, the dividend withholding tax rate may be reduced to 5%, if a Hong Kong resident enterprise that receives a dividend
is considered a non-PRC tax resident enterprise and holds at least 25% of the equity interests in the PRC enterprise distributing the
dividends. However, if the Hong Kong resident enterprise is not considered to be the beneficial owner of such dividends under applicable
PRC tax regulations, such dividends may remain subject to withholding tax at a rate of 10%. Under the Announcement of the State Administration
of Taxation on Issues Concerning "Beneficial Owners" in Tax Treaties, some factors are not conducive to the identification
of an applicant as a "beneficial owner", such as its business activities failing to constitute substantive business activities.
Accordingly, Lucas Star Global Limited may be able to enjoy the 5% withholding tax rate for the dividends it receives from its PRC subsidiaries
if it satisfies the relevant conditions under tax rules and regulations.
89
U.S.
Federal Income Tax Considerations
The
following is a discussion of the material U.S. federal income tax considerations relevant to the acquisition, ownership, and disposition
of our ordinary shares by U.S. Holders (as defined below) that will hold our ordinary shares as "capital assets" (generally,
property held for investment) under the U.S. Internal Revenue Code of 1986, as amended, or the "Code"). This discussion is
based upon applicable provisions of the Code, U.S. Treasury regulations promulgated thereunder, pertinent judicial decisions, interpretive
rulings of the U.S. Internal Revenue Service, or the IRS, and such other authorities as we have considered relevant, all of which are
subject to change, possibly with retroactive effect. This discussion does not address all aspects of U.S. federal income taxation that
may be important to particular investors in light of their individual investment circumstances, including investors subject to special
tax and/or reporting rules (for example, certain financial institutions; insurance companies; broker-dealers; pension plans; regulated
investment companies; real estate investment trusts; tax-exempt organizations (including private foundations); holders who are not U.S.
Holders (as defined below); holders who own (directly, indirectly, or constructively) 10% or more of the voting power or value of our
stock; investors that will hold their ordinary shares as part of a straddle, hedge, conversion, constructive sale, or other integrated
transaction for U.S. federal income tax purposes; investors that are traders in securities that have elected the mark-to-market method
of accounting; investors that have a functional currency other than the U.S. dollar), or holders that acquire ordinary shares through
the exercise of options or other convertible instruments or in connection with the provision of services, all of whom may be subject
to tax rules that differ significantly from those discussed below.
In
addition, this discussion does not address tax considerations relevant to U.S. Holders under any non-U.S., state or local tax laws, the
Medicare tax on net investment income, the one-percent excise tax on stock repurchases, estate or gift tax, or the alternative minimum
tax. Each U.S. Holder is urged to consult its tax advisors regarding the U.S. federal, state, local, and non-U.S. income and other tax
considerations of an investment in ordinary shares.
The
discussion below of U.S. federal income tax consequences applies to you if you are a "U.S. Holder." You are a U.S. Holder
if you are a beneficial owner of our ordinary shares and you are: (i) an individual who is a citizen or resident of the United States
for U.S. federal income tax purposes; (ii) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes,
created in, or organized under the law of any state of the United States, or the District of Columbia; (iii) an estate the income of
which is includible in gross income for U.S. federal income tax purposes regardless of its source; or (iv) a trust (A) the administration
of which is subject to the primary supervision of a U.S. federal or state court and which has one or more U.S. persons who have the authority
to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the
Code.
If
you are a partner in a partnership (including any entity or arrangement treated or elects to be treated as a partnership for U.S. federal
income tax purposes) that holds our ordinary shares, your tax treatment generally will depend on your status and the activities of the
partnership (or any such entity or arrangement treated as or elects to be treated as a partnership for U.S. federal income tax purposes).
Partners in a partnership (or any such entity or arrangement treated as or elects to be treated as a partnership for U.S. federal income
tax purposes) holding our ordinary shares should consult their tax advisors regarding the tax consequences of an investment in the ordinary
shares.
Dividends
Subject
to the PFIC rules discussed below, any cash distributions (including the amount of any PRC or other tax withheld) paid on our ordinary
shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will generally
be includible in your gross income as dividend income on the day actually or constructively received by you. Because we do not intend
to determine our earnings and profits under U.S. federal income tax principles, any distribution paid will generally be treated as a
dividend for U.S. federal income tax purposes by us. Dividends received by corporations on our ordinary shares may be eligible for the
dividends received deduction allowed to U.S. corporations under the Code.
A
non-corporate U.S. Holder generally may be subject to tax at preferential tax rates applicable to "qualified dividend income,"
provided that certain conditions are satisfied, including that (1) our stock is readily tradable on an established securities market
in the United States, or, in the event that we are deemed to be a PRC tax resident enterprise under the PRC tax law, we are eligible
for the benefit of the comprehensive United States-PRC income tax treaty, or the "Treaty", (2) we are neither a PFIC nor
treated as such with respect to a U.S. Holder (as discussed below) for the taxable year in which the dividend was paid and the preceding
taxable year, and (3) certain holding period requirements are met. U.S. holders are urged to consult their own tax advisors regarding
the availability of the preferential rate for any dividends paid with respect to our ordinary shares.
In
the event that we are deemed to be a PRC tax resident enterprise under PRC tax law, you may be subject to PRC withholding taxes on dividends
paid on our ordinary shares, as described under "Taxation— PRC Taxation". If we are deemed to be a PRC tax resident
enterprise, you may, however, be eligible for the benefits of the Treaty. If we are eligible for such benefits, dividends we pay on our
ordinary shares may be eligible for the reduced rates of taxation applicable to qualified dividend income, as discussed above.
90
For
U.S. foreign tax credit purposes, dividends generally will be treated as income from foreign sources and generally will constitute "passive"
category income. Depending on your particular circumstances, you may be eligible, subject to a number of complex limitations, to claim
a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on our ordinary shares. If you do not
elect to claim a foreign tax credit for foreign tax withheld, you may instead claim a deduction, for U.S. federal income tax purposes,
for the foreign tax withheld, but only for a year in which you elect to do so for all creditable foreign income taxes. The rules governing
the foreign tax credit are complex. You are urged to consult your tax advisor regarding the availability of the foreign tax credit under
your particular circumstances.
Sale
or Other Disposition of Ordinary Shares
Subject
to the PFIC rules discussed below, you generally will recognize capital gain or loss upon the sale or other disposition of our ordinary
shares in an amount equal to the difference, if any, between the amount realized upon the disposition and your adjusted tax basis in
such ordinary shares. Any capital gain or loss will be long-term capital gain or loss if you have held the ordinary shares for more than
one year, and will generally be U.S.-source gain or loss for U.S. foreign tax credit purposes. In the event that we are deemed to be
a PRC tax resident enterprise under PRC tax law, gain from the disposition of the ordinary shares may be subject to tax in the PRC, as
described under "Taxation— PRC Taxation". If such income were treated as U.S.-source income for foreign tax credit
purposes, you might not be able to use the foreign tax credit arising from any tax imposed on the sale, exchange, or other taxable disposition
of our ordinary shares unless such credit could be applied (subject to applicable limitations) against tax due on other income derived
from foreign sources. However, if PRC tax were to be imposed on any gain from the disposition of our ordinary shares, if you are eligible
for the benefits of the Treaty, you generally may be able to treat such gain as foreign-source income. The deductibility of a capital
loss may be subject to limitations. You are urged to consult your tax advisor regarding the tax consequences if a foreign tax is imposed
on a disposition of our ordinary shares, including the availability of the foreign tax credit under your particular circumstances.
PFIC
Rules
A
non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year, if
either (i) 75% or more of its gross income for such year consists of certain types of "passive" income or (ii) 50% or more
of the value of its assets (determined on the basis of a quarterly average) during such year produce or are held for the production of
passive income. Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange
of property producing such income and net foreign currency gains. For this purpose, cash is categorized as a passive asset and the company's
goodwill associated with active business activity is taken into account as an active asset. We will be treated as owning our proportionate
share of the assets and income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.
Based
on the projected composition of our assets and income, we do not anticipate being classified as a PFIC for our taxable year ending December
31, 2023. While we do not anticipate being classified as a PFIC, because the value of our assets for purposes of the PFIC asset test
will generally be determined by reference to the market price of our ordinary shares, fluctuations in the market price of our ordinary
shares may cause us to become a PFIC for the current or any subsequent taxable year. The determination of whether we will become a PFIC
will also depend, in part, on the composition of our income and assets, which will be affected by how, and how quickly, we use our liquid
assets and the cash raised in our initial public offering. Whether we are a PFIC is a factual determination and we must make a separate
determination each taxable year as to whether we are a PFIC (after the close of each taxable year). Accordingly, we cannot assure you
that we will not be classified as a PFIC for our taxable year ending December 31, 2023 or any future taxable year. If we are classified
as a PFIC for any taxable year during which you hold our ordinary shares, we generally will continue to be treated as a PFIC, unless
you make certain elections, for all succeeding years during which you hold our ordinary shares even if we cease to qualify as a PFIC
under the rules set forth above.
If
we are a PFIC for any taxable year during which you hold our ordinary shares, you will be subject to special tax rules with respect to
any "excess distribution" that you receive and any gain you realize from a sale or other disposition (including a pledge)
of our ordinary shares, unless you make a "mark-to-market" election as discussed below. Distributions you receive in a taxable
year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years
or your holding period for the ordinary shares will be treated as an excess distribution. Under these special tax rules:
●
the excess distribution
    or gain will be allocated ratably over your holding period for the ordinary shares;
●
amounts allocated to the
    current taxable year and any taxable years in your holding period prior to the first taxable year in which we are classified as a
    PFIC (a "pre-PFIC year") will be taxable as ordinary income; and
●
amounts allocated to each
    prior taxable year, other than the current taxable year or a pre-PFIC year, will be subject to tax at the highest tax rate in effect
    applicable to you for that year, and such amounts will be increased by an additional tax equal to interest on the resulting tax deemed
    deferred with respect to such years.
If
we are classified as a PFIC for any taxable year during which you hold our ordinary shares and any of our non-U.S. subsidiaries is also
a PFIC, you will be treated as owning a proportionate amount (by value) of the shares of each such non-U.S. subsidiary classified as
a PFIC for purposes of the application of these rules.
91
Alternatively,
a U.S. Holder of "marketable stock" (as defined below) in a PFIC may make a mark-to-market election for such stock of a PFIC
to elect out of the tax treatment discussed in the two preceding paragraphs. If you make a valid mark-to-market election for the ordinary
shares, you will include in income each year an amount equal to the excess, if any, of the fair market value of the ordinary shares as
of the close of your taxable year over your adjusted basis in such ordinary shares. You will be allowed a deduction for the excess, if
any, of the adjusted basis of the ordinary shares over their fair market value as of the close of the taxable year. However, deductions
will be allowable only to the extent of any net mark-to-market gains on the ordinary shares included in your income for prior taxable
years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the
ordinary shares, will be treated as ordinary income. Ordinary loss treatment will also apply to the deductible portion of any mark-to-market
loss on the ordinary shares, as well as to any loss realized on the actual sale or disposition of the ordinary shares, to the extent
that the amount of such loss does not exceed the net mark-to-market gains previously included for such ordinary shares. Your basis in
the ordinary shares will be adjusted to reflect any such income or loss amounts. If you make a mark-to-market election, tax rules that
apply to distributions by corporations which are not PFICs would apply to distributions by us (except that the preferential rates for
qualified dividend income would not apply).
The
mark-to-market election is available only for "marketable stock" which is stock that is traded in other than de minimis quantities
on at least 15 days during each calendar quarter ("regularly traded") on a qualified exchange or other market, as defined
in applicable U.S. Treasury regulations. We expect that the ordinary shares will be listed on the Nasdaq, which is a qualified exchange
for these purposes. If the ordinary shares are regularly traded, and the ordinary shares qualify as "marketable stock" for
purposes of the mark-to-market rules, then the mark-to-market election might be available to you if we were to become a PFIC.
Because,
as a technical matter, a mark-to-market election cannot be made for any lower-tier PFICs that we may own, you may continue to be subject
to the PFIC rules with respect to your indirect interest in any investments held by us that are treated as an equity interest in a PFIC
for U.S. federal income tax purposes.
We
do not currently intend to provide information necessary for U.S. Holders to make qualified electing fund elections, which, if available,
would result in tax treatment different from the general tax treatment for PFICs described above.
If
you own our ordinary shares during any taxable year that we are a PFIC, you must file an annual report with the IRS, subject to certain
exceptions based on the value of the ordinary shares held. You are urged to consult your tax advisor concerning the U.S. federal income
tax consequences of purchasing, holding, and disposing of our ordinary shares if we are or become a PFIC, including the possibility of
making a mark-to-market election.
Information
Reporting and Backup Withholding
You
may be required to submit to the IRS certain information with respect to your beneficial ownership of our ordinary shares, if such ordinary
shares are not held on your behalf by certain financial institutions. Penalties also may be imposed if you are required to submit such
information to the IRS and fail to do so.
Dividend
payments with respect to ordinary shares and proceeds from the sale, exchange or redemption of ordinary shares may be subject to information
reporting to the IRS and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes
a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding.
U.S. Holders who are required to establish their exempt status generally must provide such certification on IRS Form W-9 or by otherwise
establishing an exemption.
Backup
withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. Federal income tax liability,
and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund
with the IRS and furnishing any required information. You are urged to consult your tax advisors regarding the application of the U.S.
information reporting and backup withholding rules.
The
U.S. federal income tax discussion set forth above is included for general information only and may not be applicable depending upon
a holder's particular situation. Holders are urged to consult their tax advisors with respect to the tax consequences to them of
the acquisition, ownership and disposition of our ordinary shares and warrants, including the tax consequences under state, local, estate,
foreign and other tax laws and tax treaties and the possible effects of changes in U.S. or other tax laws.
F.
Dividends and Paying Agents
Not
applicable.
G.
Statement by Experts
Not
applicable.
H.
Documents on Display
We
previously filed a registration statement on Form F-1 (Registration No. 333-270107) with the SEC to register the issuance and sale of
our ordinary shares in our initial public offering.
We
are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers and
are required to file reports and other information with the SEC. Specifically, we are required to file annually an annual report on Form
20-F within four months after the end of each fiscal year, which is December 31.
92
All
information filed with the SEC can be obtained over the internet at the SEC's website at
www.sec.gov
. As a foreign private
issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements,
and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained
in Section 16 of the Exchange Act.
I.
Subsidiary Information
Not
applicable.
J.
Annual Report to Security Holders
Not
applicable.
ITEM
11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Credit
Risk
Financial
instruments that potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents, and accounts
receivable. We place substantially all of our cash with financial institutions with high credit ratings and quality in China. In the
event of bankruptcy of one of these financial institutions, we may not be able to claim our cash and demand deposits back in full. We
continue to monitor the financial strength of the financial institutions. There has been no recent history of default in relation to
these financial institutions.
For
accounts receivable, credit risk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit
risk through in-house research and analysis of the Chinese economy and the underlying obligors and transaction structures. We identify
credit risk collectively based on industry, geography and customer type. In measuring the credit risk of our sales to our customers,
we mainly reflect the "probability of default" by the customer on its contractual obligations and consider the current financial
position of the customer and the exposures to the customer and its likely future development.
Liquidity
Risk
We
are also exposed to liquidity risk which is risk that we are unable to provide sufficient capital resources and liquidity to meet our
commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures.
When necessary, we will turn to other financial institutions and related parties to obtain short-term funding to meet the liquidity shortage.
Foreign
Exchange Risk
Our
operations are primarily in China. Our reporting currency is denominated in RMB. We are exposed to currency risk primarily through capital
transaction which give rise to receivables, payables and cash balances that are denominated in currencies other than the functional currency
of the operations to which the transactions relate. Thus, results of operations may be impacted by exchange rate fluctuations between
RMB and US$. We incurred and recognized foreign currency exchange l
oss of RMB80,273, foreign currency
exchange gain of RMB147,368
and RMB1,636
for the years ended December 31, 2021, 2022 and 2023, respectively, as a result of changes in the exchange rate.
ITEM
12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A.
Debt Securities
Not
applicable.
B.
Warrants and Rights
Not
applicable.
C.
Other Securities
Not
applicable.
93
PART
II
ITEM
13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM
14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Material
Modifications to the Rights of Security Holders
None.
See "Item 10. Additional Information — B. Memorandum and Articles of Association — Ordinary Shares" for a
description of the rights of securities holders, which remain unchanged.
Use
of Proceeds
The
following "Use of Proceeds" information relates to the registration statement on Form F-1, as amended (File Number No. 333-270107)
(the "F-1 Registration Statement") in relation to our initial public offering of 1,500,000 ordinary shares, at an initial
offering price of US$4.0 per ordinary share. Our initial public offering was completed in March 2024. Joseph Gunnar & Co., LLC acted
as the sole book-running manager for our initial public offering.
The
F-1 Registration Statement was declared effective by the SEC on March 4, 2024. The total expenses incurred for our company's account
in connection with our initial public offering was approximately US$2.0 million, which included US$0.4 million in underwriting discounts
and commissions for the initial public offering for our initial public offering. We raised approximately US$4.0 million in net proceeds
from the issuance of new shares from the initial public offering. None of the transaction expenses included payments to directors or
officers of our company or their associates, persons owning more than 10% or more of our equity securities or our affiliates. None of
the net proceeds from the initial public offering were paid, directly or indirectly, to any of our directors or officers or their associates,
persons owning 10% or more of our equity securities or our affiliates.
We
still intend to use the proceeds from our initial public offering as disclosed in the F-1 Registration Statement.
ITEM
15. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
As
required by Rule 13a-15 under the Exchange Act, management, including our chief executive officer and our chief financial officer, has
evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report. Disclosure
controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports
we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules
and forms of the SEC. Disclosure controls and procedures include, without limitations, controls and procedures designed to ensure that
information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated
to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate
to allow timely decisions regarding our required disclosures.
Based
on the foregoing, our chief executive officer and our chief financial officer have concluded that, as of December 31, 2023, our disclosure
controls and procedures were one material weakness in our internal control over the financial statement reporting process.
Management's
Annual Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act. As required by Rule 13a-15(c) of the Exchange Act, our management conducted an evaluation of our
company's internal control over financial reporting as of December 31, 2023 based on the framework in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management
concluded that our internal control over financial reporting was not effective due to one material weakness in our internal control over
the financial statement reporting process as of December 31, 2023.
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risks that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Attestation
Report of the Registered Public Accounting Firm
This
annual report on Form 20-F does not include an attestation report of our independent registered public accounting firm due to rules of
the SEC where domestic and foreign registrants that are "emerging growth companies" which we are, are not required to provide
the auditor attestation.
Internal
Control Over Financial Reporting
Prior
to the Initial Public Offering, we have been a private company with limited accounting personnel and other resources to address our internal
controls and procedures. Our independent registered public accounting firm had not conducted an audit of our internal control over financial
reporting. However, in connection with the audits of our consolidated financial statements for the years ended and as of December 31,
2021, 2022 and 2023, we and our independent registered public accounting firm identified the following "material weaknesses"
in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies.
A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis.
The
material weakness that has been identified relates to the lack of accounting staff and resources with appropriate knowledge of the U.S.
GAAP and SEC reporting and compliance requirements to design and implement formal period-end financial reporting policies and procedures
to address complex U.S. GAAP technical accounting issue in accordance with U.S. GAAP and the SEC requirements.
In
response to the material weaknesses identified, we are in the process of implementing a number of measures to address hiring additional
qualified accounting and financial personnel with appropriate knowledge and experience in U.S. GAAP accounting and SEC reporting, and
organizing regular training for our accounting staffs, especially training related to U.S. GAAP and SEC reporting requirements.
We
have established an audit committee and plan to adopt additional measures to improve our internal control over financial reporting, including,
among others, creating U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed and updated, on a regular
basis, to the latest US GAAP accounting standards, and strengthening corporate governance.
However,
we cannot assure you that we will remediate our material weaknesses in a timely manner. See "Risk Factors—Risks Relating
to Our Business and Industry—If we fail to implement and maintain an effective system of internal controls, we may be unable to
accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and the market
price of our shares may be materially and adversely affected."
In
response to this material weakness, we are in the process of implementing a number of measures to address the material weakness identified,
including but not limited to: (i) recruitment of additional qualified accounting and financial personnel with appropriate knowledge and
experience in U.S. GAAP accounting and SEC reporting, and (ii) organization of regular training for our accounting staff, especially
training related to U.S. GAAP and SEC reporting requirements.
We have established an audit
committee and plan to adopt additional measures to improve our internal control over financial reporting, including, among others, creating
U.S. GAAP accounting policies and procedures manual, which will be maintained, reviewed and updated, on a regular basis, to the latest
U.S. GAAP accounting standards, and strengthening corporate governance. However, we cannot assure you that
these
measures will be sufficient to remediate our material weakness in time, or at all, or that
we will not identify additional material
weaknesses or significant deficiencies in the future. In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley
Act, our ordinary shares may not be able to remain listed on the Nasdaq. See "Item 3. Key Information — D. Risk Factors —
Risks Related to Our Business and Industry — If we fail to implement and maintain an effective system of internal controls, we may
be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud, and investor confidence and
the market price of our shares may be materially and adversely affected."
As
a company with less than US$1.235 billion in net revenues for our last fiscal year, we qualify as an "emerging growth company"
pursuant to the Jumpstart Our Business Startups Act ("JOBS Act"). An emerging growth company may take advantage of specified
reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption
from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth
company's internal control over financial reporting.
94
Changes
in Internal Control over Financial Reporting
Other
than the remediation of material weaknesses as described above, there has been no change in our internal controls over financial reporting.
ITEM
16. [RESERVED]
ITEM
16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our
board of directors has determined that Mr. Jeremy Wegerer, an independent director (under the standards set forth in Nasdaq Stock Market
Rule 5605(a)(2) and Rule 10A-3 under the Exchange Act) and chairman of our audit committee, is an audit committee financial expert.
ITEM
16B. CODE OF ETHICS
Our
board of directors has adopted a code of business conduct and ethics, which is applicable to all of our directors, officers, and employees.
Our code of business conduct and ethics is publicly available on our website at https://ir.lucasgc.com/governance/.
ITEM
16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The
following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered
and billed by Marcum Asia CPAs LLP, our independent registered public accountant firm, since 2021.
For the years ended December 31,
2021
2022
2023
(in thousands)
RMB
RMB
RMB
US$
Audit fees(1)
-
3,656
3,406
487
(1)
"Audit fees" means the aggregate fees incurred
    in each of the fiscal years listed for professional services rendered by our principal auditor for the audit or review of our annual
    financial statements or quarterly financial information and review of documents filed with the SEC.
The
audit committee of the Board of Directors on an annual basis reviews audit and non-audit services performed by the independent auditors.
All audit and non-audit services are pre-approved by the audit committee, which considers, among other things, the possible effect of
the performance of such services on the auditors' independence.
ITEM
16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not
applicable.
ITEM
16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
ITEM
16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not
applicable.
95
ITEM
16G. CORPORATE GOVERNANCE
As
a Cayman Islands exempted company listed on the Nasdaq Capital Market, we are subject to the Nasdaq Stock Market Rules corporate
governance listing standards. However, Nasdaq Stock Market Rules permit a foreign private issuer like us to follow the corporate
governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country,
may differ significantly from the Nasdaq Stock Market Rules. We have not relied on any home country practice exemption as of the
date of this annual report. However, we may choose to follow certain home country practices in the future, which may cause our
shareholders to be afforded less protection than they would otherwise enjoy under the Nasdaq Stock Market's corporate
governance listing standards applicable to U.S. domestic issuers. See "Item 3. Key Information — D. Risk Factors
— Risks Related to our Ordinary Shares — We are a foreign private issuer within the meaning of the rules under the
Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public
companies."
ITEM
16H. MINE SAFETY DISCLOSURE
Not
applicable.
ITEM
16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION
Not
applicable.
ITEM
16J. INSIDER TRADING POLICIES
Not
applicable.
ITEM
16K. CYBERSECURITY
We
have developed and implemented a cybersecurity risk management policy designed to protect the confidentiality, integrity, and availability
of our critical systems and information.
Cybersecurity Risk Management and Strategy
The audit
committee of the Board of Directors will oversee this policy and will be responsible for the implementation of the Company's
oversight, programs, procedures, and policies related to cybersecurity, cybersecurity risks, information security, and data
privacy.
Management shall report to the
audit committee on the Company's and its subsidiaries' strategy, risks, metrics and operations relating to cybersecurity and
information security matters, including significant cybersecurity and information security-related projects and initiatives and related
progress, the integration and alignment of such strategy with the Company's overall business and strategy, and trends that may affect
such strategy or operations.
Team leads from various departments
of the Company have been identified under this Policy to report to the Company's Chief Financial Officer and oversee the strategy
of the Company. While these named leaders will oversee the strategy pursuant to this Policy, cybersecurity is the responsibility of all
business stakeholders and requires the cooperation and compliance of all personnel.
All employees shall exercise professional
judgement in using computing devices and network resources connected to the cyberspace. All information, physical and intellectual properties
stored on electric and computing devices or existing within the cyberspace remain the sole property of the Company. Therefore, employees
must neither access nor share confidential and proprietary information prior to receiving consent from management or the Company's
directors and officers.
We and certain of our third-party
service providers may be subject to cyberattacks and security due to, for example, computer malware, viruses, computer hacking, credential
stuffing, and phishing attacks. We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity
incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy,
results of operations, or financial condition. However, because of our prominence, we believe that we are a particularly attractive target
for such attacks, and we expect to experience cyberattacks and security incidents in the future.
Cybersecurity Governance
Our Board of
Directors considers cybersecurity risk as part of its risk oversight function and has delegated to the audit committee oversight of
our cybersecurity and data protection program. The audit committee shall report regularly to the Board concerning its matters
covered under this Policy and advising the Board of any developments that the audit committee believes should have Board of Directors'
consideration. The audit committee shall also annually review and assess the adequacy of this policy and recommend any proposed
changes to the Board of Directors for approval.
PART
III
ITEM
17. FINANCIAL STATEMENTS
We
have elected to provide financial statements pursuant to Item 18.
ITEM
18. FINANCIAL STATEMENTS
The
consolidated financial statements of Lucas GC Limited and its subsidiaries are included at the end of this annual report.
ITEM
19. EXHIBITS
Exhibit
Number
Description
    of Document
1.1
Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated herein by reference to Exhibit
    3.3 to the Form F-1 filed on February 15, 2024 (File No. 333-270107))
2.1
Registrant's Specimen Certificate for Ordinary Shares (incorporated herein by reference to Exhibit 4.1 to the Form F-1 filed on February 15, 2024 (File No. 333-270107))
2.3*
Description of Securities
4.1
Form of Indemnification Agreement between the Registrant and each of its directors and executive officers (incorporated herein by reference to Exhibit 10.4 to the Form F-1 filed on February 15, 2024 (File No. 333-270107))
4.2
Form of Employment Agreement Between the Registrant and its directors and executive officers (incorporated herein by reference to Exhibit 10.1 to the Form F-1 filed on February 15, 2024 (File No. 333-270107))
8.1*
List of Significant Subsidiaries of the Registrant
11.1
Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 99.1 to the Form F-1 filed on February 15, 2024 (File No. 333-270107))
12.1*
Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2*
Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1**
Certification by Principal Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2**
Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1*
Consent of Maples and Calder (Hong Kong) LLP
15.2*
Consent of Beijing Dacheng Law Offices, LLP
101.INS*
Inline
    XBRL Instance Document
101.SCH*
Inline
    XBRL Taxonomy Extension Schema Document
101.CAL*
Inline
    XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
Inline
    XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
Inline
    XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
Inline
    XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover
    Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*
Filed herewith
**
Furnished herewith
96
SIGNATURES
The
registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused
and authorized the undersigned to sign this annual report on its behalf.
Lucas GC Limited
By:
/s/
    Howard Lee
Name:
Howard Lee
Title:
Chief Executive Officer
Date:
April 29, 2024
97
LUCAS
GC LIMITED
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
PAGE(S)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID:
5395
)
F-2
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2022 and 2023
F-3
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
F-4
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S (DEFICIT)/EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-7
F-
1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID
5395
)
To
the Shareholders and Board of Directors of Lucas GC Limited
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Lucas GC Limited (the "Company") as of December 31, 2022 and
2023, the related consolidated statements of income and comprehensive income
,
changes in shareholders' (deficit)/equity
and cash flows for each of the three years in the period ended December 31, 2023, 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 as of December 31, 2022 and 2023, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
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/
Marcum Asia CPAs LLP
Marcum
Asia CPAs LLP
We
have served as the Company's auditor since 2022.
New
York, New York
April
29, 2024
NEW
YORK OFFICE ●  7 Penn Plaza ● Suite 830 ● New York, New York ● 10001
Phone
646.442.4845 ● Fax 646.349.5200 ● www.marcumasia.com
F-
2
LUCAS
GC LIMITED
CONSOLIDATED
BALANCE SHEETS
(All
amounts in thousands, except for share and per share data, or otherwise noted)
As of December 31,
2022
2023
RMB
RMB
US$
ASSETS
Current assets
Cash and cash equivalents
48,473
30,123
4,243
Restricted cash
841
100
14
Short-term investments
4
-
-
Accounts receivable, net
102,762
28,144
3,964
Advance to suppliers, net
39,553
164,802
23,210
Deferred offering costs
2,503
6,541
921
Prepaid expenses and other current assets
1,614
1,626
229
Total current assets
195,750
231,336
32,581
Non-current assets
Software and equipment, net
40,496
48,299
6,803
Operating lease right-of-use assets, net
784
84
12
Deferred tax assets
4,222
12,103
1,705
Total non-current assets
45,502
60,486
8,520
TOTAL ASSETS
241,252
291,822
41,101
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings
5,921
39,381
5,547
Accounts payable
86,983
35,217
4,960
Contract liabilities
24,706
13,552
1,909
Income tax payables
137
131
18
Amounts due to related parties
2,156
3,097
436
Operating lease liabilities, current
742
86
12
Accrued expenses and other current liabilities
2,728
3,766
530
Total current liabilities
123,373
95,230
13,412
Operating lease liabilities, non-current
86
-
-
Total non-current liabilities
86
-
-
TOTAL LIABILITIES
123,459
95,230
13,412
Commitments and contingencies (Note 17)
Shareholders' equity
Ordinary shares (US$
0.000005
par value;
10,000,000,000
and
10,000,000,000
shares authorized as of December 31, 2022 and 2023;
78,063,300
and
78,063,300
shares issued and outstanding as of December 31, 2022 and 2023, respectively)
3
3
-
Subscription receivables
(
3
)
(
3
)
-
Additional paid-in capital
113,554
113,554
15,994
Statutory reserve
11,068
19,559
2,755
(Accumulated deficit)/Retained earnings
(
8,753
)
61,041
8,597
Accumulated other comprehensive loss
(
12
)
(
11
)
(
2
)
Total Lucas GC Limited shareholders' equity
115,857
194,143
27,344
Non-controlling interests
1,936
2,449
345
Total shareholders' equity
117,793
196,592
27,689
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
241,252
291,822
41,101
*
The shares and per share information are presented on a retroactive basis to reflect the reorganization, as well as the stock split on
May 29, 2023.
The
accompanying notes are an integral part of these consolidated financial statements.
F-
3
LUCAS
GC LIMITED
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(All
amounts in thousands, except for share and per share data, or otherwise noted)
For the years ended December 31,
2021
2022
2023
RMB
RMB
RMB
US$
Revenues
Recruitment service
497,486
413,047
659,049
92,825
Outsourcing service
113,774
301,890
713,957
100,559
Others
40,985
51,634
100,952
14,219
Total revenues
652,245
766,571
1,473,958
207,603
Cost of revenues
(
473,153
)
(
551,373
)
(
1,055,406
)
(
148,651
)
Gross profit
179,092
215,198
418,552
58,952
Operating expenses
Selling and marketing expenses
(
33,304
)
(
55,974
)
(
84,917
)
(
11,960
)
General and administrative expenses
(
38,428
)
(
47,733
)
(
108,376
)
(
15,264
)
Research and development expenses
(
70,246
)
(
79,868
)
(
157,543
)
(
22,189
)
Total operating expenses
(
141,978
)
(
183,575
)
(
350,836
)
(
49,413
)
Income from operations
37,114
31,623
67,716
9,539
Other (expenses) income
Financial (expenses) income, net
(
68
)
63
(
893
)
(
126
)
Other income, net
2,514
4,130
3,478
490
Total other income, net
2,446
4,193
2,585
364
Income before income tax benefit
39,560
35,816
70,301
9,903
Income tax benefit
243
595
7,880
1,110
Net income
39,803
36,411
78,181
11,013
Less: Net income attributable to non-controlling interests
(
294
)
(
269
)
(
513
)
(
72
)
Net income attributable to Lucas GC Limited
39,509
36,142
77,668
10,941
Less: Deemed dividend to redeemable preferred shareholders
(
568
)
-
-
-
Accretion of subsidiary' redeemable preferred shares to redemption value
(
1,325
)
(
2,906
)
-
-
Net income attributable to Lucas GC Limited's ordinary shareholders
37,616
33,236
77,668
10,941
Net income
39,803
36,411
78,181
11,013
Other comprehensive income, net of tax of nil:
Foreign currency translation difference, net of tax of nil
(
81
)
148
1
-
Total comprehensive income
39,722
36,559
78,182
11,013
Less: total comprehensive income attributable to non-controlling interests
(
294
)
(
269
)
(
513
)
(
72
)
Comprehensive income attributable to the Lucas GC Limited
39,428
36,290
77,669
10,941
Net income per share:
Basic
0.48
0.43
0.99
0.14
Diluted
0.48
0.43
0.99
0.14
Weighted average shares outstanding used in calculating basic and diluted income per share:
Basic
78,063,300
78,063,300
78,063,300
78,063,300
Diluted
78,063,300
78,063,300
78,063,300
78,063,300
*
The shares and per share information are presented on a retroactive basis to reflect the reorganization, as well as the stock split on
May 29, 2023.
The
accompanying notes are an integral part of these consolidated financial statements.
F-
4
LUCAS
GC LIMITED
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT) EQUITY
(All
amounts in thousands, except for share and per share data, or otherwise noted)
Ordinary Shares
Subscription
Additional paid-in
Statutory
Accumulated (deficit)/
Accumulated other comprehensive
Total Lucas GC Limited shareholders' (deficit)/
Non-controlling
Total shareholders'
Share
Amount
receivables
capital
reserve
equity
loss
equity
interests
(deficit)/equity
Balance as of January 1, 2021
78,063,300
3
(
3
)
-
1,771
(
70,309
)
(
79
)
(
68,617
)
18
(
68,599
)
Net income
-
-
-
-
-
39,509
-
39,509
294
39,803
Appropriation to statutory reserve
-
-
-
-
4,497
(
4,497
)
-
-
-
-
Deemed dividend under the modification
-
-
-
-
-
(
568
)
-
(
568
)
-
(
568
)
Accretion of subsidiary's redeemable preferred shares to redemption value
-
-
-
-
-
(
1,325
)
-
(
1,325
)
-
(
1,325
)
Foreign currency translation
-
-
-
-
-
-
(
81
)
(
81
)
-
(
81
)
Balance as of December 31, 2021
78,063,300
3
(
3
)
-
6,268
(
37,190
)
(
160
)
(
31,082
)
312
(
30,770
)
Net income
-
-
-
-
-
36,143
-
36,143
268
36,411
Appropriation to statutory reserve
-
-
-
-
4,800
(
4,800
)
-
-
-
-
Accretion of subsidiary's redeemable preferred shares to redemption value
-
-
-
-
-
(
2,906
)
-
(
2,906
)
-
(
2,906
)
Reclassification from mezzanine equity to permanent equity
-
-
-
113,554
-
-
-
113,554
1,356
114,910
Foreign currency translation
-
-
-
-
-
-
148
148
-
148
Balance as of December 31, 2022
78,063,300
3
(
3
)
113,554
11,068
(
8,753
)
(
12
)
115,857
1,936
117,793
Net income
-
-
-
-
77,668
-
77,668
513
78,181
Appropriation to statutory reserve
-
-
-
8,491
(
8,491
)
-
-
-
-
Adoption of ASC326
-
-
-
-
617
-
617
-
617
Foreign currency translation
-
-
-
-
-
1
1
-
1
Balance as of December 31, 2023
78,063,300
3
(
3
)
113,554
19,559
61,041
(
11
)
194,143
2,449
196,592
The
accompanying notes are an integral part of these consolidated financial statements, as well as the stock split on May 29, 2023
*
The shares and per share information are presented on a retroactive basis to reflect the reorganization.
F-
5
LUCAS
GC LIMITED
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(All
amounts in thousands, except for share and per share data, or otherwise noted)
For the years ended December 31,
2021
2022
2023
RMB
RMB
RMB
US$
Cash flows from operating activities:
Net income
39,803
36,411
78,181
11,013
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
1,526
3,346
4,308
607
Amortization of right-of-use assets
-
647
700
99
Provision for credit losses
5,264
91
11,713
1,650
Gain on short-term investments
(
133
)
(
500
)
-
-
Changes in operating assets and liabilities:
Accounts receivable
(
22,901
)
(
44,918
)
63,697
8,972
Advance to suppliers, net
(
59,617
)
20,548
(
125,425
)
(
17,666
)
Amounts due from related parties
21
-
-
-
Prepaid expenses and other current assets
(
42
)
(
1,457
)
(
13
)
(
2
)
Deferred tax assets, net
(
702
)
(
616
)
(
7,880
)
(
1,110
)
Accounts payable
60,126
(
16,087
)
(
51,767
)
(
7,291
)
Contract liabilities
34,381
(
9,828
)
(
11,154
)
(
1,571
)
Income tax payables
454
(
393
)
(
6
)
(
1
)
Amounts due to related parties
1,624
191
940
132
Operating lease liabilities
-
(
222
)
(
742
)
(
105
)
Accrued expenses and other current liabilities
821
(
2,333
)
1,040
145
Net cash provided by/ (used in) operating activities
60,625
(
15,120
)
(
36,408
)
(
5,128
)
Cash flows from investing activities:
Purchases of software and equipment
(
24,137
)
(
13,729
)
(
12,101
)
(
1,704
)
Maturities of short-term investments
26,802
82,280
4
1
Purchases of short-term investments
(
50,647
)
(
52,232
)
-
-
Proceeds from short-term investments
133
500
-
-
Net cash (used in)/ provided by investing activities
(
47,849
)
16,819
(
12,097
)
(
1,703
)
Cash flows from financing activities:
Proceeds from short-term borrowings
-
9,089
63,256
8,909
Repayments of short-term borrowings
-
(
3,168
)
(
29,796
)
(
4,197
)
Payments of offering costs related to initial public offering ("IPO")
-
(
2,503
)
(
4,038
)
(
569
)
Issuance of preferred shares
26,500
-
-
-
Net cash provided by financing activities
26,500
3,418
29,422
4,143
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(
81
)
148
(
8
)
(
1
)
Net increase/(decrease) in cash, cash equivalents and restricted cash:
39,195
5,265
(
19,091
)
(
2,689
)
Cash, cash equivalents and restricted cash at the beginning of year
4,854
44,049
49,314
6,946
Cash, cash equivalents and restricted cash at the end of year
44,049
49,314
30,223
4,257
Supplemental disclosure of cash flow information:
Income tax paid
-
415
6
1
Interest paid
-
30
919
129
Supplemental schedule of non-cash investing and financing activities:
Deemed dividend to redeemable preferred shareholders
568
-
-
-
Accretion of subsidiary' redeemable preferred shares to redemption value
1,325
2,906
-
-
Reclassification from mezzanine equity to permanent equity
-
114,910
-
-
Obtaining right-of-use assets in exchange for operating lease liabilities and prepaid expenses
-
1,430
-
-
The
accompanying notes are an integral part of these consolidated financial statements.
F-
6
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
1.
Principal activities and organization
Lucas
GC Limited ("Lucas", or the "Company") was incorporated under the laws of the Cayman Islands on August 15, 2022
as an exempted company with limited liability. The Company primarily engages in providing services through its directly owned subsidiaries
(collectively, the "Group") in the People's Republic of China ("PRC" or "China").
Lucas
owns
100
% equity interest of Lucas Star Holding Limited ("Lucas BVI"), which was incorporated on August 4, 2022 as investment
holding companies in British Virgin Islands. Lucas Star Global Limited ("Lucas HK"), a wholly subsidiary of Lucas BVI, was
incorporated under the laws of Hong Kong, China on October 21, 2022.
The
Company commenced its operation through Lucas Group China Limited ("Lucas China") since 2011. Lucas China was incorporated
under the laws of PRC on May 17, 2011.
In
preparation for its IPO, the Group conducted a reorganization (the "Reorganization") from August 2022 to November 2022, which
involved the following steps:
● Formation
of Lucas, Lucas BVI and Lucas HK;
● Transfer
of
100
% equity interests of Qingdao Luogaoshi Consulting Co., Ltd. ("Qingdao Luogaoshi") from Lucas China to Lucas HK at
the consideration of RMB
100
;
● Qingdao
Luogaoshi made capital injection of RMB
386.4
million to Lucas China to obtain its
99
% equity interest.
The
shareholders and their respective equity interests in the entities remain similar immediately before and after the capital injection
in Lucas China. Accordingly, the combination has been treated as a corporate restructuring (reorganization) of entities under common
control and thus the current capital structure has been retroactively presented in prior periods as if such structure existed at that
time, the entities under common control are presented on a combined basis for all periods to which such entities were under common control.
Since all of the subsidiaries were under common control for the entirety of the year ended December 31, 2021, the results of these subsidiaries
are included in the financial statements for both periods, and the equity has been restated to reflect the change as well.
Stock
Split
On
May 29, 2023,
the Company's board of directors approved to effect a one-for-two stock split of its ordinary shares (the "Stock
Split"). As a result of the Stock Split, each ordinary share of US$0.00001 was automatically split to two issued and outstanding
ordinary shares with par value of US$0.000005 each without any action on the part of the shareholder.
All historical share numbers and
per share amounts have been retrospectively restated to reflect such Stock Split for all periods presented.
As
of December 31, 2023, the Company's major subsidiaries are as follows:
Name
Date
    of Incorporation
Place
    of Incorporation
Percentage
    of Effective Ownership
Principal
    Activities
Lucas China
May 17, 2011
PRC
99
%
Recruitment, Consulting and Information Technology
Luogaoshi
    Technology (Beijing) Co., Ltd. ("Luogaoshi")
May 26, 2015
PRC
100
% owned by Lucas China
Recruitment,
    Consulting and Information Technology
Qingdao
    Luogaoshi Consulting Co., Ltd.
June 1, 2017
PRC
100
%
Recruitment,
    Consulting and Information Technology
Qingdao
    Enshi Technology Co., Ltd.
December 30, 2019
PRC
100
% owned by Lucas China
Recruitment,
    Consulting and Information Technology
Jiangxi
    Magellan Technology Co., Ltd.
June 18, 2020
PRC
100
% owned by Lucas China
Recruitment,
    Consulting and Information Technology
Lucas
    Media Co., Ltd.
July 1, 2016
PRC
100
% owned by Lucas China
Media
    and Entertainment business
Luogaoshi
    Enterprise Consulting (Tianjin) Co., Ltd.
April 6, 2017
PRC
100
% owned by Lucas China
Recruitment,
    Consulting and Information Technology
Shanghai
    Luojiashi Technology Co., Ltd
November 2, 2021
PRC
100
% owned by Lucas China
Recruitment,
    Consulting and Information Technology
Lucas
    GC Limited ("Lucas GC")
April 12, 2016
Hongkong,
    PRC
100
% owned by Lucas China
Management
    consulting business
F-
7
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
2.
Summary Of Significant Accounting Policies
(a)
Basis of presentation and principles of consolidation
The
consolidated financial statements include the financial statements of the Group. The accompanying consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for
information pursuant to the rules and regulations of the Securities Exchange Commission ("SEC").
All
intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
(b)
Use of estimates
The
preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet
date, and the reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes.
Significant accounting estimates include, but not limited to, the allowance for doubtful accounts receivable, useful life of software
and equipment, the realization of deferred income tax assets, and valuation of redeemable preferred shares. Changes in facts and circumstances
may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated
financial statements.
(c)
Foreign currency
The
functional currency of the Company and Lucas BVI is the United States dollar ("US$") and its reporting currency is the Renminbi
(the "RMB"). The functional currency of the Company's PRC subsidiaries is the RMB as determined based on the criteria
of ASC 830, Foreign Currency Matters.
The
financial statements of the Company and Lucas BVI are translated from the functional currency to the reporting currency, the RMB. Transactions
denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing on the transaction dates.
Monetary
assets and liabilities denominated in foreign currencies are re-measured at the exchange rates prevailing at the balance sheet date.
Non-monetary items that are measured in terms of historical costs in foreign currency are re-measured using the exchange rates at the
dates of the initial transactions. Exchange gains and losses are included in the consolidated statements of income and comprehensive
income.
The
Group uses the average exchange rate for the year and the exchange rate at the balance sheet date to translate the operating results
and financial position, respectively. Equity accounts other than earnings generated in current year are translated into RMB at the appropriate
historical rates. Translation differences are recorded in accumulated other comprehensive income, a component of shareholders'
(deficit) equity.
(d)
Convenience translation
Amounts
in US$ are presented for the convenience of the reader and are translated at the noon buying rate of US$
1.00
to RMB
7.0999
on December
31, 2023, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation
is made that the RMB amounts could have been, or could be converted, realized or settled into US$ at such rate or at any other rate.
(e)
Cash and cash equivalents
Cash
and cash equivalents consist of cash on hand and demand deposit placed with banks, which have original maturities of less than three
months and unrestricted as to withdrawal and use.
(f)
Restricted cash
The
Group's restricted cash amounted to RMB
841
and RMB
100
as of December 31, 2022 and 2023, respectively. The balance of fiscal year
2022 was mainly due to the lawsuit resulting in the freezing of bank account. However, the lawsuit has been ended on December 28, 2022,
with the unfreezing time of the bank lags behind. The balance of fiscal year 2023 was due to the bank frozen an investment amount injected
by Lucas HK to Lucas China under the supervision of IPO process. As of the date of issuance of these consolidated financial statements,
the bank has initiated unfreeze process.
F-
8
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
2.
Summary
                                            of significant accounting policies (cont.)
(g)
Short-term investments
Short-term
investments consist primarily of wealth management products issued by commercial banks and investment banks, which contains variable
interest indexed to the performance of underlying assets and redeemable on demand. These investments are stated at fair value. Changes
in the fair value are reflected in other income in the consolidation statements of income and comprehensive income. For the years ended
December 31, 2021, 2022 and 2023, the Group recognized investment income from its short-term investments of RMB
133
, RMB
500
and
nil
, respectively.
(h)
Accounts receivable, net
Accounts
receivable, net are stated at the original amount less allowances for doubtful accounts. Accounts receivable are recognized in the period
when the Group has provided services to its customers and when its right to consideration is unconditional. The Group reviews the accounts
receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances.
The
Group considers many factors in assessing the collectability of its receivables, such as the age of the amounts due, the customer's
payment history, credit-worthiness and other specific circumstances related to the accounts. An allowance for doubtful accounts is recorded
in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts
have been exhausted.
Adoption
of Accounting Standards Update ("ASU") 2016-13
In
June 2016, the FASB issued ASU 2016-13: Financial Instruments-Credit Losses (Topic 326), which requires the measurement of all expected
credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and
supportable forecasts. Subsequently, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, to clarify that receivables
arising from operating leases are within the scope of lease accounting standards. Further, the FASB issued ASU 2019-04, ASU 2019-05,
ASU 2019-10, ASU 2019-11 and ASU 2020-02 to provide additional guidance on the credit losses standard. For all other entities, the amendments
for ASU 2016-13 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years,
with early adoption permitted. Adoption of the ASUs is on a modified retrospective basis. The Group adopted ASU 2016-13 from January
1, 2023 using modified-retrospective transition approach with a cumulative-effect adjustment to shareholders' equity amounting
to RMB
617
gain recognized as of January 1, 2023.
(i)
Advance to suppliers, net
Advance
to suppliers is prepayment to supplier in the procurement of technology development outsourcing services, accounts recharge for recruitment
services, promotion services and other services. Advance payment depends on specific circumstances, including the industry practice,
negotiations with suppliers, security for steady supply of service, and the delivery time of services received from suppliers after the
advance payment. Advance to suppliers is settled when the services are provided and accepted by the Group. The Group reviews its advance
to suppliers on a periodic basis and determines the adequacy of credit losses when amounts outstanding are not likely to be collected in
cash or utilized against receive of services.
(j)
Software and equipment, net
Software
consists of technology purchased externally. Software and equipment are stated at cost less accumulated depreciation and impairment,
if any, and depreciated on a straight-line basis over the estimated useful lives of the assets. Cost represents the purchase price of
the asset and other costs incurred to bring the asset into its intended use. Estimated useful lives are as follows:
Category
Estimated
    useful lives
Software
10
years
Computer
    and electronic equipment
3
years
Office
    furniture and equipment
5
years
Repair
and maintenance costs are charged to expenses as incurred, whereas the cost of renewals and betterment that extends the useful lives
of software and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded
by removing the costs, accumulated depreciation and impairment with any resulting gain or loss recognized in the consolidated statements
of income and comprehensive income.
F-
9
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
2.
Summary
                                            of significant accounting policies (cont.)
(k)
Fair value measurement
Accounting
guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required
or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and
it considers assumptions that market participants would use when pricing the asset or liability.
Accounting
guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based
upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs are:
●
Level
                                            1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or
                                            liabilities in active markets.
●
Level
                                            2—Include other inputs that are directly or indirectly observable in the marketplace.
●
Level
                                            3—Unobservable inputs which are supported by little or no market activity.
ASC
820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach;
and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical
or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value
amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach
is based on the amount that would currently be required to replace an asset.
The
Group's financial instruments include cash and cash equivalents, short-term investments, accounts receivables, advance to suppliers,
prepaid expenses and other current assets, accounts payable, amount due to related parties, and accrued expenses and other current liabilities.
The carrying values of these financial instruments approximate their fair values due to their short-term maturities. The carrying amount
of the long-term borrowing approximates its fair values since it bears an interest rate which approximates market interest rate.
(l)
Short-term borrowings
Short-term borrowings represent
the Group's borrowings from commercial banks for the Group's working capital. Short-term borrowings include borrowings with
maturity terms shorter than one year.
(m)
Revenue recognition
The
Group recognizes revenues pursuant to ASC 606, Revenue from Contracts with Customers ("ASC 606"). In accordance with ASC
606, the Group recognizes revenue to depict the transfer of promised services to customers in an amount that reflects the consideration
to which the Group expects to receive in exchange for those services, reduced by value added tax. Net revenues are presented net of business
tax and surcharges. To achieve the core principle of this standard, the Group applied the following five steps:
1. Identification
of the contract, or contracts, with the customer;
2. Identification
of the performance obligations in the contract;
3. Determination
of the transaction price;
4. Allocation
of the transaction price to the performance obligations in the contract; and
5. Recognition
of the revenue when, or as, a performance obligation is satisfied.
The
Group's revenues are mainly generated from providing recruitment services, outsourcing services and others.
F-
10
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
2.
Summary
                                            Of significant accounting policies (cont.)
Recruitment
services
Recruitment
services consists of flexible employment services and permanent employment services.
Flexible
employment services
The
Group enters into contracts with corporate customers to provide flexible employment services, arranging flexible workers with corresponding
abilities and qualifications on demand to fulfill corporate customers' various operation needs. The Group identifies only one performance
obligation in flexible employment services as the contract comprises of a series of distinct services that are substantially the same
and have the same pattern of transfer to the corporate customers, which is to provide flexible workers in accordance with the demand
orders.
The
contract consideration is determined by the days flexible workers have worked times their workday pay rate. Revenue from flexible employment
services is recognized over time as the customers can simultaneously receive and consume the benefits in the period the flexible workers
provide the service.
The
contract payment is not subject to any variable consideration, refund, cancellation or termination provision. Customers generally make
the payment within one or two months after monthly reconciliation of service considerations with the Group.
Permanent
employment services
The
Group enters into contracts with corporate customers to provide permanent employment services. The Group identifies one performance obligation
in permanent employment services, which is to place a qualified and acceptable employee in accordance with customer specifications. The
probation period of the candidate is typically three months, a period for the customers to evaluate and confirm the acceptance of candidate
replacement. During the probation period, the customer is entitled to request candidate replacement if dissatisfaction of the performance
of candidate cannot be resolved after all means implemented, and the Group also keeps close track of the performance of the candidate
to see if they meet the customer's defined standard, and deals with the customer's feedback or complaint about the performance
of candidate. Upon the completion of the probation period, the customer accepts the qualified candidate and the Company has fulfilled
its obligation of permanent candidate placement. Hence, revenue from permanent employment services is recognized at a point of time when
the candidate passes the probation period.
The
contract consideration is based on a fixed percentage of the candidate's pretax annual income agreed upon with the customers in
advance. Customers generally consider the candidates for the full probation period, and the Company is not entitled to any consideration
for the services provided until the candidates pass the probation period. Except for this, the contract payment is not subject to any
variable consideration, refund, cancellation or termination provision. Customers generally make the payment within one or two months
after the completion of candidates' probation period and acceptance of billing from the Group.
F-
11
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
2.
Summary
                                            of significant accounting policies (cont.)
Outsourcing
services
The
Group enters into contracts with corporate customers to provide outsourcing services, mostly IT-related services, including construction
of IT system, development of module or software with specific functions. Although third-party service providers will be involved in the
solution process, the Group still takes on primary responsibility to coordinate project schedule, check the quality of deliverables,
conduct quality testing and handle feedback and complaints from corporate customers. The Group only identifies one performance obligation
with a fix total consideration to deliver the IT projects with functions under the agreed-upon specifications with customers. Customers
cannot control the IT projects in progress as the IT projects are not developed in the customers' location or IT environment, and
before the successful completion of the IT projects, customers cannot simultaneously receive or consume the benefits provided by the
Group's services, because the IT projects in progress are only dispersed computer codes, which neither provide any function for
the customer, nor are delivered to customers before the successful completion.
Customers
generally make the payment within one or two months upon the successful delivery of IT projects and acceptance. The Group does not have
an enforcement right to payment for services provided to date if the projects eventually fail. Except for this, the contract payment
is not subject to any variable consideration, refund, cancellation or termination provision.
The
Group recognizes revenue at a point in time when the outsourcing services, mostly IT projects, are successfully completed, delivered
and accepted by customers.
Others
The
Group also provides information technology services to corporate customers and training services to platform users. Information technology
services include data collection and analysis, marketing channel optimization and other information technology services altogether that
could contribute to customers' business development. Training services are mainly to provide training courses and career-related
certification programs for platform users to help them realize professional developments. The Group determines it only has one performance
obligation to provide those services and recognizes revenue over time based on the amount of a fixed total price, or a fixed unit price
times key performance indicators or hours charged.
The
contract payment is not subject to any variable consideration, refund, cancellation or termination provision. Customers generally make
the payment within one or two months after the reconciliation of service considerations with the Group.
Principal
versus agent considerations
For
all the services provided, the Group considers itself the principal and recognizes revenue on a gross basis as it controls the services
through the following key considerations:
●
The
                                            Group reserves the right to accept or reject the contracts or orders with the customers without
                                            involvement of the third parties and directs the selected third parties to provide services
                                            to the customers on the Group's behalf. There is no direct cooperation relationship
                                            between third parties and the customers. The Group assumes responsibility for receiving and
                                            resolving the complaints over the quality of the services. If the third-party service providers
                                            fail to deliver their work and thus affect the Group's performance obligation to the
                                            corporate customers, the Group should bear the loss of the corporate customers for breach
                                            of contract on its own, and then independently claim for compensation from third-party service
                                            providers for its loss.
●
The
                                            Group has discretion in setting up the price. The involved third parties are entitled to
                                            a fixed services fee agreed upon in advance irrespective of the consideration the Group collects
                                            from the customers.
●
The
                                            Group bears the credit risk as the Group pays the consideration due to third parties irrespective
                                            of whether the customers have paid the services consideration to the Group.
F-
12
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
2.
Summary
                                            of significant accounting policies (cont.)
Contract
balances
When
a revenue contract has performed, the Group presents the contract in the consolidated balance sheet as a contract asset or a contract
liability, depending on the relationship between the Group's performance and the customer's payment. A contract asset is
the Group's right to consideration in exchange for services that the Group has transferred to a customer. A receivable is recorded
when the Group has an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is
required before payment of that consideration is due. The Group does not have material contract asset. As of December 31, 2022 and 2023,
balance of accounts receivable, net were RMB
102,762
and RMB
28,144
, respectively; and allowance for credit losses were RMB
16,842
and
RMB
23,594
, respectively.
The
contract liability represents the billings or cash received for services in advance of revenue recognition which is recognized as revenue
when all of the Group's revenue recognition criteria are met. The Group's contract liabilities amounted to RMB
24,706
and
RMB
13,552
as of December 31, 2022 and 2023, respectively. The Group expects to recognize this balance as revenue over the next 12 months.
(n)
Cost of revenues
Cost
of revenues consists primarily of services fees charged by external services providers relating to revenue from recruitment services
and outsourcing services providers, and other costs directly attributable to the performance of the business operation.
(o)
Research and development expenses
Research
and development expenses mainly consist of (i) payroll expenses, (ii) technologies services expenses related to platform development
and data analysis to support the Group's business operations, (iii) other expenses related to research and development functions.
Research and development expenses are expensed as incurred.
(p)
Selling and marketing expenses
Selling
and marketing expenses mainly consist of advertising expenses and market promotion expenses, which are expensed as incurred.
(q)
General and administrative expenses
General
and administrative expenses mainly consist of (i) payroll expenses, (ii) community operation expenses, (iii) rental and depreciation
expenses related to general and administrative functions, (iv) professional services fees, (v) credit impairment losses and (vi) office
and miscellaneous expenses.
(r)
Employee benefits
The
Company's subsidiaries in PRC participate in a government mandated, multiemployer, defined contribution plan, pursuant to which
certain retirement, medical, housing and other welfare benefits are provided to employees. PRC labor laws require the entities incorporated
in the PRC to pay to the local labor bureau a monthly contribution calculated at a stated contribution rate on the monthly basic compensation
of qualified employees. The Group has no further commitments beyond its monthly contribution. Employee social benefits included as expenses
in the accompanying consolidated statements of income and comprehensive income amounted to RMB
662
, RMB
1,021
and RMB
1,326
for the years
ended December 31, 2021, 2022 and 2023, respectively.
F-
13
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
2.
Summary
                                            of significant accounting policies (cont.)
(s)
Income taxes
The
Group accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective
tax bases.
Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.
The
provisions of ASC 740-10-25, "Accounting for Uncertainty in Income Taxes," prescribe a more-likely- than-not threshold for
consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This
interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred
income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The
Group's operating subsidiaries in PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration
and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the
taxpayer or the withholding agent.
The statute of limitations is extended to five years under special circumstances, where the underpayment
of taxes is more than RMB100 ($14.5). 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.
The
Group did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line of
its consolidated statements of income for the years ended December 31, 2021, 2022 and 2023, respectively. The Group does not expect that
its assessment regarding unrecognized tax positions will materially change over the next 12 months.
(t)
Value added tax ("VAT")
The
Group is subject to VAT and related surcharges on revenue generated from sales of products, facilitation services and platform services.
The Group records revenue net of VAT. This VAT may be offset by qualified input VAT paid by the Group to suppliers. Net VAT balance between
input VAT and output VAT is recorded in the line item of other current assets on the consolidated balance sheets.
For
revenue generated from services, the VAT rate is
6
% depending on whether the entity is a general tax payer, and related surcharges on
revenue generated from providing services. Entities that are VAT general taxpayers are allowed to offset qualified input VAT, paid to
suppliers against their output VAT liabilities.
(u)
Leases
From
January 1, 2022, the Group adopted Accounting Standards Update ("ASU") 2016-02, Lease (FASB ASC Topic 842). The adoption
of Topic 842 resulted in the presentation of operating lease right-of-use ("ROU") assets and operating lease liabilities
on the consolidated balance sheet. The Group has elected the package of practical expedients, which allows the Group 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. Lastly,
the Group elected the short-term lease exemption for all contracts with lease terms of 12 months or less.
At
inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys
the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract
is or contains a lease, the Group assess whether the contract involves the use of an identified asset, whether it has the right to obtain
substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset.
F-
14
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
2.
Summary
                                            of significant accounting policies (cont.)
The
right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Group recognizes operating lease
expenses on a straight-line basis over the lease term.
Right-of-use
of assets
The
right-of-use of asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received.
Lease
liabilities
Lease
liability is initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the
Group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed lease payments,
variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee and any exercise
price under a purchase option that the Group is reasonably certain to exercise. Lease liability is measured at amortized cost using the
effective interest rate method. It is re-measured when there is a change in future lease payments, if there is a change in the estimate
of the amount expected to be payable under a residual value guarantee, or if there is any change in the Group assessment of option purchases,
contract extensions or termination options.
(v)
Statutory reserves
In
accordance with the PRC Company Laws, the Group's PRC subsidiaries, VIE and the VIE's subsidiary must make appropriations
from their after-tax profits as determined under the generally accepted accounting principles in the PRC ("PRC GAAP") to
non-distributable reserve funds including statutory surplus fund and discretionary surplus fund. The appropriation to the statutory surplus
fund must be 10% of the after-tax profits as determined under PRC GAAP. Appropriation is not required if the statutory surplus fund has
reached 50% of the registered capital of the PRC companies. Appropriation to the discretionary surplus fund is made at the discretion
of the PRC companies.
The
statutory surplus fund and discretionary surplus fund are restricted for use. They may only be applied to offset losses or increase the
registered capital of the respective companies. These reserves are not allowed to be transferred to the Company by way of cash dividends,
loans or advances, nor can they be distributed except for liquidation.
For
the years ended December 31, 2021, 2022 and 2023, profit appropriation to general reserve fund and statutory surplus fund for the Group's
entities incorporated in the PRC was approximately RMB
4,497
, RMB
4,800
and RMB
8,491
, respectively. No appropriation to other reserve
funds was made for any of the periods presented.
(w)
Earnings per share
Basic
earnings per share is computed by dividing net income attributable to ordinary shareholders, taking into consideration the deemed dividends
to preferred shareholders (if any), by the weighted average number of ordinary shares outstanding during the year using the two-class
method. Under the two-class method, net income is allocated between ordinary shares and other participating securities based on their
participating rights. Shares issuable for little to no consideration upon the satisfaction of certain conditions are considered as outstanding
shares and included in the computation of basic earnings per share as of the date that all necessary conditions have been satisfied.
Net losses are not allocated to other participating securities if based on their contractual terms they are not obligated to share the
losses.
Diluted
earnings per share is calculated by dividing net income attributable to ordinary shareholders, as adjusted for the effect of dilutive
ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during
the year. Ordinary equivalent shares consist of ordinary shares issuable upon the conversion of the preferred shares, using the if-converted
method, and shares issuable upon the exercise of share options using the treasury stock method. Ordinary equivalent shares are not included
in the denominator of the diluted earnings per share calculation when inclusion of such share would be anti-dilutive.
F-
15
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
2.
Summary
                                            of significant accounting policies (cont.)
(x)
Segment reporting
Based
on the criteria established by ASC 280, Segment Reporting, the Group's chief operating decision maker has been identified as the
CEO, who reviews consolidated results of the Group when making decisions about allocating resources and assessing performance. As the
Group operates businesses as a whole and does not distinguish business line from its subsidiaries, the Group has only
one
operating segment.
The Group does not distinguish between markets or segments for the purpose of internal reporting. The Company is domiciled in the Cayman
Islands while the Group mainly operates its businesses in the PRC and earns majority of the revenues from external customers attributed
to the PRC.
(y)
Recent accounting pronouncements
The
Group is an "emerging growth company" ("EGC") as defined in the Jumpstart Our Business Startups Act of 2012 (the
"JOBS Act"). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment
of the JOBS Act until such time as those standards apply to private companies. As a result, the Group's operating results and financial
statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised
accounting standards.
In
November 2023, the FASB issued ASU 2023-07, which modifies the disclosure and presentation requirements of reportable segments. The new
guidance requires the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM")
and included within each reported measure of segment profit and loss. In addition, the new guidance enhances interim disclosure requirements,
clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides new segment disclosure
requirements for entities with a single reportable segment, and contains other disclosure requirements. The update is effective for annual
periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption
permitted. The Group does not expect that the adoption of ASU 2023-07 will have a material impact on its consolidated financial statements
disclosures.
In
December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure. This standard requires more transparency about income
tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.
This standard also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective
for public business entities, 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. The Group is in the process of evaluation the impact
of adopting this new guidance on its consolidated financial statement.
Other
accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material
impact on the consolidated financial statements upon adoption. The Group does not discuss recent standards that are not anticipated to
have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.
F-
16
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
3.
Fair value measurements
As
of December 31, 2022, information about inputs into the fair value measurement of the Group's assets and liabilities that are measured
or disclosed at fair value on a recurring basis in periods subsequent to their initial recognition was as follows:
December 31, 2022
Balance at Fair value
Level 1 Inputs
Level 2 Inputs
Level 3 Inputs
Assets:
Short-term investments – wealth management products
4
4
-
-
As
of December 31, 2023, there was
nil
of short-term investment.
When
available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not
available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently
sourced market parameters, such as interest rates and currency rates.
Short-term
investment consists of wealth management products issued by commercial banks and are redeemable on demand. For the instruments whose
fair value is provided by banks at the end of each period, the Group classifies the valuation techniques that use these inputs as Level
1 of fair value measurements.
For
the years ended December 31, 2021, 2022 and 2023, the Group recognized investment income from its short-term investments of RMB
133
, RMB
500
and
nil
, respectively, in the consolidated statements of income and comprehensive income.
4.
Accounts receivable, net
Accounts
receivable, net consisted of the following:
As of December 31,
2022
2023
RMB
RMB
Accounts receivables
119,604
51,738
Less: allowance of credit losses
(
16,842
)
(
23,594
)
Total
102,762
28,144
The
Group recorded allowance for credit losses of RMB
5,264
, RMB
91
and RMB
11,539
for the years ended December 31, 2021, 2022 and 2023, respectively.
The Group adopted ASU 2016-13 from January 1, 2023 using modified-retrospective transition approach with a cumulative-effect adjustment
to shareholders' equity amounting to RMB
617
recognized as of January 1, 2023. For the year ended December 31, 2023, accounts receivables
written-off was RMB
4,170
.
5.
Advance to suppliers, net
Advance
to suppliers, net consisted of the following:
As of December 31,
2022
2023
RMB
RMB
Prepayment for technology outsourcing service
12,046
94,269
Accounts recharge for recruitment service
(1)
11,855
60,881
Prepayment for brand promotion
12,294
8,738
Others
3,358
1,088
Less: allowance of credit losses
-
(
174
)
Total
39,553
164,802
The
Group recorded allowance for credit losses of
nil
,
nil
and RMB
174
for the years ended December 31, 2021, 2022 and 2023, respectively.
(1)
The Group engaged
third-party suppliers to make the payment of compensation to flexible workers in flexible employment services on behalf of the Group.
The Group was required to recharge the accounts in advance before the third-party suppliers make the payment to flexible workers.
F-
17
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
6.
Prepaid expenses and other current assets
Prepaid
expenses and other current assets consisted of the following:
As of December 31,
2022
2023
RMB
RMB
Prepaid input VAT
1,410
1,141
Others
204
485
Total
1,614
1,626
7.
Software and equipment, net
Software
and equipment, net, consisted of the following:
As of December 31,
2022
2023
RMB
RMB
Software
45,562
57,673
Computer and electronic equipment
285
285
Office furniture and equipment
5
5
Total
45,852
57,963
Less: Accumulated depreciation
(
5,356
)
(
9,664
)
Software and equipment, net
40,496
48,299
For
the years ended December 31, 2021, 2022 and 2023, depreciation expense amounted to RMB
1,526
, RMB
3,346
and RMB
4,308
, respectively.
8.
Short-term borrowings
The
balance of short-term borrowings consisted of the following:
Annual Interest
As of December 31,
Rate
Maturity
2022
2023
RMB
RMB
Bank of Ningbo
3.9
%-
4.1
%
June, 2024
5,921
19,381
Bank of Beijing
3.00
%-
3.45
%
July, 2024
-
10,000
Bank of China
2.35
%
November, 2024
-
5,000
China Merchants Bank
3.20
%-
3.25
%
April, 2024
-
5,000
Total
5,921
39,381
Interest
expenses were
nil
, RMB
30
and RMB
919
for short-term borrowings for the years ended December 31, 2021, 2022 and 2023, respectively. The
weighted average interest rates of short-term borrowings were
nil
,
4.27
% and
3.89
% as of December 31, 2021, 2022 and 2023, respectively.
Beijing
Yizhuang International Financing Guarantee Co., Ltd provided RMB
2,000
guarantee and Beijing Zhongguancun Technology Financing Guarantee
Co., Ltd provided RMB
3,000
guarantee for the borrowing from China Merchants Bank. The corporate counter-guarantee provided by Mr. Howard
Lee and Luogaoshi were equivalent to the amount of credit granted to Lucas China.
Ms. Luting Meng, owned
100
%
equity interests of MLT Holding Limited which has 8.1% beneficial ownership of the Group as of the date, provided RMB
5,000
guarantee for the borrowing from Bank of China.
The Group repaid an aggregate
total RMB
17,221
of
borrowings from January 2024 to April 2024. From January 2024 to April 2024, the Group obtained five short term bank loans from Bank
of Ningbo for an aggregate total of RMB
17,829
and one short term bank loan from China's Industrial Bank of RMB
10,000
,
which to be due from July 2024 to March 2025.These bank loans bear interest rate from
3.2
%
to
4.5
%.
F-
18
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
9.
Accrued expenses and other current liabilities
Accrued
expenses and other current liabilities consisted of the following:
As of December 31,
2022
2023
RMB
RMB
Salary and welfare payable
1,719
2,349
Value-added tax payable
333
139
Rental payable
328
826
Others
348
452
2,728
3,766
10.
Redeemable preferred shares of non-controlling interest
Issuance
of redeemable preferred shares
From
year 2018 to 2021, Lucas China issued a series of shares to investors:
On
August 14, 2018, Qianjin Network Information Technology (Shanghai) Co., Ltd. ("Qianjin Network"), aka 51 JOB, entered into
a share purchase agreement with Lucas China ("2018 SPA I"), to purchase
649,519
shares with par value RMB
1
per share, amounting
to an aggregate purchase price of RMB
25,000
.
On
November 12, 2018, Beagledata Technology Co., Ltd. ("Beagledata") entered into a share purchase agreement with Lucas China
("2018 SPA II"), to purchase
60,313
shares with par value RMB
1
per share, amounting to an aggregate purchase price of RMB
5,000
.
Before
January 1, 2020, Lucas China has collected all proceeds from investment pursuant to 2018 SPA I and 2018 SPA II.
On
August 14, 2020, Qianjing Network, Beagledata, Qingdao Haichuanghui Technology Co., Ltd ("Haichuanghui"), a corporate venture
capital firm fully owned by the Haier Group, entered into a share purchase agreement with the Group ("2020 SPA"), to purchase
75,392
,
52,271
and
20,104
shares with par value RMB
1
per share and purchase price of approximately RMB
99.48
per share, respectively,
amounting to an aggregate purchase price of RMB
14,700
. Pursuant to 2020 SPA, share purchase agreements signed aforementioned, including
2018 SPA I and 2018 SPA II, shall be carried out in accordance with the terms agreed in 2020 SPA. According to 2020 SPA, the major rights,
preferences and privileges of the shares are as follows:
Redemption
Rights
The
shares shall be redeemable at the option of holders of the shares if any of the below terms was met:
(1)
The
                                            investors issue a written notice to require the redemption of all or part of their shares;
(2)
Other
                                            matters in which the interests of Investors are damage due to the Lucas China's actions,
                                            including but not limited to the matters that the result that controlling shareholders lose
                                            control of the Lucas China by transferring their shares without prior consent, primarily
                                            business of the Lucas China changes adversely, transactions without commercial substance,
                                            forgery of accounting documents, etc.
The
redemption price of the Shares is:
Redemption
price = Total Consideration * (1+10%*T) + Accumulated unpaid dividends from the first date which Lucas China received the consideration
of investment
T
equals to days, between the date on which Lucas China received the total consideration and the redemption date, divided by 365.
F-
19
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
10.
Redeemable
                                            preferred shares of non-controlling interest (cont.)
Liquidation
Preferences
In
the event of any liquidation, dissolution or winding up of the Lucas China, either voluntary or involuntary, the holders of the shares
shall be entitled to receive, prior to any distribution to the holders of the ordinary shares or any other class or series of shares
then outstanding, an amount equals to the redemption amount mentioned before.
On
October 10, 2021, Jiaxing Anding Equity Investment Partnership (L.P.) ("Jiaxing Anding") entered into a share purchase agreement
with the Group ("2021 SPA"), to purchase
136,611
shares with par value RMB
1
per share and purchase price of approximately
RMB
179.34
per share, respectively, amounting to an aggregate purchase price of RMB
24,500
. As of December 31, 2021, Lucas China received
the total consideration. The major rights, preferences and privileges of the shares in 2021 SPA are applicable to all investors and their
shares ("Shares"), including Qianjing Network, Beagledata, Haichuanghui, Jiaxing Anding (collectively "Investors"),
which are as below:
Redemption
Rights
The
Shares shall be redeemable at the option of holders of the Shares if any of the below terms was met:
(1)
Lucas
                                            China has not consummated a Qualified Initial Public Offering ("QIPO") within
                                            48 months after the closing of the sales of the Shares;
(2)
The
                                            Investors issue a written notice to require the redemption of all or part of their shares;
(3)
Other
                                            matters in which the interests of Investors are damage due to the Lucas China's actions,
                                            including but not limited to the matters that the result that controlling shareholders lose
                                            control of the Lucas China by transferring their shares without prior consent, primarily
                                            business of the Lucas China changes adversely, transactions without commercial substance,
                                            forgery of accounting documents, etc.
The
redemption price of the Shares is:
Redemption
price = Total Consideration * (1+8%*T) + Accumulated unpaid dividends from the first date which Lucas China received the consideration
of investment
T
equals to days, between the date on which Lucas China received the total consideration and the redemption date, divided by 365.
Dividend
Rights
Jiaxing
Anding and Qianjing Network should be entitled to have priority rights to receive dividends, prior and in preference to any declaration
or payment of any dividend on the ordinary shares or any other class or series of shares of Lucas China, at the rate of
8
% per annum
of the total consideration of the shares. The distributions shall be cumulative.
If
there is any surplus after the payment of the dividend to Jiaxing Anding, dividends or profits shall be declared and distributed to Qianjin
Network in priority, and then to each shareholder (including Jiaxing Anding and Qianjin Network) in accordance with the relative proportion
of the investment amount actually paid by each shareholder in the Company.
Liquidation
Preferences
In
the event of any liquidation, dissolution or winding up of Lucas China, either voluntary or involuntary, the holders of the Shares shall
be entitled to receive, prior to any distribution to the holders of the ordinary shares or any other class or series of shares then outstanding,
an amount equals to the redemption amount mentioned before.
Waive
of redemption rights
On
October 27, 2022, Lucas China entered into supplemental agreement with investors including Qianjin Network, Beagledata, Haichuanghui
and Jiaxing Anding, under which all investors agreed to waive their privileges including redemption rights, priority rights to receive
dividends, and liquidation preferences under 2021 SPA.
F-
20
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
10.
Redeemable
                                            preferred shares of non-controlling interest (cont.)
Accounting
for redeemable preferred shares of non-controlling interest and waive of redemption feature
2021
SPA modified the redemption rights and corresponding calculation formula of redemption price, clarified the dividend rights to different
investors in 2020 SPA. Pursuant to valuation report, the change of fair value of redeemable preferred shares immediately before and after
the amendment was less than
10
%. Therefore, the amendment under 2021 SPA should be accounted for as a modification, and the difference
between the fair value of redeemable preferred shares immediately before and after the modification should be recognized as reduction
of accumulated deficit as a deemed dividend of RMB
568
.
For
the years ended December 31, 2021, the Group recognized additional accretion of redeemable preferred shares to redemption value of RMB
1,325
.
Under
the supplemental agreement dated October 27, 2022, since the redemption feature lapsed, the mezzanine equity should be reclassified to
permanent equity on the agreement effective date. In 2022 before the waiver of redemption rights of preferred shares, the Group recognized
additional accretion of redeemable preferred shares to redemption value of RMB
2,906
.
The
movement in the carrying value of the redeemable preferred shares are as follows:
Redeemable preferred shares issued to Qianjin NetWork
Redeemable preferred shares issued to Tianyun Rongchuang and Haichuanghui
Redeemable preferred shares issued to Jiaxing Anding
Total
Balance as of January 1, 2021
72,390
11,221
-
83,611
Issuance of redeemable preferred shares
-
-
24,500
24,500
Collection of subscription receivables of redeemable preferred shares
-
2,000
-
2,000
Deemed dividend/(Transfer of value) in connection with preferred shares modification
1,001
(
433
)
-
568
Accretion of subsidiary's redeemable preferred shares to redemption value
144
1,181
-
1,325
Balance as of December 31, 2021
73,535
13,969
24,500
112,004
Accretion of subsidiary's redeemable preferred shares to redemption value
493
802
1,611
2,906
Waive of redemption features
(
74,028
)
(
14,771
)
(
26,111
)
(
114,910
)
Balance as of December 31, 2022
-
-
-
-
11.
Ordinary shares
The
shareholders' equity structures of the Company as of December 31, 2022 and 2023 were presented after giving retroactive effect
to the Reorganization and Stock Split of the Company.
The
authorized share capital of the Company is $
50,000
divided into
5,000,000,000
Ordinary Shares of $
0.00001
par value per share. On August
15, 2022 and November 15, 2022, the Company issued an aggregate of
39,031,650
Ordinary Shares at a price of $
0.00001
per share, with
total consideration of $
0.4
thousand, pro-rata to the shareholders of the Company as of such date.
On
May 29, 2023,
the Company's board of directors approved to effect a one-for-two stock split of its ordinary shares (the "Stock
Split"). As a result of the Stock Split, each ordinary share of US$0.00001 was automatically split to two issued and outstanding
ordinary shares with par value of US$0.000005 each without any action on the part of the shareholder.
All historical share numbers and
per share amounts have been retrospectively restated to reflect such Stock Split for all periods presented. As of December 31, 2022 and
2023,
78,063,300
and
78,063,300
Ordinary Shares were issued and outstanding.
F-
21
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
12.
Restricted net assets
A
significant portion of the Group's operations are conducted through its PRC (excluding Hong Kong) subsidiaries, the Group's
ability to pay dividends is primarily dependent on receiving distributions of funds from the Company's subsidiaries. Relevant PRC
statutory laws and regulations permit payments of dividends by the Company's subsidiaries only out of their retained earnings,
if any, as determined in accordance with PRC accounting standards and regulations, and after it has met the PRC requirements for appropriation
to statutory reserves. The Group is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve
and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles
of the PRC ("PRC GAAP"). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax
net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity's registered capital. Appropriations
to the surplus reserve are made at the discretion of the Board of Directors. Paid-in capital of the Company's subsidiaries included
in the Company's consolidated net assets are also non-distributable for dividend purposes.
As
a result of these PRC laws and regulations, the Company's PRC subsidiaries are restricted in their ability to transfer a portion
of their net assets to the Company. As of December 31, 2022 and 2023, net assets restricted in the aggregate, which include paid-in capital
and statutory reserves funds of the Company's subsidiaries, that are included in the Company's consolidated net assets were
approximately RMB
82,790
and RMB
91,671
, respectively.
13.
Taxation
Cayman
Islands
The Company is incorporated in the Cayman Islands and conducts its primary business operations through the subsidiaries
in the PRC. Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain arising in Cayman
Islands. Additionally, upon payments of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed.
British
Virgin Islands
Lucas BVI is incorporated in the British Virgin Islands and conducts its primary business operations through the
subsidiaries in the PRC. Under the current laws of the British Virgin Islands, Lucas BVI is not subject to tax on income or capital gains.
Additionally, upon payments of dividends by the Company to its shareholders, no BVI withholding tax will be imposed.
Hong
Kong
Lucas GC Limited (HK) is incorporated in Hong Kong and is subject to Hong Kong profits tax rate. Under the two-tiered
profits tax rates regime, the first 2,000 Hong Kong Dollar ("HKD") of profits of the qualifying group entity will be taxed
at 8.25%, and profits above HKD2,000 will be taxed at 16.5%. Additionally, upon payments of dividends by the Company to its shareholders,
no HK withholding tax will be imposed.
PRC
Under the PRC Enterprise Income Tax Law
(the "EIT Law"), the standard enterprise income tax rate for domestic enterprises and foreign invested enterprises is 25%.
EIT grants preferential tax treatment to High and New Technology Enterprises ("HNTEs") at a rate of 15%, subject to a requirement
that they re-apply for HNTE status every three years. For the Group's subsidiaries, Lucas China obtained the high-tech certificate
in December 2020 and November 2023, and enjoyed a preferential income tax rate at 15% from 2020 to 2025. Luogaoshi Technology (Beijing)
Co., Ltd. obtained the high-tech certificate in December 2021, and enjoyed a preferential income tax rate at 15% from 2021 to 2023.
From January 1, 2021 to December 31, 2021, 12.5% of the first RMB 1.0 million of the assessable profit before tax
is subject to preferential tax rate of 20% and the 50% of the assessable profit before tax exceeding RMB 1.0 million but not exceeding
RMB 3.0 million is subject to preferential tax rate of 20%. From January 1, 2022 to December 31, 2022, 12.5% of the first RMB 1.0 million
of the assessable profit before tax is subject to preferential tax rate of 20% and the 25% of the assessable profit before tax exceeding
RMB 1.0 million but not exceeding RMB 3.0 million is subject to preferential tax rate of 20%. From January 1, 2023 to December 31, 2027,
25% of the first RMB 3.0 million of the assessable profit before tax is subject to the tax rate of 20% for the Company's subsidiaries
that are qualified as "Small Profit Enterprises
".
F-
22
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
13.
Taxation (cont.)
The
following table sets forth current and deferred portion of income tax benefit of the Company and its consolidated subsidiaries:
For the years ended December 31,
2021
2022
2023
RMB
RMB
RMB
Current income tax expense
459
21
-
Deferred income tax benefit
(
702
)
(
616
)
(
7,880
)
Total
(
243
)
(
595
)
(
7,880
)
A
reconciliation of the Group's PRC statutory tax rate to the effective income tax rate during the periods is as follows:
For the years ended December 31,
2021
2022
2023
RMB
RMB
RMB
Income before income tax
39,560
35,816
70,301
Expected taxation at PRC statutory tax rate
9,890
8,954
17,575
Impact of preferential tax rates
(
5,255
)
(
2,749
)
(
6,711
)
Research and development super-deduction
(
6,417
)
(
8,534
)
(
18,676
)
Effect of True up to Tax Return
-
-
258
Non-deductible expenses
1,497
7
-
Effect of income tax rate differences in jurisdictions other
than the PRC
(
6
)
22
10
Change in valuation allowance
48
1,705
(
336
)
Income tax benefits
(
243
)
(
595
)
(
7,880
)
As
of December 31, 2022 and 2023, the significant components of the deferred tax assets were summarized below:
As of December 31,
2022
2023
RMB
RMB
Deferred tax assets:
Net operating loss carryforward
5,003
10,861
Allowance of doubtful accounts
2,585
4,271
Gross deferred assets
7,588
15,132
Less: Valuation allowance
(
3,366
)
(
3,029
)
Total deferred tax assets, net
4,222
12,103
As
of December 31, 2022 and 2023, the movement of the valuation allowance were as below:
As of December 31,
2022
2023
RMB
RMB
Balance at beginning of the year
1,661
3,366
Additions
2,170
1,085
Decrease
(
465
)
(
1,422
)
Balance at end of the year
3,366
3,029
F-
23
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
13.
Taxation
                                            (cont.)
For entities incorporated
in Hong Kong, net loss can be carried forward indefinitely; for entities incorporated in PRC mainland, net loss can be carried forward
for five years, and for entities qualified as HNTE, net loss can be carried forward for ten years. As of December 31, 2022 and 2023, the
Group had net operating loss carryforwards of approximately RMB
34,358
and RMB
67,797
, respectively, which arose from the Group's
subsidiaries established in the PRC, the PRC taxable losses will expire from December 31, 2024 to 2033 if not utilized. The net operating
loss carryforwards of approximately RMB
1,277
and RMB
195
, respectively, for entities incorporated in Hong Kong. As of December 31, 2022
and 2023, deferred tax assets from the net operating loss carryforwards amounted to RMB
5,003
and RMB
10,861
, respectively, which can be
carried forward ten years for HNTEs.
The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences
become deductible. Recovery of substantially all of the Company's deferred tax assets is dependent upon the generation of future
income, exclusive of reversing taxable temporary differences. The valuation allowance is considered on an individual entity basis. As
of December 31, 2023 and 2022, valuation allowances on deferred tax assets are provided because the Company believes that it is more-likely-than-not
that certain of the subsidiaries in the PRC will not be able to generate sufficient taxable income in the near future, to realize the
deferred tax assets carried-forwards, while the remaining PRC operating entities have been gradually recovered. 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 believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize
the deferred tax assets as of December 31, 2023 and 2022.Accordingly, as of December 31, 2022 and 2023, a RMB
3,366
and RMB
3,029
valuation
allowance has been established respectively.
The Company evaluates each uncertain tax position (including the potential
application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions.
As of December 31, 2021, 2022 and 2023, the Company did not have any unrecognized uncertain tax positions and the Company does not believe
that its unrecognized tax benefits will change over the next twelve months. For the years ended December 31, 2021, 2022 and 2023, the
Company did not incur any interest and penalties related to potential underpaid income tax expenses. As of December 31, 2023, the tax
years ended December 31, 2018 through 2022 for the Company's subsidiaries in the PRC are generally subject to examination by the
PRC tax authorities.
14.
Related party transactions
(a)
Related
                                            parties
The
following is a list of related parties which the Group has significant transactions with:
Names
    of related parties
Relationship
    with the Company
Beagledata
    Technology Co., Ltd. ("Beagledata")
Shareholder
    of the Company
Mr.
    Howard Lee
Founder,
    Chairman of the Board, and CEO of the Company
(b)
Related
                                            party transactions
The
Group had the following significant related party transactions for the years ended December 31, 2022 and 2023:
For the years ended December 31,
2021
2022
2023
RMB
RMB
RMB
Technology services received from:
Beagledata (
i
)
320
1,480
-
Recruitment services provided to:
Beagledata (
ii
)
6,230
9,697
7,417
Outsourcing services provided to:
Beagledata
1,200
-
566
F-
24
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
14.
Related
                                            party transactions (cont.)
(i)
Beagledata
                                            provided technology services for the years ended December 31, 2022 and 2023, and the Group
                                            recorded it as research and development expenses in the consolidated statements of income
                                            and comprehensive income.
(ii)
The
                                            Group provided recruitment services to Beagledata, including flexible staffing services and
                                            permanent recruitment services for the years ended December 31, 2022 and 2023.
(c)
Balances
                                            with related parties:
Balances
with related parties consisted of the following for the periods indicated:
As of December 31,
2022
2023
RMB
RMB
Amounts due to related parties:
Beagledata (
i
)
2,120
2,479
Mr. Howard (
ii
)
36
618
Total
2,156
3,097
(i)
As
                                            of December 31, 2022 and 2023, amounts due to Beagledata consisted of technology services
                                            fees payable of RMB
2,120
and RMB
2,120
, respectively, and contract liabilities of
nil
and
                                            RMB
359
, respectively.
(ii)
Amounts
                                            due to Mr. Howard represented expensed paid on behalf of the Group.
15.
Income per share
The
following table sets forth the basic and diluted net income per share computation and provides a reconciliation of the numerator and
denominator for the years presented:
For the years ended December 31,
2021
2022
2023
RMB
RMB
RMB
Basic and diluted earnings per ordinary share calculation:
Numerator:
Net income attributable to Lucas GC Limited
39,509
36,142
77,668
Less: Deemed dividend to redeemable preferred shareholders
(
568
)
-
-
Accretion of subsidiary' redeemable preferred shares to redemption value
(
1,325
)
(
2,906
)
-
Net income attributable to the Lucas GC Limited's ordinary shareholders
37,616
33,236
77,668
Denominator:
Weighted average ordinary shares outstanding-basic and diluted
78,063,300
78,063,300
78,063,300
Income per ordinary share basic and diluted
0.48
0.43
0.99
F-
25
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
16.
Leases
Effective
on January 1, 2022, the Group adopted Topic 842. At the inception of a contract, the Group determines if the arrangement is, or contains,
a lease. The leases of the Group mainly consisted of office leasing.
Supplemental
balance sheet information related to operating lease was as follows:
As of December 31,
2022
2023
RMB
RMB
Operating lease right-of-use assets
784
84
Lease liabilities – current
742
86
Lease liabilities – non-current
86
-
Total operating lease liabilities
828
86
The
weighted average remaining lease terms and discount rates for the operating lease for the years ended December 31, 2021, 2022 and 2023
were as follows:
For the years ended December 31,
2021
2022
2023
Weighted average remaining lease term (years)
-
1.08
0.17
Weighted average discount rate
-
4.75
%
4.75
%
For
the years ended December 31, 2021, 2022 and 2023, the lease expenses were as follows:
For the years ended December 31,
2021
2022
2023
RMB
RMB
RMB
Operating lease expense
-
692
720
Short-term lease expense
-
91
18
Total lease expense
-
783
738
The
following is a schedule of future minimum payments under the Group's operating leases as of December 31, 2023:
For the fiscal year ended December 31, 2023
Amount
RMB
2024
86
Thereafter
-
Total lease payments
86
Less: imputed interest
-
Present value of lease liabilities
86
F-
26
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
17.
Concentration of credit risk
Financial
instruments that potentially expose the Group to concentrations of credit risk consist primarily of accounts receivable.
The
following table sets forth a summary of single customers who represent 10% or more of the Group's total revenue:
For the years ended December 31,
2021
2022
2023
RMB
RMB
RMB
Percentage of the Group's total revenues
Customer A
*
12
%
*
The
following table sets forth a summary of single customers who represent 10% or more of the Group's total accounts receivable, net:
As of December 31,
2022
2023
RMB
RMB
Percentage of the Group's accounts receivables, net
Customer A
13
%
60
%
Customer B
*
11
%
Customer C
10
%
*
Customer D
11
%
*
The
following table sets forth a summary of single customers who represent 10% or more of the Group's total contract liabilities:
As of December 31,
2022
2023
RMB
RMB
Percentage of the Group's contract liabilities
Customer E
*
25
%
Customer F
*
21
%
Customer G
28
%
*
Customer H
13
%
*
Customer I
10
%
*
The
following table sets forth a summary of single suppliers who represent 10% or more of the Group's total purchases:
For the years ended December 31,
2021
2022
2023
RMB
RMB
RMB
Percentage of the Group's total purchases
Supplier A
*
*
15
%
Supplier B
*
24
%
*
Supplier C
17
%
*
*
Supplier D
11
%
*
*
F-
27
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
17.
Concentration
                                            of credit risk (cont.)
The
following table sets forth a summary of single suppliers who represent 10% or more of the Group's total accounts payable:
As of December 31,
2022
2023
RMB
RMB
Percentage of the Group's accounts payable
Supplier E
22
%
42
%
Supplier F
*
11
%
Supplier G
17
%
*
Supplier H
11
%
*
The
following table sets forth a summary of single suppliers who represent 10% or more of the Group's total advance to suppliers, net:
As of December 31,
2022
2023
RMB
RMB
Percentage of the Group's advance to suppliers, net
Supplier I
*
23
%
Supplier J
*
12
%
Supplier K
15
%
*
Supplier L
11
%
*
*
Represent
percentage less than 10%
18.
Commitments and contingencies
(d)
Contingencies
In
the ordinary course of business, the Group may be subject to legal proceedings regarding contractual and employment relationships and
a variety of other matters. The Group records contingent liabilities resulting from such claims, when a loss is assessed to be probable,
and the amount of the loss is reasonably estimable. In the opinion of management, there were no pending or threatened claims and litigation
as of December 31, 2023 and through the issuance date of these consolidated financial statements.
F-
28
LUCAS
GC LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(All
amounts in thousands, except for share and per share data, unless otherwise noted)
19.
Condensed company financial statements
The
Company performed a test on the restricted net assets of consolidated subsidiary in accordance with U.S. Securities and Exchange Commission
Regulation S-X Rule 4-08 (e) (3), "General Notes to Financial Statements" and concluded that it was applicable for the Company
to disclose the financial statements for the parent company.
Basis
of presentation
The
condensed financial information of the Parent Company has been prepared using the same accounting policies as set out in the Group's
consolidated financial statements.
Investments
in subsidiaries
The
Parent Company and its subsidiaries were included in the consolidated financial statements where inter-company balances and transactions
were eliminated upon consolidation.
Condensed
Balance Sheets
As of December 31,
2022
2023
RMB
RMB
US$
ASSETS
Investment in subsidiaries
115,857
194,143
27,344
TOTAL ASSETS
115,857
194,143
27,344
LIABILITIES
Total liabilities
-
-
-
Shareholders' equity
Ordinary shares (US$
0.000005
par value;
10,000,000,000
and
10,000,000,000
shares authorized as of December 31, 2022 and December 31, 2023;
78,063,300
and
78,063,300
shares issued and
    outstanding as of December 31, 2022 and December 31, 2023, respectively)
*
3
3
-
Subscription receivables
(
3
)
(
3
)
-
Additional paid-in capital
113,554
113,554
15,994
Statutory reserve
11,068
19,559
2,755
(Accumulated deficit)/Retained earnings
(
8,753
)
61,041
8,597
Accumulated other comprehensive loss
(
12
)
(
11
)
(
2
)
Total shareholders' equity
115,857
194,143
27,344
TOTAL LIABILITIES AND SHAREHOLDERS' EQITY
115,857
194,143
27,344
*
The shares and
per share information are presented on a retroactive basis to reflect the reorganization, as well as the stock split on May 31, 2023.
Condensed
Statements of operations
For the years ended December 31,
2022
2023
RMB
RMB
US$
Operating income:
Share of income of subsidiaries
36,142
77,668
10,941
Income before income tax expense
36,142
77,668
10,941
Income tax expense
-
-
-
Net income
36,142
77,668
10,941
20.
Subsequent events
Initial
Public Offering
In
March 2024, the Group completed its initial public offering of
1,500,000
ordinary shares at a public offering price of $
4.00
per share
for total gross proceeds of $
6,000
before deducting underwriting discounts and offering expenses.
In
addition, the Company has granted to the underwriter an option, exercisable for 45 days from the date of the final prospectus, to purchase
up to an aggregate of an additional
225,000
ordinary shares at the initial public offering price, less underwriting discounts. As of
the date of issuance of these consolidated financial statements, over-allotment was not exercised.
F-
29