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</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 2pt solid; border-bottom: Black 1pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>UNITED STATES<br/>
SECURITIES AND EXCHANGE COMMISSION<br/>
Washington,&#160;D.C. 20549</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>FORM <ix:nonNumeric contextRef="c0" name="dei:DocumentType">20-F</ix:nonNumeric></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>(Mark One)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentRegistrationStatement">&#9744;</ix:nonNumeric>&#160;<b>REGISTRATION STATEMENT PURSUANT
TO SECTION&#160;12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF&#160;1934</b></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:DocumentAnnualReport">&#9746;</ix:nonNumeric>&#160;<b>ANNUAL REPORT PURSUANT TO SECTION&#160;13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF&#160;1934</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>For the fiscal year ended <ix:nonNumeric contextRef="c0" format="ixt:date-monthname-day-year-en" name="dei:DocumentPeriodEndDate"><ix:nonNumeric contextRef="c0" format="ixt:date-monthname-day-en" name="dei:CurrentFiscalYearEndDate">December 31</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" name="dei:DocumentFiscalYearFocus">2022</ix:nonNumeric></ix:nonNumeric></b></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentTransitionReport">&#9744;</ix:nonNumeric>&#160;<b>TRANSITION REPORT PURSUANT TO SECTION&#160;13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF&#160;1934</b></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentShellCompanyReport">&#9744;</ix:nonNumeric>&#160;<b>SHELL COMPANY REPORT PURSUANT TO
SECTION&#160;13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF&#160;1934</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>For the transition period from&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;to&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Commission file number:&#160;<ix:nonNumeric contextRef="c0" name="dei:EntityFileNumber">001-41493</ix:nonNumeric></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" name="dei:EntityRegistrantName"><b>Lichen China Limited</b></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Exact name of Registrant as specified in its charter)</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt-sec:edgarprovcountryen" name="dei:EntityIncorporationStateCountryCode"><b>Cayman Islands</b></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Jurisdiction of incorporation or organization)</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b><ix:nonNumeric contextRef="c0" name="dei:EntityAddressAddressLine1">B2306</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" continuedAt="_EntityAddressAddressLine2-c0_cont_1" name="dei:EntityAddressAddressLine2">Block B</ix:nonNumeric></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b><ix:continuation id="_EntityAddressAddressLine2-c0_cont_1">Tower 3</ix:continuation>, <ix:nonNumeric contextRef="c0" continuedAt="_EntityAddressAddressLine3-c0_cont_1" name="dei:EntityAddressAddressLine3">Jinjiang Wanda Plaza Commercial Complex&#160;</ix:nonNumeric></b></p><div>

</div><ix:continuation continuedAt="_EntityAddressAddressLine3-c0_cont_2" id="_EntityAddressAddressLine3-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>888 Century Avenue&#160;</b></p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b><ix:continuation id="_EntityAddressAddressLine3-c0_cont_2">Meiling Street</ix:continuation>, <ix:nonNumeric contextRef="c0" continuedAt="_EntityAddressCityOrTown-c0_cont_1" name="dei:EntityAddressCityOrTown">Jinjiang</ix:nonNumeric></b></p><div>

</div><ix:continuation id="_EntityAddressCityOrTown-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Fujian Province&#160;</b></p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>People&#8217;s Republic of <ix:nonNumeric contextRef="c0" format="ixt-sec:countrynameen" name="dei:EntityAddressCountry">China</ix:nonNumeric> <ix:nonNumeric contextRef="c0" name="dei:EntityAddressPostalZipCode">362000</ix:nonNumeric></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>+86-59585633335</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Address of principal executive offices)</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c1" name="dei:ContactPersonnelName"><b>Ya Li</b></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b><ix:nonNumeric contextRef="c1" name="dei:CityAreaCode">+86</ix:nonNumeric>-<ix:nonNumeric contextRef="c1" name="dei:LocalPhoneNumber">59585633335</ix:nonNumeric></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c1" name="dei:ContactPersonnelEmailAddress"><b>Ir@lichenzx.com</b></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b><ix:nonNumeric contextRef="c1" name="dei:EntityAddressAddressLine1">B2306</ix:nonNumeric>, <ix:nonNumeric contextRef="c1" continuedAt="_EntityAddressAddressLine2-c1_cont_1" name="dei:EntityAddressAddressLine2">Block B</ix:nonNumeric></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b><ix:continuation id="_EntityAddressAddressLine2-c1_cont_1">Tower 3</ix:continuation>, <ix:nonNumeric contextRef="c1" continuedAt="_EntityAddressAddressLine3-c1_cont_1" name="dei:EntityAddressAddressLine3">Jinjiang Wanda Plaza Commercial Complex&#160;</ix:nonNumeric></b></p><div>

</div><ix:continuation continuedAt="_EntityAddressAddressLine3-c1_cont_2" id="_EntityAddressAddressLine3-c1_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>888 Century Avenue&#160;</b></p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b><ix:continuation id="_EntityAddressAddressLine3-c1_cont_2">Meiling Street</ix:continuation>, <ix:nonNumeric contextRef="c1" continuedAt="_EntityAddressCityOrTown-c1_cont_1" name="dei:EntityAddressCityOrTown">Jinjiang</ix:nonNumeric></b></p><div>

</div><ix:continuation id="_EntityAddressCityOrTown-c1_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Fujian Province&#160;</b></p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>People&#8217;s Republic of <ix:nonNumeric contextRef="c1" format="ixt-sec:countrynameen" name="dei:EntityAddressCountry">China</ix:nonNumeric> <ix:nonNumeric contextRef="c1" name="dei:EntityAddressPostalZipCode">362000</ix:nonNumeric></b></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Securities registered or to be registered pursuant
to Section&#160;12(b) of the Act:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="white-space: nowrap; width: 32%; border-bottom: black 1.5pt solid; 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="white-space: nowrap; width: 2%; text-align: center">&#160;</td> <td style="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Trading Symbol(s)</b></span></td> <td style="width: 2%">&#160;</td> <td style="white-space: nowrap; width: 32%; border-bottom: black 1.5pt solid; 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="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: center"><ix:nonNumeric contextRef="c0" name="dei:Security12bTitle"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Class A Ordinary shares, par value $0.00004 per share</span></ix:nonNumeric></td> <td style="text-align: center">&#160;</td> <td style="text-align: center"><ix:nonNumeric contextRef="c0" name="dei:TradingSymbol"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">LICN</span></ix:nonNumeric></td> <td>&#160;</td> <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt-sec:exchnameen" name="dei:SecurityExchangeName">The Nasdaq Stock Market LLC</ix:nonNumeric> (Nasdaq Capital Market)</span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Securities registered or to be registered pursuant
to Section&#160;12(g) of the Act:&#160;<b>None</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Securities for which there is a reporting obligation
pursuant to Section&#160;15(d) of the Act:&#160;<b>None</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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: <ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="dei:EntityCommonStockSharesOutstanding" scale="0" unitRef="shares">13,500,000</ix:nonFraction> Class
A Ordinary Shares and <ix:nonFraction contextRef="c3" decimals="INF" format="ixt:num-dot-decimal" name="dei:EntityCommonStockSharesOutstanding" scale="0" unitRef="shares">9,000,000</ix:nonFraction> Class B Ordinary Shares issued and outstanding as of December 31, 2022.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule&#160;405 of the Securities&#160;Act.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&#9744;&#160;Yes&#160;&#9746;&#160;<ix:nonNumeric contextRef="c0" name="dei:EntityWellKnownSeasonedIssuer">No</ix:nonNumeric></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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&#160;13 or&#160;15(d) of the Securities Exchange
Act of&#160;1934.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&#9744;&#160;Yes&#160;&#9746;&#160;<ix:nonNumeric contextRef="c0" name="dei:EntityVoluntaryFilers">No</ix:nonNumeric></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indicate by check mark whether the registrant:
(1)&#160;has filed all reports required to be filed by Section&#160;13 or&#160;15(d) of the Securities Exchange Act of 1934 during the
preceding 12&#160;months (or&#160;for such shorter period that the registrant was required to file such reports), and (2)&#160;has been
subject to such filing requirements for the past 90&#160;days.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&#9746;&#160;<ix:nonNumeric contextRef="c0" name="dei:EntityCurrentReportingStatus">Yes</ix:nonNumeric>&#160;&#9744;&#160;No</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indicate by check mark whether the registrant
has submitted electronically on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule&#160;405 of Regulation&#160;S-T (&#167;232.405 of this chapter) during the preceding 12&#160;months (or&#160;for such
shorter period that the registrant was required to submit such&#160;files).</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&#9746;&#160;<ix:nonNumeric contextRef="c0" name="dei:EntityInteractiveDataCurrent">Yes</ix:nonNumeric>&#160;&#160;&#9744;&#160;No</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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,&#8221; &#8220;accelerated filer,&#8221; and &#8220;emerging growth company&#8221; in Rule 12b-2 of the Exchange Act.</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 32%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large accelerated filer&#160;&#9744;</span></td> <td style="width: 2%">&#160;</td> <td style="width: 32%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated filer&#160;&#9744;</span></td> <td style="width: 2%">&#160;</td> <td style="width: 32%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory">Non-accelerated filer</ix:nonNumeric>&#160;&#9746;</span></td></tr> <tr style="vertical-align: top"> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&#160;</td> <td>&#160;</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">&#160;</td> <td>&#160;</td> <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging growth company&#160;<ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:EntityEmergingGrowthCompany">&#9746;</ix:nonNumeric></span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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&#8224; provided pursuant to Section 13(a) of the Exchange
Act. <ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:EntityExTransitionPeriod">&#9744;</ix:nonNumeric></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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.&#160;<ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:IcfrAuditorAttestationFlag">&#9744;</ix:nonNumeric></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">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. &#9744;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Black">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 &#167;240.10D-1(b). &#9744;</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indicate by check mark which basis of accounting
the registrant has used to prepare the financial statements included in this&#160;filing:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="white-space: nowrap; width: 32%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="-sec-ix-hidden: hidden-fact-0">U.S.&#160;GAAP</span>&#160;&#9746;</span></td> <td style="white-space: nowrap; width: 2%">&#160;</td> <td style="white-space: nowrap; width: 32%; 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="white-space: nowrap; width: 2%">&#160;</td> <td style="white-space: nowrap; width: 32%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other&#160;&#9744;</span></td></tr> <tr style="vertical-align: top"> <td style="white-space: nowrap; text-align: center">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td style="white-space: nowrap; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">by the International Accounting Standards Board&#160;&#9744;</span></td> <td style="white-space: nowrap">&#160;</td> <td style="white-space: nowrap; text-align: center">&#160;</td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right; text-indent: 0.5in">&#9744;&#160;Item&#160;17&#160;&#160;&#9744;&#160;Item&#160;18</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If this is an annual report, indicate by check
mark whether the registrant is a shell company (as&#160;defined in Rule&#160;12b-2 of the Securities Exchange Act of&#160;1934).</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&#9744;&#160;Yes&#160;<ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:EntityShellCompany">&#9746;</ix:nonNumeric>&#160;No</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PAST FIVE&#160;YEARS)</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indicate by check mark whether the registrant
has filed all documents and reports required to be filed by Sections&#160;12, 13 or&#160;15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a&#160;court.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: right">&#9744;&#160;Yes&#160;&#160;&#9744;&#160;No</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 1pt solid; border-bottom: Black 2pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 2 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font-size: 10pt"><tr style="vertical-align: top; text-align: left"><td style="width: 100%">&#160;</td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Table of Contents</b></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="vertical-align: top; width: 12%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="vertical-align: top; width: 78%">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; vertical-align: bottom; width: 8%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Page</b></span></td></tr>
  <tr>
    <td style="vertical-align: top"><a href="#m_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><b>PART I</b></span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    1.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Identity of Directors, Senior Management and Advisers</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    2.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Offer Statistics and Expected Timetable</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">1</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    3.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Key Information</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center; vertical-align: bottom">1</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    4.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_005"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Information on the Company</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">40</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    4A.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Unresolved Staff Comments</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center; vertical-align: bottom">66</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    5.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_007"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Operating and Financial Review and Prospects</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">66</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    6.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_008"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Directors, Senior Management and Employees</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center; vertical-align: bottom">79</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    7.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_009"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Major Shareholders and Related Party Transactions</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">86</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    8.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_010"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Financial Information</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">87</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    9.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_011"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">The Offer and Listing</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center; vertical-align: bottom">88</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    10.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_012"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Additional Information</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">88</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    11.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_013"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Quantitative and Qualitative Disclosures About Market Risk</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">98</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    12.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_014"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Description of Securities Other than Equity Securities</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">98</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top">&#160;</td>
    <td>&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top"><a href="#m_015"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><b>PART II</b></span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    13.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_016"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Defaults, Dividend Arrearages and Delinquencies</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">99</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    14.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_017"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Material Modifications to the Rights of Security Holders and Use of Proceeds</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">99</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    15.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_018"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Controls and Procedures</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">99</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font: small-caps 10pt Times New Roman, Times, Serif">Item
    16.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#mm_001"><span style="font-variant: small-caps">[Reserved]</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">101</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    16A.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_019"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Audit Committee Financial Expert</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">101</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    16B.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_020"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Code of Ethics</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">101</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    16C.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_021"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Principal Accountant Fees and Services</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">101</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    16D.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_022"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Exemptions from the Listing Standards for Audit Committees</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">102</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    16E.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_023"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Purchases of Equity Securities by the Issuer and Affiliated Purchasers</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center; vertical-align: bottom">102</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    16F.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_024"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Change in Registrant&#8217;s Certifying Accountant</span></a></td>
    <td>&#160;</td>
    <td style="text-align: center; vertical-align: bottom">102</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    16G.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_025"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Corporate Governance</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">102</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    16H.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_026"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Mine Safety Disclosure</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">102</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    16I.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_027"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">102</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    16J.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_028"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Insider Trading Policies</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">102</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top">&#160;</td>
    <td>&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top"><a href="#m_029"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><b>PART III</b></span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    17.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_030"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Financial Statements</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">103</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    18.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_031"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Financial Statements</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">103</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Item
    19.</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><a href="#m_032"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-variant: small-caps">Exhibits</span></a></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center">103</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 3; Options: NewSection; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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: LowerRoman; Name: PageNo -->i<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="background-color: white"><b>INTRODUCTION</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify">Throughout this report, unless the context indicates
otherwise, references to &#8220;Lichen China&#8221;, &#8220;Lichen China Limited&#8221;, &#8220;we,&#8221; &#8220;us,&#8221; the &#8220;Company,&#8221;
&#8220;our company,&#8221; or &#8220;LICN&#8221; refer to Lichen China Limited, a holding company. References to &#8220;Subsidiaries&#8221;
or &#8220;PRC subsidiaries&#8221; refer to the Lichen China Limited&#8217;s subsidiaries established under the laws of the People&#8217;s
Republic of China. References to &#8220;Group&#8221; are to Lichen China Limited and its consolidated subsidiaries collectively. Unless
otherwise indicated, in this annual report, references to:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;China&#8221;
or the &#8220;PRC&#8221; are to the People&#8217;s Republic of China;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Class
A Ordinary Shares&#8221; are to a class of shares of Lichen China (as defined below) called the &#8220;series A ordinary shares&#8221;
with par value $0.00004 per share;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Class
B Ordinary Shares&#8221; are to a class of shares of Lichen China (as defined below) called the &#8220;series B ordinary shares&#8221;
with par value $0.00004 per share;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;HKD&#8221;
are to the official currency of Hong Kong;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Lichen
China&#8221; are to Lichen China Limited, a Cayman Islands exempted company;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Legend
Consulting BVI&#8221; are to Legend Consulting Investments Limited, a British Virgin Islands exempted company and a wholly-owned subsidiary
of Lichen China;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Legend
Consulting HK&#8221; are to Legend Consulting Limited (HK), a Hong Kong company and a wholly-owned subsidiary of Legend Consulting BVI;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Lichen
WFOE&#8221; or &#8220;Lichen Zixun&#8221; are to Fujian Province Lichen Management and Consulting Company Limited, a wholly foreign-owned
company organized under the laws of the PRC and a wholly-owned subsidiary of Legend Consulting HK;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Lichen
Education&#8221; are to Xiamen City Legend Education Services Company Limited, a limited liability company organized under the laws of
the PRC and a wholly-owned subsidiary of Lichen WFOE;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; </span></td>
    <td>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#8220;Operating Subsidiaries&#8221; are
Lichen Zixun and Lichen Education;</p></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; </span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;RMB&#8221; are to Renminbi, or the legal currency of the PRC; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;U.S.
dollars,&#8221; &#8220;$,&#8221; and &#8220;USD&#8221; are to the legal currency of the United States; and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;WFOE&#8221;
are to wholly foreign-owned enterprise.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">LICN is a holding company with operations conducted
in the PRC through its operating subsidiaries in the PRC, using RMB. The reporting currency is U.S. dollars. Assets and liabilities denominated
in foreign currencies are translated at year-end exchange rates, income statement accounts are translated at average rates of exchange
for the year and equity is translated at historical exchange rates. Any translation gains or losses are recorded in other comprehensive
income (loss). Gains or losses resulting from foreign currency transactions are included in net income. Unless otherwise noted, all translations
from RMB to U.S. dollars and from U.S. dollars to RMB in this annual report were made at a year-end spot rate of RMB6.9646 to US$1.00
or an average rate of RMB6.7261 to US$1.00 for the fiscal year ended December 31, 2022. On December 31, 2021, the year-end spot rate and
average rate for RMB were, respectively, RMB6.3757 to US$1.00 and RMB6.4515 to US$1.00. On December 31, 2020, the year-end spot rate and
average rate for RMB were, respectively, RMB6.5249 to US$1.00 and RMB6.8976 to US$1.00.</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">We have relied on statistics provided by a variety
of publicly-available sources regarding China&#8217;s expectations of growth. We did not directly or indirectly sponsor or participate
in the publication of such materials, and these materials are not incorporated in this report other than to the extent specifically cited
in this report. We have commissioned the industry report from Frost &amp; Sullivan Inc. (&#8220;Frost &amp; Sullivan&#8221;). We have
sought to provide current information in this report and believe that the statistics provided in this report remain up-to-date and reliable,
and these materials are not incorporated in this report other than to the extent specifically cited in this report.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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: LowerRoman; Name: PageNo -->ii<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify">This annual report contains forward-looking statements
that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking
statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as &#8220;approximates,&#8221;
&#8220;believes,&#8221; &#8220;hopes,&#8221; &#8220;expects,&#8221; &#8220;anticipates,&#8221; &#8220;estimates,&#8221; &#8220;projects,&#8221;
&#8220;intends,&#8221; &#8220;plans,&#8221; &#8220;will,&#8221; &#8220;would,&#8221; &#8220;should,&#8221; &#8220;could,&#8221; &#8220;may&#8221;
or other similar expressions in this annual report. These statements are likely to address our growth strategy, financial results and
product and development programs. You must carefully consider any such statements and should understand that many factors could cause
actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of
other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and
actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking
statements include, but are not limited to:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our
goals and strategies;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">introduction
of new product and service offerings;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">expected
changes in our revenues, costs or expenditures;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">expected
growth of our customers, including consolidated account customers;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">competition
in our industry;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">government policies and regulations relating to our industry; </span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">the length and severity of the recent&#160;</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">COVID-19 <span style="background-color: white">outbreak and its impact on our business and industry</span></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">any
recurrence of the&#160;</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">COVID-19<span style="background-color: white">&#160;pandemic
and scope of related government orders and restrictions and the extent of the impact of the&#160;</span>COVID-19 <span style="background-color: white">pandemic
on the global economy;</span></span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">other
factors that may affect our financial condition, liquidity and results of operations; and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white">other
risk factors discussed under &#8220;Item 3. Key&#160;</span><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Information
&#8212; 3.D. <span style="background-color: white">Risk Factors.&#8221;</span></span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">We base our forward-looking statements on our
management&#8217;s beliefs and assumptions based on information available to our management at the time the statements are made. We caution
you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking
statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities
laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this annual
report, whether as a result of new information, future events, changes in assumptions, or otherwise.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><div><a id="m_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>PART I</b></p><div>

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

</div><div><a id="m_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-variant: small-caps"><b>Item 1. Identity of Directors,
Senior Management and Advisers</b></span></p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">Not applicable for annual reports on Form 20-F.</p><div>

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

</div><div><a id="m_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-variant: small-caps"><b>Item 2. Offer Statistics
and Expected Timetable</b></span></p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">Not applicable for annual reports on Form 20-F.</p><div>

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

</div><div><a id="m_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-variant: small-caps"><b>Item 3. Key Information</b></span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Corporate Structure</b></p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">The following diagram illustrates the corporate
structure of Lichen China Limited and its subsidiaries as of the date of this annual report.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_001.jpg"/></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Holding Company Structure</b></p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">Lichen China Limited was incorporated on April
13, 2016 under the laws of the Cayman Islands. As of the date of this annual report, the authorized share capital of the Company is US$50,000
divided into 1,000,000,000 Class A Ordinary Shares and 250,000,000 Class B Ordinary Shares, of which 17,500,000 Class A Ordinary Shares
and 9,000,000 Class B Ordinary Shares are issued and outstanding. The Company is a holding company and is currently not actively engaging
in any business. Lichen China Limited controls and receives the economic benefits of its PRC subsidiaries&#8217; business operation, if
any, through equity ownership.</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">Legend Consulting BVI was incorporated on December
20, 2013 under the laws of the British Virgin Islands with limited liability. Legend Consulting BVI is a wholly owned subsidiary of the
Company. Legend Consulting BVI is a holding company and is currently not actively engaging in any business.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">Legend Consulting HK was formed on January 8,
2014 under the laws of Hong Kong. Legend Consulting HK is a wholly owned subsidiary of Legend Consulting BVI. It is a holding company
and is not actively engaging in any business.</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">Lichen Zixun was established on April 14, 2004
under the laws of the PRC. Lichen Zixun is a wholly owned subsidiary of Legend Consulting HK and is our main operating entity.</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">Lichen Education was established on July 30, 2014
under the laws of PRC. Lichen Education is a wholly owned subsidiary of Lichen Zixun and is our operating entity.</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">As a result of our corporate structure, LICN&#8217;s
ability to pay dividends may depend upon dividends paid by our Operating Subsidiaries. If our existing Operating 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.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Transfers of Cash between Our Company and Our
Subsidiaries</b></p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">We currently have not
maintained any cash management policies that dictate the purpose, amount and procedure of cash transfers between the Company, our subsidiaries,
or investors. Rather, the funds can be transferred in accordance with the applicable PRC laws and regulations. To the extent cash or assets
in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or
for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us or our subsidiaries by the PRC government to transfer cash or assets.</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">Under existing PRC foreign
exchange regulations, payment of current account items, such as profit distributions and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange, or the SAFE, by complying
with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior
approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures
under PRC foreign exchange regulations, such as the overseas investment registrations by our shareholders or the ultimate shareholders
of our corporate shareholders who are PRC residents. Approval from, or registration with, appropriate government authorities is, however,
required where the RMB 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. The PRC government may also at its discretion restrict access in the future to foreign currencies
for current account transactions. Current PRC regulations permit our PRC subsidiaries to pay dividends to the Company only out of their
accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. As of the date of this report,
there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong
(including funds from Hong Kong to the PRC), except for transfer of funds involving money laundering and criminal activities. Cayman Islands
law prescribes that a company may only pay dividends out of its profits. Other than that, there is no restrictions on Lichen China Limited&#8217;s
ability to transfer cash to investors. See &#8220;Risk Factors - Risks Related to Doing Business in China - To the extent cash or assets
in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or
for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us or our subsidiaries by the PRC government to transfer cash or assets,&#8221; &#8220;Risk Factors - Risks Related to Doing Business
in China - We 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 adverse effect on
our ability to conduct our business,&#8221; and &#8220;Risk Factors - Risks Related to Doing Business in China - Our PRC subsidiaries
are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability
to conduct our business.&#8221;</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">As a holding company,
we may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for our cash and
financing requirements. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt
may restrict their ability to pay dividends to us. Lichen China Limited is permitted under the laws of the Cayman Islands to provide funding
to our subsidiaries incorporated in the British Virgin Islands and Hong&#160;Kong through loans or capital contributions without restrictions
on the amount of the funds. Our subsidiaries are permitted under the respective laws of the British Virgin Islands and Hong Kong to provide
funding to Lichen China Limited through dividend distribution without restrictions on the amount of the funds. There are no restrictions
on dividends transfers from HK to BVI and BVI to the Cayman Islands. Current PRC regulations permit our WFOE&#160;to pay dividends to
the Company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">The PRC has currency
and capital transfer regulations that require us to comply with certain requirements for the movement of capital. The Company is able
to transfer cash (US Dollars) to its PRC subsidiaries through an investment (by increasing the Company&#8217;s registered capital in a
PRC subsidiary). The Company&#8217;s subsidiaries within China can transfer funds to each other when necessary through the way of current
lending. The transfer of funds among companies are subject to the Provisions on Private Lending Cases, which was implemented on August
20, 2020 to regulate the financing activities between natural persons, legal persons and unincorporated organizations. As advised by our
PRC counsel, Tianyuan Law Firm, the Provisions on Private Lending Cases does not prohibit using cash generated from one subsidiary to
fund another subsidiary&#8217;s operations. We have not been notified of any other restriction which could limit our PRC subsidiaries&#8217;
ability to transfer cash between PRC subsidiaries. The Company&#8217;s subsidiaries in the PRC have not transferred any earnings or cash
to the Company to date. As of the date of this report, there has not been any assets or cash transfer between the holding company and
its subsidiaries. As of the date of this report, there has not been any dividends or distributions made to US investors. The Company&#8217;s
business is primarily conducted through its subsidiaries. The Company is a holding company and its material assets consist solely of the
ownership interests held in its PRC subsidiaries. The Company relies on dividends paid by its subsidiaries for its working capital and
cash needs, including the funds necessary: (i) to pay dividends or cash distributions to its shareholders, (ii) to service any debt obligations
and (iii) to pay operating expenses. As a result of PRC laws and regulations (noted below) that require annual appropriations of 10% of
after-tax income to be set aside in a general reserve fund prior to payment of dividends, the Company&#8217;s PRC subsidiaries are restricted
in that respect, as well as in other respects noted below, in their ability to transfer a portion of their net assets to the Company as
a dividend.&#160;</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">With respect to transferring
cash from the Company to its subsidiaries, increasing the Company&#8217;s registered capital in a PRC subsidiary requires the filing of
the local commerce department, while a shareholder loan requires a filing with the State Administration of Foreign Exchange or its local
bureau. Aside from the declaration to the State Administration of Foreign Exchange, there is no restriction or limitations on such cash
transfer or earnings distribution.</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">With respect to the payment
of dividends, we note the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PRC
regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with accounting standards
and PRC regulations (an in-depth description of the PRC regulations is set forth below);</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
PRC subsidiaries are required to set aside, at a minimum, 10% of their net income after taxes, based on PRC accounting standards, each
year as statutory surplus reserves until the cumulative amount of such reserves reaches 50% of their registered capital;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Such
reserves may not be distributed as cash dividends;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
PRC subsidiaries may also allocate a portion of their after-tax profits to fund their staff welfare and bonus funds; except in the event
of a liquidation, these funds may also not be distributed to shareholders; the Company does not participate in a Common Welfare Fund;
and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
incurrence of debt, specifically the instruments governing such debt, may restrict a subsidiary&#8217;s ability to pay shareholder dividends
or make other cash distributions.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">If, for the reasons
noted above, our subsidiaries are unable to pay shareholder dividends and/or make other cash payments to the Company when needed, the
Company&#8217;s ability to conduct operations, make investments, engage in acquisitions, or undertake other activities requiring working
capital may be materially and adversely affected. However, our operations and business, including investment and/or acquisitions by our
subsidiaries within China, will not be affected as long as the capital is not transferred in or out of the PRC.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">During the fiscal years
ended December 31, 2020, Lichen Zixun made dividend payments of RMB30 million (approximately $4.3 million) to the then eventual shareholders
of Lichen Zixun, who are PRC individuals. The Company made no such dividend, distribution or transfer during the fiscal year ended December
31, 2022 and 2021. As of the date of this report, the Company or its subsidiaries have made no other transfers, dividends, or distributions
to investors and no investors have made transfers, dividends, or distributions to the Company or its subsidiaries.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">On February 10, 2023,
Lichen China Limited made payments of $6 million to its subsidiary Legend Consulting BVI for investment. As of the date of this report,
no other dividends, distributions or transfers has been made between Lichen China Limited and any of its subsidiaries. For the foreseeable
future, the Company intends to use the earnings for research and development, to develop new products and to expand its production capacity.
As a result, we do not expect to pay any cash dividends in the foreseeable future.&#160;Also, as of the date of this report, no cash generated
from one subsidiary is used to fund another subsidiary&#8217;s operations and we do not anticipate any difficulties or limitations on
our ability to transfer cash between subsidiaries.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">See &#8220;Item 8. Financial Information &#8211;
A. Consolidated Statements and Other Financial Information &#8211; Dividend Policy&#8221; and &#8220;<span style="background-color: white">Item
3. Key&#160;</span>Information &#8212; 3.D. Risk Factors &#8212; Risks Relating to our Corporate Structure &#8211; <i>We rely on dividends
and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any
limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to
conduct our business</i>&#8221;.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Implication of the Holding Foreign Companies
Accountable Act (the &#8220;HFCAA&#8221;)</b></p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">U.S. laws and regulations, including the Holding
Foreign Companies Accountable Act, or HFCAA, may restrict or eliminate our ability to complete a business combination with certain companies,
particularly those acquisition candidates with substantial operations in China.</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">On March 24, 2021, the SEC adopted interim final
rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. An identified issuer will be required
to comply with these rules if the SEC identifies it as having a &#8220;non-inspection&#8221; year under a process to be subsequently established
by the SEC. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022,
legislation entitled &#8220;Consolidated Appropriations Act, 2023&#8221; (the &#8220;Consolidated Appropriations Act&#8221;) was signed
into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies
Accountable Act and amended the HFCAA 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, thus reducing the time period for triggering
the prohibition on trading. If our auditor cannot be inspected by the Public Company Accounting Oversight Board, or the PCAOB, for two
consecutive years, the trading of our securities on any U.S. national securities exchanges, as well as any over-the-counter trading in
the U.S., will be prohibited. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework
for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely
registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA.
The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public
accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position
taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable
to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because
of positions taken by PRC authorities in those jurisdictions, which determinations were vacated on December 15, 2022.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">On August 26, 2022, the&#160;PCAOB&#160;announced
that it had signed a Statement of Protocol (the &#8220;SOP&#8221;) with the China Securities Regulatory Commission and the Ministry of
Finance of China. The SOP,&#160;together with two protocol agreements governing inspections and investigations (together, the &#8220;SOP
Agreement&#8221;), establishes a specific, accountable framework to make possible complete inspections and investigations by the&#160;PCAOB&#160;of
audit firms based in mainland China and Hong Kong, as required under U.S. law.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">On December 15, 2022, the PCAOB announced that
it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China
and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate
completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue
to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong
Kong is subject to uncertainties and depends on a number of factors out of our and our auditor&#8217;s control. The PCAOB continues to
demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023
and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated
that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">As of the date of the annual report, TPS Thayer,
our auditor for the fiscal year ended December 31, 2022 and 2021, headquartered in Sugar Land, Texas, is subject to laws in the United
States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. TPS
Thayer&#8217;s registration with the PCAOB took effect in September 2020 and it is currently subject to PCAOB inspections. As of the date
of the annual report, B&amp;V, our auditor for the fiscal year ended December 31, 2020, withdrew its registration from the PCAOB in January
2022.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">However, we cannot assure you whether Nasdaq or
regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor&#8217;s
audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or
experience as it relates to the audit of our financial statements. In the event it is later determined that the PCAOB is unable to inspect
or investigate completely the Company&#8217;s auditor because of a position taken by an authority in a foreign jurisdiction, then such
lack of inspection could cause trading in the Company&#8217;s securities to be prohibited under the HFCAA and AHFCAA, and ultimately results
in a determination by a securities exchange to delist the Company&#8217;s securities. The delisting of our Class A Ordinary Shares, or
the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless.&#160;In
addition, under the AHFCAA, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is
not inspected by the PCAOB for two consecutive years instead of three, and this ultimately could result in our Class A Ordinary Shares
being delisted by and exchange. See &#8220;<span style="background-color: white">Item 3. Key&#160;</span>Information &#8212; 3.D. Risk
Factors &#8212; Risks Related to Doing Business in China <i>&#8211; </i>The recent joint statement by the SEC and PCAOB, proposed rule
changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to
be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not
inspected by the PCAOB. These developments could add uncertainties to our offering&#8221; on page 24 and &#8220;Trading in our securities
may be prohibited under the HFCAA and as a result an exchange may determine to delist our securities if it is later determined that the
PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction&#8221;
on page 25. We cannot assure you whether Nasdaq or other regulatory authorities will apply additional or more stringent criteria to us.
Such uncertainty could cause the market price of our Class A Ordinary Shares to be materially and adversely affected.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Recent Regulatory Development in the PRC</b></p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">The Regulations on Mergers
and Acquisitions of Domestic Companies by Foreign Investors (the &#8220;M&amp;A Rules&#8221;), adopted by six PRC regulatory agencies
in 2006 and amended in 2009, include, among other things, provisions that purport to require that an offshore special purpose vehicle,
formed for the purpose of an overseas listing of securities through acquisitions of domestic enterprises in China or assets and controlled
by enterprises or individuals in China, 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. On September&#160;21, 2006, pursuant to the M&amp;A Rules&#160;and other PRC laws, the CSRC
published on its official website relevant guidance regarding its approval of the listing and trading of special purpose vehicles&#8217;
securities on overseas stock exchanges, including a list of application materials. However, substantial uncertainty remains regarding
the scope and applicability of the M&amp;A Rules&#160;to offshore special purpose vehicles.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">On July&#160;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. These opinions and any related implementation rules&#160;to
be enacted may subject us to additional compliance requirement in the future. As of the date hereof, no official guidance or related implementation
rules have been issued.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white"><span style="background-color: white">Pursuant
to Cybersecurity Review Measures which were issued on December&#160;28, 2021 and became effective on February&#160;15, 2022, network platform
operators holding over one million users&#8217; personal information must apply with the Cybersecurity Review Office for a cybersecurity
review before any public offering at a foreign stock exchange. However, given the Cybersecurity Review Measures were relatively new, there
are substantial uncertainties as to the interpretation, application and enforcement of the Cybersecurity Review Measures. It remains uncertain
whether we should apply for cybersecurity review prior to any offshore offering and that we would be able to complete the applicable cybersecurity
review procedures in a timely manner, or at all, if we are required to do so. In addition, on November&#160;14, 2021, the Cyberspace Administration
of China (the &#8220;CAC&#8221;) published the Administration Regulations on Network Data Security (Draft for Comments), or the Draft
Measures for Network Data Security, which provides that data processors conducting the following activities shall apply for cybersecurity
review: (i)&#160;merger, reorganization or separation 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)&#160;overseas listing
of data processors processing over one million users&#8217; personal information; (iii)&#160;listing in Hong Kong which affects or may
affect national security; (iv)&#160;other data processing activities that affect or may affect national security. The CAC solicited comments
on this draft, but there is no timetable as to when it will be enacted.</span></p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white"><span style="background-color: white">On
February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies
(the &#8220;Overseas Listing Trial Measures&#8221;) and five relevant guidelines, which became effective on March 31, 2023.&#160;</span>
According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either
in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (1) such securities
offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (2) the intended
securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council
in accordance with law; (3) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s)
and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining
the order of the socialist market economy during the latest three years; (4) the domestic company intending to make the securities offering
and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion
has yet been made thereof; or (5) there are material ownership disputes over equity held by the domestic company&#8217;s controlling shareholder(s)
or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">The Overseas Listing
Trial Measures also provides that if the issuer meets both the following criteria, the overseas securities offering and listing conducted
by such issuer will be deemed as indirect overseas offering by PRC domestic companies: (1) 50% or more of any of the issuer&#8217;s operating
revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal
year is accounted for by domestic companies; and (2) the issuer&#8217;s main business activities are conducted in China, or its main place(s)
of business are located in China, or the majority of senior management staff in charge of its business operations and management are PRC
citizens or have their usual place(s) of residence located in China. Where an issuer submits an application for initial public offering
to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted.
In addition, the Overseas Listing Trial Measures provide that the direct or indirect overseas listings of the assets of domestic companies
through one or more acquisitions, share swaps, transfers or other transaction arrangements shall be subject to filing procedures in accordance
with the Overseas Listing Trial Measures. The Overseas Listing Trial Measures also requires subsequent reports to be filed with the CSRC
on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings
and listings.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">At a press conference
held for these new regulations (&#8220;Press Conference&#8221;), officials from the CSRC clarified that the domestic companies that have
already been listed overseas on or before March 31, 2023 shall be deemed as existing issuers (the &#8220;Existing Issuers&#8221;). Existing
Issuers are not required to complete the filling procedures immediately, and they shall be required to file with the CSRC upon occurrences
of certain subsequent matters such as follow-on offerings of securities. According to the Overseas Listing Trial Measures and the Press
Conference, the existing domestic companies that have completed overseas offering and listing before March 31, 2023, such as us, shall
not be required to perform filing procedures for the completed overseas securities issuance and listing. However, from the effective date
of the regulation, any of our subsequent securities offering in the same overseas market or subsequent securities offering and listing
in other overseas markets shall be subject to the filing requirement with the CSRC within three working days after the offering is completed
or after the relevant application is submitted to the relevant overseas authorities, respectively. If it is determined that any approval,
filing or other administrative procedures from other PRC governmental authorities is required for any future offering or listing, we cannot
assure you that we can obtain the required approval or accomplish the required filings or other regulatory procedures in a timely manner,
or at all. If we fail to fulfill filing procedure as stipulated by the Trial Measures or offer and list securities in an overseas market
in violation of the Trial Measures, the CSRC may order rectification, issue warnings to us, and impose a fine of between RMB1,000,000
and RMB10,000,000. Persons-in-charge and other persons that are directly liable for such failure shall be warned and each imposed a fine
from RMB500,000 to RMB5,000,000. Controlling shareholders and actual controlling persons of us that organize or instruct such violations
shall be imposed a fine from RMB1,000,000 and RMB10,000,000.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">On February&#160;24,
2023, the CSRC published the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities
Offering and Listing by Domestic Enterprises (the &#8220;Provisions on Confidentiality and Archives Administration&#8221;), which came
into effect on March 31, 2023. The Provisions on Confidentiality and Archives Administration requires that, in the process of overseas
issuance and listing of securities by domestic entities, the domestic entities, and securities companies and securities service institutions
that provide relevant securities service shall strictly implement the provisions of relevant laws and regulations and the requirements
of these provisions, establish and improve rules&#160;on confidentiality and archives administration. Where the domestic entities provide
with or publicly disclose documents, materials or other items related to the state secrets and government work secrets to the relevant
securities companies, securities service institutions, overseas regulatory authorities, or other entities or individuals, the companies
shall apply for approval of competent departments with the authority of examination and approval in accordance with law and report the
matter to the secrecy administrative departments at the same level for record filing. Where there is unclear or controversial whether
or not the concerned materials are related to state secrets, the materials shall be reported to the relevant secrecy administrative departments
for determination. However, there remain uncertainties regarding the further interpretation and implementation of the Provisions on Confidentiality
and Archives Administration.</p><div>

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</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">As of the date of this annual report, <span style="background-color: white">we
and our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the
business operations of our PRC subsidiaries. In addition, </span>as of the date of this annual report, <span style="background-color: white">we
and our PRC subsidiaries are not required to obtain approval or permission from the CSRC or the CAC or any other entity that is required
to approve our PRC subsidiaries&#8217; operations or required for us to offer securities to foreign investors under any currently effective
PRC laws, regulations, and regulatory rules.</span> If it is determined that we are subject to filing requirements imposed by the CSRC
under the Overseas Listing Regulations or approvals from other PRC regulatory authorities or other procedures, including the cybersecurity
review under the revised <span style="background-color: white">Cybersecurity Review Measures</span>, for our future offshore offerings,
it would be uncertain whether we can or how long it will take us to complete such procedures or obtain such approval and any such approval
could be rescinded. Any failure to obtain or delay in completing such procedures or obtaining such approval for our offshore offerings,
or a rescission of any such approval if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities
for failure to file with the CSRC or failure to seek approval from other government authorization for our offshore 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 our offshore 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 Class A Ordinary Shares. The CSRC or other PRC regulatory authorities also may take actions requiring us, or
making it advisable for us, to halt our offshore offerings before settlement and delivery of the securities 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 their approvals or accomplish the required filing or other regulatory procedures for our prior offshore 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 Class A Ordinary Shares.&#160;</p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">If the CSRC, CAC or other regulatory agencies
later promulgate new rules or explanations requiring that we obtain their approvals for this offering and any follow-on offering, we may
be unable to obtain such approvals and we may face sanctions by the CSRC, CAC or other PRC regulatory agencies for failure to seek their
approval which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors and
the securities currently being offered may substantially decline in value and be worthless. For more details, see &#8220;<span style="background-color: white">Item
3. Key&#160;</span>Information &#8212; 3.D. Risk Factors &#8211; Risks Related to Doing Business in China.&#8221;&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>3.A. [Reserved]</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>3.B. Capitalization and Indebtedness</b></p><div>

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

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in">Not applicable for annual reports on Form 20-F.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>3.C. Reasons for the Offer and Use of Proceeds</b></p><div>

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

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in">Not applicable for annual reports on Form 20-F.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 12; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b>3.D. Risk Factors</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

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

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">You should carefully
consider all of the information in this annual report before making an investment in our Class A Ordinary Shares. Below please find a
summary of the principal risks and uncertainties we face, organized under relevant headings. In particular, as we are a PRC-based company
incorporated in the Cayman Islands, you should pay special attention to subsections headed &#8220;Item 3. Key Information&#8212;3.D. Risk
Factors&#8212;Risks Related to Our Corporate Structure.&#8221; and &#8220;Item 3. Key Information&#8212;3.D. Risk Factors&#8212;Risks
Related to Doing Business in China.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white">Our business is subject
to a number of risks, 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:</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Risks Relating to Our Corporate Structure</span></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
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 adverse effect on our ability
to conduct our business. See &#8220;<i>Risk Factors &#8211; Risks Relating to our Corporate Structure &#8211; We 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 adverse effect on our ability to conduct our business</i>&#8221;
on page 12.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Risks Relating to Doing Business in China</span></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Changes in China&#8217;s economic, political or social conditions or government policies could have a material adverse effect on our business and results of operations.&#160;See &#8220;<i>Risk Factors &#8211; Risks Relating to Doing Business in China &#8211; Changes in China&#8217;s economic, political or social conditions or government policies could have a material adverse effect on our business and results of operations</i>&#8221; on page 13.</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 the initial public offering to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.&#160;See &#8220;<i>Risk Factors &#8211; Risks Relating to Doing Business in China &#8211; 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 the initial public offering to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business</i>&#8221; on page 14.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="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 enforcement of laws, and sudden or unexpected changes in laws and regulations in China with little advance notice could adversely affect us and limit the legal protections available to you and us. See &#8220;<i>Risk Factors &#8211; Risks Relating to Doing Business in China &#8211; Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in laws and regulations in China with little advance notice could adversely affect us and limit the legal protections available to you and us</i>&#8221; on page 13.</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; </span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chinese regulatory authorities could change the rules and regulations regarding foreign ownership in the industry in which the company operates, which would likely result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless.&#160; See &#8220;<i>Risk Factors &#8211; Risks Relating to Doing Business in China &#8211; The filing, approval or other administration requirements of the CSRC or other PRC government authorities may be required in connection with our future offshore offering under PRC law, and, if required, we cannot predict whether or for how long we will be able to complete the filing procedure with the CSRC and obtain such approval or complete such filing, as applicable</i>&#8221; on page 15. </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 13; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We are not currently required to obtain any approval from the CAC. However,
it is unclear whether we will be subject to the oversight of the CAC and how such oversight may impact us. Our business could be interrupted
or we could be subject to liabilities which may materially and adversely affect the results of our operation and the value of your investment.
See &#8220;<i>Risk Factors &#8211; Risks Relating to Doing Business in China &#8211; We are not currently required to obtain any approval
from the CAC. However, it is unclear whether we will be subject to the oversight of the CAC and how such oversight may impact us. Our
business could be interrupted or we could be subject to liabilities which may materially and adversely affect the results of our operation
and the value of your investment</i>&#8221; on page 26.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Uncertainties exist with respect to the interpretation and implementation of the enacted Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations. See &#8220;<i>Risk Factors &#8211; Risks Relating to Doing Business in China &#8211; Uncertainties exist with respect to the interpretation and implementation of the enacted Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations</i>&#8221; on page 18.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We 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 adverse effect on our ability to conduct our business. See &#8220;<i>Risk Factors &#8211; Risks Relating to Doing Business in China &#8211; We 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 adverse effect on our ability to conduct our business</i>&#8221; on page 12.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; </span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To the extent cash or assets in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC government to transfer cash or assets. See &#8220;<i>Risk Factors &#8211; Risks Relating to Doing Business in China &#8211; To the extent cash or assets in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC government to transfer cash or assets</i>&#8221; on page 18. </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fluctuations in exchange rates could have a material adverse effect on our results of operations and the price of our Class A Ordinary Shares. See &#8220;<i>Risk Factors &#8211; Risks Relating to Doing Business in China &#8211; Fluctuations in exchange rates could have a material adverse effect on our results of operations and the price of our Class A Ordinary Shares</i>&#8221; on page 19.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment. See &#8220;<i>Risk Factors &#8211; Risks Relating to Doing Business in China &#8211; Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment</i>&#8221; on page 20.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

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

</div><p style="margin: 0">&#160;</p><div>

</div><p style="margin: 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="margin: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; </span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our Class A Ordinary Shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our Class A Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer&#8217;s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years. On December 16, 2021, the PCAOB issued its determination that the PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, which determinations were vacated on December 15, 2022. Our auditors, B&amp;V for the fiscal year ended December 31, 2020 and TPS Thayer for the fiscal year ended December 31, 2021, are both based in the U.S. B&amp;V withdrew its registration from the PCAOB in January 2022. TPS Thayer are registered with PCAOB and subject to PCAOB inspections. However, in the event it is later determined that the PCAOB is unable to inspect or investigate completely the Company&#8217;s auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause our securities to be delisted from the stock exchange. See &#8220;<i>Risk Factors &#8212; Risks Related to Doing Business in China &#8212; The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering</i>&#8221; on page 24. </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Risks Relating to our Class A Ordinary Shares
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We are an &#8220;emerging growth company,&#8221; and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A Ordinary Shares less attractive to investors. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Class A Ordinary Shares &#8211; We are an &#8220;emerging growth company,&#8221; and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A Ordinary Shares less attractive to investors</i>&#8221; on page 28.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The market price of our Class A Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the public offering price. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Class A Ordinary Shares &#8211; The market price of our Class A Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the public offering price</i>&#8221; on page 30.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; </span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The trading of our Class A Ordinary Shares could experience extreme stock price run-ups followed by rapid price declines and strong stock price volatility as experienced in recent initial public offerings. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Class A Ordinary Shares &#8211; The price of our Class A Ordinary Shares could be subject to rapid and substantial volatility.&#8221; </i>on page 31. </span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; </span></td>
    <td>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There can be no assurance that we will not
    be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could
    subject United States investors in our Class A Ordinary Shares to significant adverse United States income tax consequences. See
    &#8220;<i>Risk Factors &#8211; Risks Relating to Our Class A Ordinary Shares &#8211; There can be no assurance that we will not be a
    passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject
    United States investors in our Class A Ordinary Shares to significant adverse United States income tax consequences.&#8221; </i>on
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></p><div>

</div><!-- Field: Page; Sequence: 15; Value: 1 --><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Risks Relating to Our Business</span></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our business, financial condition and results of operations may be affected due to the COVID-19 pandemic and other diseases or epidemic. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Business and Operations &#8211; Our business, financial condition and results of operations may be affected due to the COVID-19 pandemic and other diseases or epidemic</i>&#8221; on page 33.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We may incur impairment losses for intangible assets, which may adversely affect our results of operations. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Business and Operations &#8211; We may incur impairment losses for intangible assets, which may adversely affect our results of operations</i>&#8221; on page 34.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our results of operations
    may be adversely affected by credit risk associated with our financial assets through profit and loss. See <i>&#8220;Risk Factors
    &#8211; Risks Relating to Our Business and Operations &#8211; Our results of operations may be adversely affected by credit risk
    associated with our financial assets through profit and loss</i>&#8221; on page 34.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our business depends on the market recognition of our &#8220;Lichen&#8221; brand name. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Business and Operations &#8211; Our business depends on the market recognition of our &#8220;Lichen&#8221; brand name</i>&#8221; on page 34.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our revenue was mainly derived from financial and taxation solution services projects, which are not recurring in nature and there is no assurance that our customers will provide us with new business. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Business and Operations &#8211; Our revenue was mainly derived from financial and taxation solution services projects, which are not recurring in nature and there is no assurance that our customers will provide us with new business</i>&#8221; on page 34.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Failure to maintain our relationship with our external experts could materially and adversely affect our business, financial condition and results of operations. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Business and Operations &#8211; Failure to maintain our relationship with our external experts could materially and adversely affect our business, financial condition and results of operations</i>&#8221; on page 35.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our financial and taxation solution services may attract liability. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Business and Operations &#8211; Our financial and taxation solution services may attract liability</i>&#8221; on page 37.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We may not be able to successfully implement our strategies, or achieve our business objectives and our business, operating results and financial position may be materially and adversely affected. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Business and Operations &#8211; We may not be able to successfully implement our strategies, or achieve our business objectives and our business, operating results and financial position may be materially and adversely affected</i>&#8221; on page 37.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We have limited insurance coverage to protect us against all risks associated with our business operations. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Business and Operations &#8211; We have limited insurance coverage to protect us against all risks associated with our business operations</i>&#8221; on page 38.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Protection of intellectual property rights may not prevent third parties and/or our competitors&#8217; infringement on our teaching and learning materials or self-developed software, which could weaken our competitive position and harm our business and results of operations. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Business and Operations &#8211; Protection of intellectual property rights may not prevent third parties and/or our competitors&#8217; infringement on our teaching and learning materials or self-developed software, which could weaken our competitive position and harm our business and results of operations</i>&#8221; on page 38.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Risks Relating to Our Industry</span></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The financial and taxation solution service, education support service and software and maintenance service industries rely on manpower and the increase in our staff costs may materially and adversely affect our operations, profitability and financial condition. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Industry &#8211; The financial and taxation solution service, education support service and software and maintenance service industries rely on manpower and the increase in our staff costs may materially and adversely affect our operations, profitability and financial condition</i>&#8221; on page 39.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our customer base is primarily concentrated on business enterprises and Partnered Institutions in the PRC. Any slowdown of the enterprises&#8217; growth and development in the PRC or demands for financial and taxation solution services, education support services or software and maintenance services could have a material adverse effect on our business, financial condition and results of operations. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Industry &#8211; Our customer base is primarily concentrated on business enterprises and Partnered Institutions in the PRC. Any slowdown of the enterprises&#8217; growth and development in the PRC or demands for financial and taxation solution services, education support services or software and maintenance services could have a material adverse effect on our business, financial condition and results of operations</i>&#8221; on page 39.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 57pt; text-align: justify; text-indent: -21pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We face significant competition in various geographical locations where we offer our financial and taxation solution services, and if we fail to compete effectively, we may lose market share and our profitability could be adversely affected. See &#8220;<i>Risk Factors &#8211; Risks Relating to Our Industry &#8211; We face significant competition in various geographical locations where we offer our financial and taxation solution services, and if we fail to compete effectively, we may lose market share and our profitability could be adversely affected</i>&#8221; on page 39.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b>Risks Relating to
our Corporate Structure </b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We 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 adverse effect on our ability to conduct our business</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a holding company,
and we rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including
the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiaries
incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other
distributions to us. In addition, the PRC tax authorities may require our PRC subsidiaries to adjust its taxable income, in a manner that
would materially and adversely affect their ability to pay dividends and other distributions to us.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under PRC laws and regulations,
our PRC subsidiaries, as wholly foreign-owned enterprises in China, may pay dividends only out of their respective accumulated after-tax
profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required
to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate
amount of such funds reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion
of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and
bonus funds are not distributable as cash dividends.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In response to the persistent
capital outflow and the Renminbi&#8217;s depreciation against the U.S. dollar in the fourth quarter of 2016, the People&#8217;s Bank of
China (&#8220;PBOC&#8221;) and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures,
including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments
and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries&#8217; dividends
and other distributions may be subjected to tighter scrutiny in the future. Any limitation on the ability of our PRC subsidiaries to pay
dividends or make other distributions 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.</p><div>

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

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

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->12<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Risks Relating to Doing Business in China</b></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Substantially all of our operations
are located in China. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant
degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole. The Chinese
economy differs from the economies of most developed countries in many respects, including 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, and has reduced state ownership of productive assets, 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.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While the Chinese economy
has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the
economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of 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. In addition,
in the past, the Chinese government has implemented certain measures, including interest rate increases, to control the pace of economic
growth. These measures may cause decreased economic activity in China, and since 2012, China&#8217;s economic growth has slowed down.
Any prolonged slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect
our business and results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Uncertainties with respect to the PRC legal
system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in laws and regulations in China with
little advance notice could adversely affect us and limit the legal protections available to you and us</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are substantial uncertainties
regarding the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing
our business and the enforcement and performance of our arrangements with customers in certain circumstances. The laws and regulations
are sometimes vague and may be subject to future changes, and their official interpretation and enforcement could be unpredictable, with
little advance notice. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws
and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or
interpreted in a manner different from our current understanding of these laws and regulations. New laws and regulations that affect existing
and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new
PRC laws or regulations may have on our business.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The PRC legal system is a
civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited
for reference but have limited precedential value. In addition, any new or changes in PRC laws and regulations related to foreign investment
in China could affect the business environment and our ability to operate our business in China.</p><div>

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

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From time to time, we may
have to resort to administrative and court proceedings to enforce our legal rights. Any administrative and court proceedings in China
may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court
authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be more difficult
to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal
systems. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect
our business and results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 may
have 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 unpredictability towards our contractual, property and procedural rights could adversely affect our business and impede
our ability to continue our operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The financial and taxation
solution services industry in China is subject to extensive regulation. Related laws and regulations are relatively new and evolving.
The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating
to the financial and taxation solution services industry have created substantial uncertainties regarding the legality of existing and
future foreign investments in, and the businesses and activities of, financial and taxation solution services businesses in China, including
our business. We cannot assure you that we will be able to maintain our existing licenses or obtain new ones. If our operations do not
comply with these new regulations at the time they become effective, or if we fail to obtain any licenses required under these new laws
and regulations, we could be subject to penalties.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">The
PRC government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations
as the government deems appropriate to further regulatory, political and societal goals. The PRC government has recently published new
policies that significantly&#160;affected certain industries, such as the education and internet industries, and 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 and results of operations. Furthermore, the PRC government has recently indicated 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. Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer
or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become
worthless.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><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 the initial public offering to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely
affect our liquidity and our ability to fund and expand our business</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an offshore holding
company conducting our operations in China through our PRC subsidiaries. We may decide to finance our PRC subsidiaries by means of loans
or capital contributions.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any loans to Lichen WFOE,
which is treated as a Foreign Investment Enterprise, or FIE, under PRC law, is subject to PRC regulations and foreign exchange loan registrations.
For example, loans by us to Lichen WFOE to finance its activities cannot exceed statutory limits and must be registered with the local
counterpart of the SAFE, or filed with SAFE in its information system. According to the Notice of the People&#8217;s Bank of China (&#8220;PBOC&#8221;)
and the State Administration of Foreign Exchange on Adjustments to Comprehensive Macro-prudential Regulation Parameters for Cross-border
Financing issued by the People&#8217;s Bank of China and the State Administration of Foreign Exchange in January 2021, the limit for the
total amount of foreign debt is 2 times of their respective net assets. Moreover, any medium or long-term loan to be provided by us to
our PRC subsidiaries must also be filed and registered with the National Development and Reform Commission, or the NDRC. We may also decide
to finance our PRC subsidiaries by means of capital contributions. These capital contributions must be reported to the Ministry of Commerce,
or MOFCOM, or its local counterpart.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe the offering proceeds
would be available for investments in our PRC operation after completing the registration. For example, if we decide to make loans to
our PRC subsidiaries, the loan can be in an amount of up to 2 times of the net assets in the consolidated financial statement. However,
we cannot assure you that we will be able to obtain relevant government registrations or approvals on a timely basis, or at all.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These capital contributions
must be approved by the Ministry of Commerce (&#8220;MOC&#8221;) or its local counterpart. On March 30, 2015, the State Administration
of Foreign Exchange (&#8220;SAFE&#8221;) promulgated Circular of the State Administration of Foreign Exchange on Reforming the Management
Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or Circular 19, which expands a pilot reform
of the administration of the settlement of the foreign exchange capital of foreign-invested enterprises nationwide. Circular 19 came into
force and replaced both previous Circular 142 and Circular 36 on June 1, 2015. On June 9, 2016, SAFE promulgated Circular of the State
Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts,
or Circular 16, to further expand and strengthen such reform. Under Circular 19 and Circular 16, foreign-invested enterprises in the PRC
are allowed to use their foreign exchange funds under capital accounts and RMB funds from exchange settlement for expenditure under current
accounts within their business scope or expenditure under capital accounts permitted by laws and regulations, except that such funds shall
not be used for (i) expenditure beyond the enterprise&#8217;s business scope or expenditure prohibited by laws and regulations; (ii) investments
in securities or other investments than principal-secured products issued by banks; (iii) granting loans to non-affiliated enterprises,
except where it is expressly permitted in the business license; and (iv) construction or purchase of real estate for purposes other than
self-use (except for real estate enterprises). In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted
from foreign currency registered capital of a foreign-invested company. The use of such RMB capital may not be altered without SAFE&#8217;s
approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. Violations
of these circulars could result in severe monetary or other penalties. These circulars may significantly limit our ability to use RMB
converted from the cash provided by our offshore financing activities to fund the establishment of new entities in China by our PRC subsidiaries,
to invest in or acquire any other PRC companies through our PRC subsidiaries.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 to our PRC subsidiaries or future capital contributions by us to our PRC subsidiaries. If we fail
to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from our initial public
offering 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.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>The <span style="background-color: white">filing,
approval or other administration requirements of the CSRC&#160;or other PRC government authorities</span> may be required in connection
with our future offshore offering under PRC law, and, <span style="background-color: white">if required,</span> we cannot predict whether
or for how long we will be able to complete the filing procedure with the CSRC and obtain such approval or complete such filing, as applicable</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The M&amp;A Rules requires
an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies
or individuals to obtain the approval of the China Securities Regulatory Commission (&#8220;CSRC&#8221;) prior to the listing and trading
of such special purpose vehicle&#8217;s securities on an overseas stock exchange. However, the application of the M&amp;A Rules remains
unclear. While the application of the M&amp;A Rules remains unclear, we believe, based on the advice of our PRC counsel, Tianyuan Law
Firm, that the CSRC approval is not required for the listing and trading of our Class A Ordinary Shares on the Nasdaq Capital Market in
the context of the initial public offering, given that the CSRC currently has not issued any definitive rule or interpretation concerning
whether offerings like ours are subject to this regulation and the acquisitions of the 100% equity interests in Lichen Zixun by Legend
Consulting HK is not subject to the M&amp;A Rules. However, our PRC legal counsel has further advised us that there remains some uncertainty
as to how the M&amp;A Rules will be interpreted or implemented in the context of an overseas offering and its opinions summarized above
are subject to any new laws, regulations and rules or detailed implementations and interpretations in any form relating to the M&amp;A
Rules. If CSRC approval is required in the future, it is uncertain whether it would be possible for us to obtain the approval, and any
failure to obtain or delay in obtaining CSRC approval for the initial public offering would subject us to sanctions imposed by the CSRC
and other PRC regulatory agencies. There remains some uncertainty as to how the M&amp;A Rules will be interpreted or implemented in the
context of an overseas offering and the above summary is subject to any new laws, regulations, and rules or detailed implementations and
interpretations in any form relating to the M&amp;A Rules.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors (the &#8220;M&amp;A Rules&#8221;), adopted by six PRC
regulatory agencies in 2006 and amended in 2009, include, among other things, provisions that purport to require that an offshore special
purpose vehicle, formed for the purpose of an overseas listing of securities through acquisitions of domestic enterprises in China or
assets and controlled by enterprises or individuals in China, 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. On September&#160;21, 2006, pursuant to the M&amp;A Rules&#160;and
other PRC laws, the CSRC published on its official website relevant guidance regarding its approval of the listing and trading of special
purpose vehicles&#8217; securities on overseas stock exchanges, including a list of application materials. However, substantial uncertainty
remains regarding the scope and applicability of the M&amp;A Rules&#160;to offshore special purpose vehicles.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">On
July&#160;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. These opinions and
any related implementation rules&#160;to be enacted may subject us to additional compliance requirement in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">Pursuant
to Cybersecurity Review Measures which were issued on December&#160;28, 2021 and became effective on February&#160;15, 2022, network platform
operators holding over one million users&#8217; personal information must apply with the Cybersecurity Review Office for a cybersecurity
review before any public offering at a foreign stock exchange. However, given the Cybersecurity Review Measures were relatively new, there
are substantial uncertainties as to the interpretation, application and enforcement of the Cybersecurity Review Measures. It remains uncertain
whether we should apply for cybersecurity review prior to any offshore offering and that we would be able to complete the applicable cybersecurity
review procedures in a timely manner, or at all, if we are required to do so. In addition, on November&#160;14, 2021, the Cyberspace Administration
of China (the &#8220;CAC&#8221;) published the Administration Regulations on Network Data Security (Draft for Comments), or the Draft
Measures for Network Data Security, which provides that data processors conducting the following activities shall apply for cybersecurity
review: (i)&#160;merger, reorganization or separation 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)&#160;overseas listing
of data processors processing over one million users&#8217; personal information; (iii)&#160;listing in Hong Kong which affects or may
affect national security; (iv)&#160;other data processing activities that affect or may affect national security. The CAC solicited comments
on this draft, but there is no timetable as to when it will be enacted.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">On
February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies
(the &#8220;Overseas Listing Trial Measures&#8221;) and five relevant guidelines, which became effective on March 31, 2023.&#160;</span>
According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either
in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (1) such securities
offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (2) the intended
securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council
in accordance with law; (3) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s)
and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining
the order of the socialist market economy during the latest three years; (4) the domestic company intending to make the securities offering
and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion
has yet been made thereof; or (5) there are material ownership disputes over equity held by the domestic company&#8217;s controlling shareholder(s)
or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
Overseas Listing Trial Measures also provides that if the issuer meets both the following criteria, the overseas securities offering and
listing conducted by such issuer will be deemed as indirect overseas offering by PRC domestic companies: (1) 50% or more of any of the
issuer&#8217;s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements
for the most recent fiscal year is accounted for by domestic companies; and (2) the issuer&#8217;s main business activities are conducted
in China, or its main place(s) of business are located in China, or the majority of senior management staff in charge of its business
operations and management are PRC citizens or have their usual place(s) of residence located in China. Where an issuer submits an application
for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such
application is submitted. In addition, the Overseas Listing Trial Measures provide that the direct or indirect overseas listings of the
assets of domestic companies through one or more acquisitions, share swaps, transfers or other transaction arrangements shall be subject
to filing procedures in accordance with the Overseas Listing Trial Measures. The Overseas Listing Trial Measures also requires subsequent
reports to be filed with the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who
have completed overseas offerings and listings.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">At
a press conference held for these new regulations (&#8220;Press Conference&#8221;), officials from the CSRC clarified that the domestic
companies that have already been listed overseas on or before March 31, 2023 shall be deemed as existing issuers (the &#8220;Existing
Issuers&#8221;). Existing Issuers are not required to complete the filling procedures immediately, and they shall be required to file
with the CSRC upon occurrences of certain subsequent matters such as follow-on offerings of securities. According to the Overseas Listing
Trial Measures and the Press Conference, the existing domestic companies that have completed overseas offering and listing before March
31, 2023, such as us, shall not be required to perform filing procedures for the completed overseas securities issuance and listing. However,
from the effective date of the regulation, any of our subsequent securities offering in the same overseas market or subsequent securities
offering and listing in other overseas markets shall be subject to the filing requirement with the CSRC within three working days after
the offering is completed or after the relevant application is submitted to the relevant overseas authorities, respectively. If it is
determined that any approval, filing or other administrative procedures from other PRC governmental authorities is required for any future
offering or listing, we cannot assure you that we can obtain the required approval or accomplish the required filings or other regulatory
procedures in a timely manner, or at all. If we fail to fulfill filing procedure as stipulated by the Trial Measures or offer and list
securities in an overseas market in violation of the Trial Measures, the CSRC may order rectification, issue warnings to us, and impose
a fine of between RMB1,000,000 and RMB10,000,000. Persons-in-charge and other persons that are directly liable for such failure shall
be warned and each imposed a fine from RMB500,000 to RMB5,000,000. Controlling shareholders and actual controlling persons of us that
organize or instruct such violations shall be imposed a fine from RMB1,000,000 and RMB10,000,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">On
February&#160;24, 2023, the CSRC published the Provisions on Strengthening the Confidentiality and Archives Administration Related to
the Overseas Securities Offering and Listing by Domestic Enterprises (the &#8220;Provisions on Confidentiality and Archives Administration&#8221;),
which came into effect on March 31, 2023. The Provisions on Confidentiality and Archives Administration requires that, in the process
of overseas issuance and listing of securities by domestic entities, the domestic entities, and securities companies and securities service
institutions that provide relevant securities service shall strictly implement the provisions of relevant laws and regulations and the
requirements of these provisions, establish and improve rules&#160;on confidentiality and archives administration. Where the domestic
entities provide with or publicly disclose documents, materials or other items related to the state secrets and government work secrets
to the relevant securities companies, securities service institutions, overseas regulatory authorities, or other entities or individuals,
the companies shall apply for approval of competent departments with the authority of examination and approval in accordance with law
and report the matter to the secrecy administrative departments at the same level for record filing. Where there is unclear or controversial
whether or not the concerned materials are related to state secrets, the materials shall be reported to the relevant secrecy administrative
departments for determination. However, there remain uncertainties regarding the further interpretation and implementation of the Provisions
on Confidentiality and Archives Administration.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this annual
report, <span style="background-color: white">we and our PRC subsidiaries have obtained the requisite licenses and permits from the PRC
government authorities that are material for the business operations of our PRC subsidiaries. In addition, </span>as of the date of this
annual report, <span style="background-color: white">we and our PRC subsidiaries are not required to obtain approval or permission from
the CSRC or the CAC or any other entity that is required to approve our PRC subsidiaries&#8217; operations or required for us to offer
securities to foreign investors under any currently effective PRC laws, regulations, and regulatory rules.</span> If it is determined
that we are subject to filing requirements imposed by the CSRC under the Overseas Listing Regulations or approvals from other PRC regulatory
authorities or other procedures, including the cybersecurity review under the revised <span style="background-color: white">Cybersecurity
Review Measures</span>, for our future offshore offerings, it would be uncertain whether we can or how long it will take us to complete
such procedures or obtain such approval and any such approval could be rescinded. Any failure to obtain or delay in completing such procedures
or obtaining such approval for our offshore offerings, or a rescission of any such approval if obtained by us, would subject us to sanctions
by the CSRC or other PRC regulatory authorities for failure to file with the CSRC or failure to seek approval from other government authorization
for our offshore 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 our
offshore 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 Class A Ordinary Shares. The CSRC or other PRC regulatory authorities
also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the
securities 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 their approvals or accomplish the required filing or other regulatory
procedures for our prior offshore 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 Class A Ordinary Shares.&#160;</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Uncertainties exist with respect to the
interpretation and implementation of the enacted Foreign Investment Law and how it may impact the viability of our current corporate structure,
corporate governance and business operations</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 15, 2019, the PRC
National People&#8217;s Congress approved the Foreign Investment Law, which came into effect on January 1, 2020 and replaces the trio
of existing laws regulating foreign investment in the PRC, 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 and become the legal foundation for foreign investment in the PRC. Meanwhile, the Implementation Regulation of the
Foreign Investment Law and the Measures for Reporting of Information on Foreign Investment came into effect as of January 1, 2020, which
clarified and elaborated the relevant provisions of the Foreign Investment Law.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Foreign Investment Law
sets out the basic regulatory framework for foreign investments and proposes to implement a system of pre-entry national treatment with
a negative list for foreign investments, pursuant to which (i) foreign entities and individuals are prohibited from investing in the areas
that are not open to foreign investments, (ii) foreign investments in the restricted industries must satisfy certain requirements under
the law, and (iii) foreign investments in business sectors outside of the negative list will be treated equally with domestic investments.
The Foreign Investment Law also sets forth necessary mechanisms to facilitate, protect and manage foreign investments and proposes to
establish a foreign investment information reporting system, through which foreign investors or foreign-invested enterprises are required
to submit initial report, report of changes, report of deregistration and annual report relating to their investments to the Ministry
of Commerce, or MOFCOM, or its local branches.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>To the extent cash or assets in the business
is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or for other use
outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our
subsidiaries by the PRC government to transfer cash or assets</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The transfer of funds and
assets among Lichen China Limited, its Hong Kong and PRC subsidiaries are subject to restrictions. The PRC government imposes controls
on the conversion of the RMB into foreign currencies and the remittance of currencies out of the PRC. See &#8220;Risk Factors &#8211;
Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your
investment.&#8221; In addition, the PRC Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate
of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises, unless reduced under treaties or
arrangements between the PRC central government and the governments of other countries or regions where the non-PRC resident enterprises
are tax resident. See &#8220;Risk Factors - Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments
to us, which may have a material adverse effect on our ability to conduct our business.&#8221;&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this annual
report, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of
Hong Kong (including funds from Hong Kong to the PRC), except for the transfer of funds involving money laundering and criminal activities.
However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions
in the future.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of the above,
to the extent cash or assets in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available
to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations
on the ability of us or our subsidiaries by the PRC government to transfer cash or assets.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our PRC subsidiaries are subject to restrictions
on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a holding company incorporated
in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements,
including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If
our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay
dividends or make other distributions to us.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Current PRC regulations permit
our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting
standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits
each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital.
Our PRC subsidiaries may also allocate a portion of their respective after-tax profits based on PRC accounting standards to employee welfare
and bonus funds at their discretion. These reserves are not distributable as cash dividends. These limitation on the ability of our PRC
subsidiaries to pay dividends or make other distributions 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.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Fluctuations in exchange rates could have
a material adverse effect on our results of operations and the price of our Class A Ordinary Shares</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Substantially all of our revenues
and expenditures are denominated in RMB, whereas our reporting currency is the U.S. dollar. As a result, fluctuations in the exchange
rate between the U.S. dollar and RMB will affect the relative purchasing power in RMB terms of our U.S. dollar assets and the proceeds
from our initial public offering. Our reporting currency is the U.S. dollar while the functional currency for our PRC subsidiaries is
RMB. Gains and losses from the re-measurement of assets and liabilities that are receivable or payable in RMB are included in our consolidated
statements of operations. The re-measurement has caused the U.S. dollar value of our results of operations to vary with exchange rate
fluctuations, and the U.S. dollar value of our results of operations will continue to vary with exchange rate fluctuations. A fluctuation
in the value of RMB relative to the U.S. dollar could reduce our profits from operations and the translated value of our net assets when
reported in U.S. dollars in our consolidated financial statements. This could have a negative impact on our business, financial condition
or results of operations as reported in U.S. dollars. If we decide to convert our RMB into U.S. dollars for the purpose of making payments
for dividends on our Class A Ordinary Shares or for other business purposes, appreciation of the U.S. dollar against the RMB would have
a negative effect on the U.S. dollar amount available to us. In addition, fluctuations in currencies relative to the periods in which
the earnings are generated may make it more difficult to perform period-to-period comparisons of our reported results of operations.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The value of the RMB against
the U.S. dollar and other currencies is affected by, among other things, changes in China&#8217;s political and economic conditions and
China&#8217;s foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the
RMB to the U.S. dollar, and the RMB appreciated more than 20% against the U.S. dollar over the following three years. However, the PBOC
regularly intervenes in the foreign exchange market to limit fluctuations in RMB exchange rates and achieve policy goals. During the period
between July 2008 and June 2010, the exchange rate between the RMB and the U.S. dollar had been stable and traded within a narrow range.
Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. Since October 1, 2016, Renminbi
has joined the International Monetary Fund (IMF)&#8217;s basket of currencies that make up the Special Drawing Right (SDR), along with
the U.S. dollar, the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the RMB depreciated significantly in
the backdrop of a surging U.S. dollar and persistent capital outflows of China. With the development of the foreign exchange market and
progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further
changes to the exchange rate system and we cannot assure you that the 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 the Renminbi and the U.S. dollar in the future.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There remains significant
international pressure on the PRC government to adopt a flexible currency policy. Any significant appreciation or depreciation of the
RMB may materially and adversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on,
our Class A Ordinary Shares in U.S. dollars. For example, to the extent that we need to convert U.S. dollars we receive from our initial
public offering into RMB to pay our operating expenses, appreciation of the RMB against the U.S. dollar would have an adverse effect on
the RMB amount we would receive from the conversion. Conversely, a significant depreciation of the RMB against the U.S. dollar may significantly
reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the price of our Class A Ordinary Shares.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Very limited hedging options
are available in China to reduce our exposure to exchange rate fluctuations. As of the date of this annual report, 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 adequately
hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict
our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on the
price of our Class A Ordinary Shares.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The PRC government imposes
controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive
substantially all of our net revenues in RMB. Under our current corporate structure, our company in the Cayman Islands relies on dividend
payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations,
payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made
in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiaries
are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of
such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment
registrations by the beneficial owners of our company who are PRC residents. But approval from, or registration with, appropriate government
authorities is required where RMB 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.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In light of the flood of capital
outflows of China in 2016 due to the weakening RMB, the PRC government has imposed more restrictive foreign exchange policies and stepped
up scrutiny of major outbound capital movement. More restrictions and substantial vetting processes have been put in place by SAFE to
regulate cross-border transactions falling under the capital account. The PRC government may also at its discretion restrict access in
the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient
foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We must remit the offering proceeds to PRC
before they may be used to benefit our business in the PRC, and this process may take a number of months</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The proceeds of the initial
public offering must be sent back to the PRC, and the process for sending such proceeds back to the PRC may take several months after
the closing of the initial public offering. We may be unable to use these proceeds to grow our business until we receive such proceeds
in the PRC. In order to remit the offering proceeds to the PRC, we will have to take the following actions: <i>First</i>, we will open
a special foreign exchange account for capital account transactions. To open this account, we must submit to SAFE certain application
forms, identity documents, transaction documents, form of foreign exchange registration of overseas investments by domestic residents,
and foreign exchange registration certificate of the invested company. <i>Second</i>, we will remit the offering proceeds into this special
foreign exchange account. <i>Third</i>, we will apply for settlement of the foreign exchange. In order to do so, we must submit to SAFE
certain application forms, identity documents, payment order to a designated person, and a tax certificate.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The timing of the process
is difficult to estimate because the efficiencies of different SAFE branches can vary materially. Ordinarily, the process takes several
months to complete but is required by law to be accomplished within 180 days of application. The proceeds of the initial public offering
will be maintained in an interest-bearing account maintained by us in the United States, until the abovementioned approvals have been
provided.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Failure to make adequate contributions to
various employee benefit plans as required by PRC regulations may subject us to penalties</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are required under PRC
laws and regulations 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. If the local governments deem our contribution to
be not sufficient, we may be subject to late contribution fees or fines in relation to any underpaid employee benefits, our financial
condition and results of operations may be adversely affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Currently, we are making contributions
to the plans based on the minimum standards, although the PRC laws required such contributions to be based on the actual employee salaries
up to a maximum amount specified by the local government. If we are required to make increased contributions or are subject to late contribution
fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The M&amp;A Rules and certain other PRC
regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult
for us to pursue growth through acquisitions in China</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Regulations on Mergers
and Acquisitions of Domestic Companies by Foreign Investors, or the M&amp;A Rules, adopted by six PRC regulatory agencies in August 2006
and amended in 2009, and some other regulations and rules concerning mergers and acquisitions, established additional procedures and requirements
that could make merger and acquisition activities by foreign investors more time consuming and complex, including requirements in some
instances that the MOC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC
domestic enterprise. Moreover, the Anti-Monopoly Law requires that the MOC shall be notified in advance of any concentration of undertaking
if certain thresholds are triggered. In addition, the security review rules issued by the MOC that 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 MOC, 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 grow our business by acquiring
complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such
transactions could be time consuming, and any required approval processes, including obtaining approval from the MOC or its local counterparts,
may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our
market share.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>PRC regulations relating to offshore investment
activities by PRC residents may limit our PRC subsidiaries&#8217; ability to increase their registered capital or distribute profits to
us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">SAFE promulgated the Circular
on Relevant Issues Relating to Domestic Resident&#8217;s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles,
or SAFE Circular 37, in July 2014, which requires PRC residents or entities to register with SAFE or its local branch in connection with
their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such
PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating
to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases
in investment amount, transfers or exchanges of shares, or mergers or divisions. SAFE Circular 37 was issued to replace the Notice on
Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas
Special Purpose Vehicles, or SAFE Circular 75. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of
the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular
37, requiring PRC residents or entities to register with qualified banks, rather than SAFE or its local branch, in connection with their
establishment or control of an offshore entity established for the purpose of overseas investment or financing.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If our shareholders who are
PRC residents or entities do not complete their registration as required, our PRC subsidiaries may be prohibited from distributing their
profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute
additional capital to our PRC subsidiaries. Moreover, failure to comply with the SAFE registration described above could result in liability
under PRC laws for evasion of applicable foreign exchange restrictions.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of our shareholders who
directly or indirectly hold shares in Lichen China Limited and who are known to us as being PRC residents have completed the foreign exchange
registrations required in connection with our recent corporate restructuring. However, we may not be informed of the identities of all
the PRC residents or entities holding direct or indirect interest in our company, nor can we compel our beneficial owners to comply with
SAFE registration requirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents
or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations.
Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations
of our PRC subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit
our PRC subsidiaries&#8217; ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely
affect our business and prospects.</p><div>

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

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

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the PRC Enterprise Income
Tax Law and its implementation rules, an enterprise established outside of the PRC with a &#8220;de facto management body&#8221; within
the PRC 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 &#8220;de facto management body&#8221; as the body that exercises full and substantial control
over and overall management of the business, productions, personnel, accounts and properties of an enterprise. In April 2009, the State
Administration of Taxation issued a circular, known as Circular 82, 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. Although this
circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals
or foreigners like us, the criteria set forth in the circular may reflect the State Administration of Taxation&#8217;s general position
on how the &#8220;de facto management body&#8221; test 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.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe none of our entities
outside of China is a PRC resident enterprise for PRC tax purposes. See &#8220;Material Tax Consequences Applicable to U.S. Holders of
Our Ordinary Shares &#8211; People&#8217;s Republic of China Taxation.&#8221; 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; As substantially all of our management members are based in China, it remains unclear how the tax residency rule will apply
to our case. If the PRC tax authorities determine that Lichen China Limited or any of our subsidiaries outside of China is a PRC resident
enterprise for PRC enterprise income tax purposes, then Lichen China Limited or such subsidiary could be subject to PRC tax at a rate
of 25% on its world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise
income tax reporting obligations. Furthermore, if the PRC tax authorities determine that we are a PRC resident enterprise for enterprise
income tax purposes, gains realized on the sale or other disposition of our Class A Ordinary Shares may be subject to PRC tax, at a rate
of 10%, in the case of non-PRC enterprises, or 20%, in the case of non-PRC individuals (in each case, subject to the provisions of any
applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our company would
be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated
as a PRC resident enterprise. Any such tax imposed may reduce the returns on the investment in our Class A Ordinary Shares.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may not be able to obtain certain benefits
under relevant tax treaties on dividends paid by our PRC subsidiaries to us through our Hong Kong subsidiary</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an exempted company
incorporated under the laws of the Cayman Islands and as such rely on dividends and other distributions on equity from our PRC subsidiaries
to satisfy part of our liquidity requirements. Pursuant to the PRC Enterprise Income Tax Law, a withholding tax rate of 10% currently
applies to dividends paid by a PRC &#8220;resident enterprise&#8221; to a foreign enterprise investor, unless any such foreign investor&#8217;s
jurisdiction of incorporation has a tax treaty with China that provides for preferential tax treatment. Pursuant to the Arrangement between
the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or
the Double Tax Avoidance Arrangement, such withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than
25% of a PRC enterprise. Furthermore, the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties,
which became effective in August 2015, require non-resident enterprises to determine whether they are qualified to enjoy the preferential
tax treatment under the tax treaties and file the relevant report and materials with the tax authorities. There are also other conditions
for enjoying the reduced withholding tax rate, according to other relevant tax rules and regulations. As of the date of the annual report,
we did not record any withholding tax on the retained earnings of our subsidiaries in the PRC, as we intended to re-invest all earnings
generated from our PRC subsidiaries for the operation and expansion of our business in China, and we intend to continue this practice
in the foreseeable future. Should our tax policy change to allow for offshore distribution of our earnings, we would be subject to a significant
withholding tax. We cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will
not be challenged by the relevant tax authority or if we will be able to complete the necessary filings with the relevant tax authority
and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our
PRC subsidiaries to HK Beach, our Hong Kong subsidiary.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Enhanced scrutiny over acquisition transactions
by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The PRC tax authorities have
enhanced their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular, equity interests in
a PRC resident enterprise, by a non-resident enterprise by promulgating and implementing Notice of the Ministry of Finance and the State
Administration of Taxation on Several Issues Concerning the Enterprise Income Tax Treatment on Enterprise Reorganization (Circular 59)
and Announcement No. 7 [2015] of the State Administration of Taxation&#8212;Announcement on Several Issues concerning the Enterprise Income
Tax on Income from the Indirect Transfer of Assets by Non-Resident Enterprises (Circular 7) which became effective in February 2015. Under
Circular 7, where a non-resident enterprise conducts an &#8220;indirect transfer&#8221; by transferring the equity interests of a PRC
&#8220;resident enterprise&#8221; indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise,
being the transferor, may be subject to PRC enterprise income tax, if the indirect transfer is considered to be an abusive use of company
structure without reasonable commercial purposes. Circular 7 also provides that, where a non-PRC resident enterprise transfers its equity
interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority
has the power to make a reasonable adjustment to the taxable income of the transaction.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Circular 7 extends its tax
jurisdiction to not only indirect transfers but also transactions involving transfer of other taxable assets, through the offshore transfer
of a foreign intermediate holding company. In addition, Circular 7 provides clear criteria on how to assess reasonable commercial purposes
and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market.
Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer)
of the taxable assets. Where a non-resident enterprise conducts an &#8220;indirect transfer&#8221; by transferring the taxable assets
indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the
transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer.
Using a &#8220;substance over form&#8221; principle, the PRC tax authority may disregard the existence of the overseas holding company
if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the &#8220;Enterprise
Income Tax Law of the People&#8217;s Republic of China&#8221; (adopted on March 16, 2007, first amended on February 24, 2017, and further
amended on December 29, 2018), if the business dealings between an enterprise and its affiliated parties do not conform to the principle
of independent transactions and thus reduce the taxable income or income of the enterprise or its affiliated parties, the tax authorities
have the right to adjust in accordance with reasonable methods. The cost incurred by an enterprise and its related parties in developing
and accepting intangible assets or providing and receiving labor services together shall be apportioned according to the principle of
independent transaction when calculating taxable income.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Where enterprises that are
controlled by resident enterprises or resident enterprises and Chinese residents in the country (region) where the actual tax burden is
obviously lower than the tax rate level of China&#8217;s enterprise income tax, and profits are not distributed or are distributed at
a reduced rate due to reasons other than reasonable business needs, the portion of the above profits attributable to such resident enterprises
shall be included in the income of such resident enterprises for the reported period. Interest expenses incurred when the ratio of creditor&#8217;s
rights investment to equity investment accepted by an enterprise from its affiliated parties exceeds the prescribed standard shall not
be deducted in the calculation of taxable income. If an enterprise reduces its taxable income or income by implementing other arrangements
without reasonable commercial purposes, tax authorities have the right to adjust them in accordance with reasonable methods.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We face uncertainties on the
reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer
of shares in our company by investors that are non-PRC resident enterprises. 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 Circular 59 and Circular 7, and may be required to expend valuable resources to comply with Circular 59 and Circular
7 or to establish that we and our non-resident enterprises should not be taxed under these circulars, which may have a material adverse
effect on our financial condition and results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The PRC tax authorities have
the discretion under Circular 59 and Circular 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. Although we currently have no plans to pursue any acquisitions in
China or elsewhere in the world, we may pursue acquisitions in the future that may involve complex corporate structures. If we are considered
a non-resident enterprise under the PRC Enterprise Income Tax Law and if the PRC tax authorities make adjustments to the taxable income
of the transactions under Circular 59 and Circular 7, our income tax costs associated with such potential acquisitions will be increased,
which may have an adverse effect on our financial condition and results of operations.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The recent joint statement by the SEC and
PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent
criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors
who are not inspected by the PCAOB. These developments could add uncertainties to our offering</i></b></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 18, 2020, Nasdaq filed
three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a &#8220;Restrictive
Market&#8221;, (ii) adopt a new requirement relating to the qualification of management or board of directors 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.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 20, 2020, the U.S.
Senate passed the Holding Foreign Companies Accountable Act (&#8220;HFCAA&#8221;), 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 securities exchange or in the over-the-counter trading market in the U.S. On December
2, 2020, the U.S. House of Representatives approved the HFCAA. On December 18, 2020, the HFCAA was signed into law.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 24, 2021, the SEC
announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of
the HFCAA.&#160;The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms
10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction
and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that
jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to
submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction,
and will also require disclosure in the registrant&#8217;s annual report regarding the audit arrangements of, and governmental influence
on, such a registrant.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 22, 2021, the U.S.
Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the
HFCAA and requiring the SEC to prohibit an issuer&#8217;s securities from trading on any U.S. stock exchange if its auditor is not subject
to PCAOB inspections for two consecutive years instead of three consecutive years.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On September 22, 2021, the
PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under
the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction
because of a position taken by one or more authorities in that jurisdiction.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 2, 2021, the SEC
issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants
that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located
in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in
foreign jurisdictions.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 16, 2021, the
PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting
firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, which determinations
were vacated on December 15, 2022.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 26, 2022, the&#160;PCAOB&#160;announced
that it had signed a Statement of Protocol (the &#8220;SOP&#8221;) with the China Securities Regulatory Commission and the Ministry of
Finance of China. The SOP,&#160;together with two protocol agreements governing inspections and investigations (together, the &#8220;SOP
Agreement&#8221;), establishes a specific, accountable framework to make possible complete inspections and investigations by the&#160;PCAOB&#160;of
audit firms based in mainland China and Hong Kong, as required under U.S. law.</p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 15, 2022, the
PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered
in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable
to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether
the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in
mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor&#8217;s control.
The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections
in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB
has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our auditors, B&amp;V for
the fiscal year ended December 31, 2020 and TPS Thayer for the fiscal year ended December 31, 2021, are both based in the U.S. B&amp;V
withdrew its registration from the PCAOB in January 2022. TPS Thayer is headquartered in Sugar Land, Texas, and its registration with
the PCAOB took effect in September 2020 and it is currently subject to PCAOB inspections.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">However, we cannot assure
you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness
of our auditor&#8217;s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources,
geographic reach or experience as it relates to the audit of our financial statements. In the event it is later determined that the PCAOB
is unable to inspect or investigate completely the Company&#8217;s auditor because of a position taken by an authority in a foreign jurisdiction,
then such lack of inspection could cause trading in the Company&#8217;s securities to be prohibited under the HFCAA and the AHFCAA, and
ultimately result in a determination by a securities exchange to delist the Company&#8217;s securities. The delisting of our Class A Ordinary
Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless.
It remains unclear what the SEC&#8217;s implementation process related to the above rules and amendments will entail or what further actions
the SEC, the PCAOB or Nasdaq will take to address these issues and what impact those actions will have on U.S. companies that have significant
operations in the PRC and have securities listed on a U.S. stock exchange. In addition, the above rules and amendments and any additional
actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create some
uncertainty for investors, the market price of our Class A Ordinary Shares could be adversely affected, and we could be delisted if we
and our auditor are unable to meet the PCAOB inspection requirement or being required to engage a new audit firm, which would require
significant expense and management time.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Trading in our securities may be prohibited
under the HFCAA and as a result an exchange may determine to delist our securities&#160;if it is later determined that the PCAOB is unable
to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The HFCAA, was enacted on
December 18, 2020. The HFCAA states if the SEC determines that a company has filed audit reports issued by a registered public accounting
firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such shares
from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 24, 2021, the SEC
adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. A company
will be required to comply with these rules if the SEC identifies it as having a &#8220;non-inspection&#8221; year under a process to
be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and
trading prohibition requirements described above.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 22, 2021, United States
Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the
HFCAA and requiring the SEC to prohibit an issuer&#8217;s securities from trading on any U.S. stock exchange if its auditor is not subject
to PCAOB inspections for two consecutive years instead of three consecutive years.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Despite that we have a U.S.-based
auditor that is registered with the PCAOB and subject to PCAOB inspection, there are still risks to the company and investors if it is
later determined that the PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority
in a foreign jurisdiction. Such risks include, but are not limited to that trading in our securities may be prohibited under the HFCAA
and as a result an exchange may determine to delist our securities.</p><div>

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

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</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>We are not currently required to obtain any approval from the
CAC. However, it is unclear whether we will be subject to the oversight of the CAC and how such oversight may impact us. Our business
could be interrupted or we could be subject to liabilities which may materially and adversely affect the results of our operation and
the value of your investment</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the PRC Cybersecurity
Law and the Measures for Cybersecurity Censorship (the &#8220;Cybersecurity Review Measures&#8221;) promulgated on April 13, 2020, if
a critical information infrastructure operator purchases internet products and services that affect or may affect national security, it
should be subject to cybersecurity review by the CAC. Any internet product or service that affect or may affect national security as deemed
by the cybersecurity review authorities may be subject to cybersecurity review. According to the Cybersecurity Review Measures, a critical
information infrastructure operator refers to any operator identified by an authority for the protection of critical information infrastructures.
As of the date hereof, we have not received any notice from such authorities identifying us as a critical information infrastructure operator
or requiring us to going through cybersecurity review by the CAC.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 28, 2021, the
CAC and other relevant PRC governmental authorities jointly promulgated the Cybersecurity Review Measures (the &#8220;new Cybersecurity
Review Measures&#8221;) which took effect on February 15, 2022, and replaced the original Cybersecurity Review Measures. Pursuant to the
new Cybersecurity Review Measures, if critical information infrastructure operators purchase network products and services, or network
platform operators conduct data processing activities that affect or may affect national security, they will be subject to cybersecurity
review. A network platform operator holding more than one million users/users&#8217; individual information also shall be subject to cybersecurity
review before listing abroad. The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core
data, important data, or a large amount of personal information being influenced, controlled or maliciously used by foreign governments
and risk of network data security after going public overseas.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As the new Cybersecurity Review
Measures took effect on February 15, 2022, we believe we are not subject to the cybersecurity review by the CAC for the initial public
offering, given that: (i) we are not a network platform operator holding more than one million users&#8217; individual information; and
(ii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data
by the authorities and we will not be required to obtain any permission from the CAC. However, there remains uncertainty as to how the
new Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt
new laws, regulations, rules, or detailed implementation and interpretation related to the new Cybersecurity Review Measures. If any such
new laws, regulations, rules, or implementation and interpretation comes into effect, we expect to take all reasonable measures and actions
to comply and to minimize the adverse effect of such laws on us.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we
can fully or timely comply with such laws. In the event that we are subject to any mandatory cybersecurity review and other specific actions
required by the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given
such uncertainty, we may be further required to suspend our relevant business, shut down our website, or face other penalties, which could
materially and adversely affect our business, financial condition, and results of operations.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b>Risks Relating to
our Class A Ordinary Shares </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>Our CEO has control
over key decision making as a result of his control of a majority of our voting shares</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our authorized and issued
ordinary shares are divided into Class A Ordinary Shares and Class B Ordinary Shares. Holders of Class A Ordinary Shares are entitled
to one vote per share, while holders of Class B Ordinary Shares are entitled to ten votes per share. Lichen China Limited issued Class
A Ordinary Shares in the initial public offering. Each Class B Ordinary Share is convertible into one Class A Ordinary Share at any time
by the holders thereof, while Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Founder, CEO, and our
Chairman of the Board of Directors of the Company, or the Board, Mr. Ya Li, has voting rights with respect to an aggregate of 9,000,000
Class B Ordinary Shares, representing 83.72% of the voting power of our issued and outstanding Ordinary Shares as of the date of this
annual report. As a result, Mr. Li has the ability to control the outcome of matters submitted to our shareholders for approval, including
the election of directors and any merger, consolidation, or sale of all or substantially all of our assets. In addition, Mr. Li has the
ability to control the management and affairs of our Company, as a result of his position as our CEO and his ability to control the election
of our directors. Additionally, in the event that Mr. Li controls our Company at the time of his death, control may be transferred to
a person or entity that he designates as his successor. As a board member and officer, Mr. Li owes a fiduciary duty to our Company and
must act in good faith in a manner he reasonably believes to be in the best interests of our Company. As a beneficial shareholder, even
a controlling beneficial shareholder, Mr. Li is entitled to vote his shares, and shares over which he has voting control as a result of
voting agreements, in his own interests, which may not always be in the interests of our shareholders generally.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Future issuances of our Class B Ordinary
Shares may be dilutive to the voting power of our Class A Ordinary Shareholders</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Future issuances of our Class
B Ordinary Shares, which can be approved by our Board of Directors, could result in dilution to existing holders of our Class A Ordinary
Shares. Such issuances, or the perception that such issuances may occur, could depress the market price of the Class A Ordinary Shares.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, there might be
impact of the conversion of Class B Ordinary Shares on holders of Class A Ordinary Shares, including dilution and the reduction in aggregate
voting power, as well as the potential increase in the relative voting power if any Class B holder retains their shares.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>The dual-class structure of our ordinary shares may adversely
affect the trading market for the Class A Ordinary Shares </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain shareholder advisory
firms have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the
S&amp;P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total
voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the
use of multiple class structures. As a result, the dual class structure of our ordinary shares may prevent the inclusion of the Class
A Ordinary Shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance
practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active
trading market for our Class A Ordinary Shares. Any actions or publications by shareholder advisory firms critical of our corporate governance
practices or capital structure could also adversely affect the value of the Class A Ordinary Shares.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>As a &#8220;controlled
company&#8221; under the rules of the Nasdaq Capital Market, we may choose to exempt our Company from certain corporate governance requirements
that could have an adverse effect on our public shareholders</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our directors and officers
beneficially own a majority of the voting power of our issued and outstanding Ordinary Shares. Under the Rule 4350(c) of the Nasdaq Capital
Market, a company of which more than 50% of the voting power is held by an individual, group or another company is a &#8220;controlled
company&#8221; and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of
our directors be independent, as defined in the Nasdaq Capital Market Rules, and the requirement that our compensation and nominating
and corporate governance committees consist entirely of independent directors. Although we do not intend to rely on the &#8220;controlled
company&#8221; exemption under the Nasdaq listing rules, we could elect to rely on this exemption in the future. If we elect to rely on
the &#8220;controlled company&#8221; exemption, a majority of the members of our Board of Directors might not be independent directors
and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly,
during any time while we remain a controlled company relying on the exemption and during any transition period following a time when we
are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to
all of the Nasdaq Capital Market corporate governance requirements. Our status as a controlled company could cause our Class A Ordinary
Share to look less attractive to certain investors or otherwise harm our trading price.</p><div>

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

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

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are an &#8220;emerging growth company,&#8221;
and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A Ordinary
Shares less attractive to investors</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an &#8220;emerging
growth company,&#8221; as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be
an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of
Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval
of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could
lose that status sooner if our revenues exceed $1.235 billion, if we issue more than $1 billion in non-convertible debt in a three-year
period, or if the market value of our Class A Ordinary Shares held by non-affiliates exceeds $700 million before that time, in which case
we would no longer be an emerging growth company as of the following December 31. We cannot predict if investors will find our Class A
Ordinary Shares less attractive because we may rely on these exemptions. If some investors find our Class A Ordinary Shares less attractive
as a result, there may be a less active trading market for our Class A Ordinary Shares and our stock price may be more volatile. &#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the JOBS Act, emerging growth companies can
also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected
to avail our company of this exemption from new or revised accounting standards and, therefore, will be subject to accounting standards
that are available to emerging growth companies.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are a &#8220;foreign private issuer,&#8221;
and our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information
as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate
our performance and prospects</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lichen China Limited is a
foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act,
we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting
companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed
individual executive compensation information. Furthermore, our directors and executive officers will not be required to report equity
holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime.
As a foreign private issuer, we will also be exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant
to ensure that select groups of investors are not privy to specific information about an issuer before other investors. However, we will
still be subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the
disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should
not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Because we are a foreign private issuer
and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would
have if we were a domestic issuer </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Nasdaq Listing Rule requires
listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we
are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above
requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a
majority of our board to consist of independent directors. Thus, although a director must act in the best interests of the Company, it
is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our
company may decrease as a result. In addition, the Nasdaq Listing Rules also require U.S. domestic issuers to have a compensation committee,
a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three
members. We, as a foreign private issuer, are not subject to these requirements. The Nasdaq Listing Rules may require shareholder approval
for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and
material revisions to those plans, certain ordinary share issuances. We comply with the requirements of Nasdaq Listing Rules in determining
whether shareholder approval is required on such matters and to appoint a nominating and corporate governance committee. However, we may
consider following home country practice in lieu of the requirements under Nasdaq Listing Rules with respect to certain corporate governance
standards which may afford less protection to investors.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"></p><div>

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    </div><!-- Field: /Page --><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 may not be 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 standing to initiate a shareholder derivative action in a federal court of
the United States.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a Cayman Islands exempted
company and substantially all of our assets are located outside of the United States. In addition, a majority of our current directors
and officers are nationals and/or residents of countries other than the United States. All or a substantial portion 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 the
PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding
the relevant laws of the Cayman Islands and the PRC, see &#8220;Enforceability of Civil Liabilities.&#8221;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Shareholder claims, including
securities law class actions and fraud claims, are common in the United States and are generally difficult to pursue as a matter of law
or practicability in China. For example, in China, there are significant legal and other barriers to obtaining information needed for
shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local 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 regulatory cooperation with the securities regulatory authorities in the United States
have not been efficient in the absence of a mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities
Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection
activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators or other relevant
authorities, no entity or individual may provide any documents and materials relating to securities business activities to foreign entities
or government agencies.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Nasdaq may apply additional and more stringent
criteria for our initial and continued listing because we plan to have a small public offering and insiders will hold a large portion
of the company&#8217;s listed securities</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Nasdaq Listing Rule 5101 provides
Nasdaq with broad discretionary authority over the initial and continued listing of securities in Nasdaq and Nasdaq may use such discretion
to deny initial listing, apply additional or more stringent criteria for the initial or continued listing of particular securities, or
suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes initial or continued
listing of the securities on Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though the securities meet all enumerated
criteria for initial or continued listing on Nasdaq. In addition, Nasdaq has used its discretion to deny initial or continued listing
or to apply additional and more stringent criteria in the instances, including but not limited to: (i) where the company engaged an auditor
that has not been subject to an inspection by the PCAOB, an auditor that PCAOB cannot inspect, or an auditor that has not demonstrated
sufficient resources, geographic reach, or experience to adequately perform the company&#8217;s audit; (ii) where the company planned
a small public offering, which would result in insiders holding a large portion of the company&#8217;s listed securities. Nasdaq was concerned
that the offering size was insufficient to establish the company&#8217;s initial valuation, and there would not be sufficient liquidity
to support a public market for the company; and (iii) where the company did not demonstrate sufficient nexus to the U.S. capital market,
including having no U.S. shareholders, operations, or members of the Board of Directors or management. Our public offering will be relatively
small and the insiders of our Company will hold a large portion of the company&#8217;s listed securities. Nasdaq might apply the additional
and more stringent criteria for our initial and continued listing, which might cause delay or even denial of our listing application.&#160;</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we cannot satisfy, or continue to satisfy,
the continued listing requirements and other rules of Nasdaq Capital Market, although we exempt from certain corporate governance standards
applicable to US issuers as a Foreign Private Issuer, our securities may not be listed or may be delisted, which could negatively impact
the price of our securities and your ability to sell them </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are listed on the Nasdaq
Capital Market. We cannot assure you that we will be able to meet those continued listing requirements in the future. Even if our securities
are listed on the Nasdaq Capital Market, we cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market.
In addition, in order to maintain our listing on the Nasdaq Capital Market, we will be required to comply with certain rules of Nasdaq
Capital Market, including those regarding minimum stockholders&#8217; equity, minimum share price and certain corporate governance requirements.
Even if we initially meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue
to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our
listing, our securities could be subject to delisting.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the Nasdaq Capital Market
does not list our securities, or subsequently delists our securities from trading, we could face significant consequences, including:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a
limited availability for market quotations for our securities;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reduced
liquidity with respect to our securities;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a
determination that our Class A Ordinary Share is a &#8220;penny stock,&#8221; which will require brokers trading in our Class A Ordinary
Share to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for
our Class A Ordinary Share;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">limited
amount of news and analyst coverage; and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a
decreased ability to issue additional securities or obtain additional financing in the future.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The market price of our Class A Ordinary
Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above
the public offering price</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The market price of our Class
A Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">actual
or anticipated fluctuations in our revenue and other operating results;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">actions
of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow
our company, or our failure to meet these estimates or the expectations of investors;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">announcements
by us or our competitors of significant services or features, technical innovations, acquisitions, strategic partnerships, joint ventures,
or capital commitments;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">price
and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">lawsuits
threatened or filed against us; and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">other
events or factors, including those resulting from war or incidents of terrorism, or responses to these events.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->30<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the stock markets
have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities
of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance
of those companies. In the past, shareholders have filed securities class action litigation following periods of market volatility. If
we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management
from our business, and adversely affect our business.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The price of our Class A Ordinary Shares
could be subject to rapid and substantial volatility and there may not be an active, liquid trading market for our Class A Ordinary Shares.</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There have been instances
of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings,
especially among those with relatively smaller public floats. As a relatively small-capitalization company with relatively small public
float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization
companies. In particular, our Class A Ordinary Shares may be subject to&#160;rapid and substantial price&#160;volatility, low volumes
of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected
operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing
value of our Class A Ordinary Shares.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, if the trading
volumes of our Class A Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence prices of
our Class A Ordinary Shares. This low volume of trades could also cause the price of our Class A Ordinary Shares to fluctuate greatly,
with large percentage changes in price occurring in any trading day session. Holders of our Class A Ordinary Shares may also not be able
to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations
and general economic and political conditions may also adversely affect the market price of our Class A Ordinary Shares. As a result of
this volatility, investors may experience losses on their investment in our Class A Ordinary Shares. A decline in the market price of
our Class A Ordinary Shares also could adversely affect our ability to issue additional shares of Class A Ordinary Shares or other of
our securities and our ability to obtain additional financing in the future.&#160;No assurance can be given that an active market in our
Class A Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Class A Ordinary Shares may
be unable to readily sell the shares they hold or may not be able to sell their shares at all.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we fail to establish and maintain proper
internal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could
be impaired</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Prior to our initial public
offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls
and procedures. We will be in a continuing process of developing, establishing, and maintaining internal controls and procedures that
will allow our management to report on, and our independent registered public accounting firm to attest to, our internal controls over
financial reporting if and when required to do so under Section 404 of the Sarbanes-Oxley Act of 2002. Although our independent registered
public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section
404(b) of the Sarbanes-Oxley Act until the date we are no longer an emerging growth company, our management will be required to report
on our internal controls over financial reporting under Section 404.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this annual
report, our management has assessed the effectiveness of our internal control over financial reporting. The material weaknesses relate
to that the Company does not have in-house accounting personnel with sufficient knowledge of US GAAP and SEC reporting experiences. Management
concluded that as of the date of this annual report, our internal control over financial reporting was ineffective.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to address and resolve
the foregoing material weakness, we have implemented measures designed to improve our internal control over financial reporting to remediate
this material weakness, including hiring consultants who have requisite training and experience in the preparation of financial statements
in compliance with applicable SEC requirements. In addition to hiring outside consultant, we also plan to take remedial measures including
(i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the
financial reporting function and to set up a financial and system control framework; (ii) implementing regular and continuous U.S. GAAP
accounting and financial reporting training programs for our accounting and financial reporting personnel; (iii) setting up an internal
audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements
and improvement of overall internal control; and (iv) appointing independent directors, establishing an audit committee, and strengthening
corporate governance.</p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The implementation of these
measures may not fully address the material weaknesses in our internal control over financial reporting, and we cannot conclude that they
have been fully remedied. Our failure to correct theses material weaknesses or our failure to discover and address any other material
weaknesses could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial
reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations
and prospects, as well as the trading price of our Class A Ordinary Shares, may be materially and adversely affected. Moreover, ineffective
internal control over financial reporting significantly hinders our ability to prevent fraud. We are a public company in the United States
subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, will require that we include
a report from management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual
report for the fiscal year ending December 31, 2022. In addition, once we cease to be an &#8220;emerging growth company&#8221; as such
term is defined in 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, after we become 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.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We do not intend to pay dividends for the
foreseeable future</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently intend to retain
any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the
foreseeable future. As a result, you may only receive a return on your investment in our Class A Ordinary Shares if the market price of
our Class A Ordinary Shares increases.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We will incur additional costs as a result
of becoming a public company, which could negatively impact our net income and liquidity</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">After our initial public offering,
we become a public company in the United States. As a public company, we will incur significant legal, accounting and other expenses that
we did not incur as a private company. In addition, Sarbanes-Oxley and rules and regulations implemented by the SEC and the Nasdaq Capital
Market require significantly heightened corporate governance practices for public companies. We expect that these rules and regulations
will increase our legal, accounting and financial compliance costs and will make many corporate activities more time-consuming and costly.
We do not expect to incur materially greater costs as a result of becoming a public company than those incurred by similarly sized U.S.
public companies. If we fail to comply with these rules and regulations, we could become the subject of a governmental enforcement action,
investors may lose confidence in us and the market price of our Class A Ordinary Shares could decline.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The obligation to disclose information publicly
may put us at a disadvantage to competitors that are private companies</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon completion of our initial
public offering, we become a publicly listed company in the United States. As a publicly listed company, we will be required to file annual
reports with the Securities and Exchange Commission. In some cases, we will need to disclose material agreements or results of financial
operations that we would not be required to disclose if we were a private company. Our competitors may have access to this information,
which would otherwise be confidential. This may give them advantages in competing with our company. Similarly, as a U.S.-listed public
company, we will be governed by U.S. laws that our competitors, which are mostly private Chinese companies, are not required to follow.
To the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public listing
could affect our results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>There can be no
assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable
year, which could subject United States investors in our Class A Ordinary Shares to significant adverse United States income tax consequences</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
will be classified as a passive foreign investment company, or PFIC, for any taxable year if either (i) 75% or more of our gross income
for such year consists of certain types of &#8220;passive&#8221; income, or (ii) 50% or more of the value of our assets (determined on
the basis of a quarterly average) during such year produce or are held for the production of passive income (the &#8220;asset test&#8221;).
Based upon our current and expected income and assets, as well as projections as to the market price of our Class A Ordinary Shares, we
do not presently expect to be classified as a PFIC for the current taxable year or the foreseeable future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">While
we do not expect to be a PFIC, because the value of our assets, for purposes of the asset test, may be determined by reference to the
market price of our Class A Ordinary Shares, fluctuations in the market price of our Class A Ordinary Shares may cause us to become a
PFIC classification for the current or subsequent taxable years. The determination of whether we will be or become a PFIC will also depend,
in part, on the composition and classification of our income, including the relative amounts of income generated by and the value of assets
of our potential strategic investment business as compared to our other businesses. Because there are uncertainties in the application
of the relevant rules, it is possible that the U.S. Internal Revenue Service, or IRS, may challenge our classification of certain income
and assets as non-passive which may result in our being or becoming a PFIC in the current or subsequent years. In addition, the composition
of our income and assets will also be affected by how, and how quickly, we use our liquid assets and the cash raised in the initial public
offering. If we determine not to deploy significant amounts of cash for active purposes, our risk of being a PFIC may substantially increase.
Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after
the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable
year.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are a PFIC in any taxable
year, a U.S. Holder (as defined in &#8220;Taxation&#8212;United States Federal Income Tax Considerations&#8221;) may incur significantly
increased United States income tax on gain recognized on the sale or other disposition of our Class A Ordinary Shares and on the receipt
of distributions on our Class A Ordinary Shares to the extent such gain or distribution is treated as an &#8220;excess distribution&#8221;
under the United States federal income tax rules, and such holder may be subject to burdensome reporting requirements. Further, if we
are a PFIC for any year during which a U.S. Holder holds our Class A Ordinary Shares, we will generally continue to be treated as a PFIC
for all succeeding years during which such U.S. Holder holds our Class A Ordinary Shares. For more information see &#8220;Item 10. Additional
Information&#8212;10.E. Taxation&#8212;United States Federal Income Tax Considerations&#8212;Passive Foreign Investment Company Rules.&#8221;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Relating to our Business</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our business, financial condition and results
of operations may be affected due to the COVID-19 pandemic and other diseases or epidemic</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any occurrence of disease
or epidemic may cause material disruptions to our business operations. In particular, during the occurrence of a disease or epidemic,
we may not be able to deliver our services as efficiently and effectively as before such occurrence. In such event, we may not be able
to conduct physical meetings with our customers or our customers may be less inclined to meet with us, and the Partnered Institutions
may temporarily close their education premises or postpone or cancel scheduled talks and seminars, or our external experts may encounter
difficulties hosting seminars or talks at the Partnered Institutions&#8217; premises due to travel restrictions. As a result, we may experience
disruption in our on-site expert support services provided to the Partnered Institutions. The outbreak of COVID-19 in early 2020 had temporarily
disrupted our business operations, which temporarily suspended our business operations after the Chinese New Year. We resumed full operation
as of February 10, 2020. Our Partnered Institutions also temporarily suspended provision of in-person trainings, seminars or talks and
gradually resumed these trainings, seminars and talks in late May 2020. The overall confidence and interest of the customers or investors
in the general economy in China was affected due to COVID-19, which in turn directly affected the growth and development of business companies
in the market and the demand for financial and taxation solution services. Since the outbreak of COVID-19, the impact to our business
was mainly on the on-site consultation services. Due to travel restrictions, our external experts could not provide on-site consultation
services to our customers, we therefore modified our business model by providing remote services first and postponed or reduced part of
our on-site procedures. The areas where our Partnered Institutions located were not greatly affected by the pandemic and the total number
of Partnered Institutions remained stable. Our business of software and maintenance services accounts approximately for 10% of our total
sales, and the impact on suppliers such as textbook and software service providers is negligible. After taking corresponding measures,
most of our customers&#8217; business and operations have returned to pre-pandemic level since the second quarter of 2020. Our total revenue
for the year ended December 31, 2021 has increased by 11.83% to approximately $34.30 million compared to the total revenue of $30.67 million
for the year ended December 31, 2020. Our total revenue for the six months ended June 30, 2022 has decreased by 4.93% to approximately
$16.15 million compared to the total revenue of $16.99 million for the six months ended June 30,2021. We do not believe that the pandemic
had overall material adverse effect on our business, financial condition and results of operations. However, there is no assurance that
there will be no recurrence of any outbreak of diseases such as COVID-19, Severe Acute Respiratory Syndrome (SARS), Middle East Respiratory
Syndrome Coronavirus (MERS-CoV) or any other contagious disease or epidemic in major cities or provinces in China in which we conduct
business. Any occurrence of disease or epidemic in the future could have a material and adverse effect on our business, financial condition
and results of operations.&#160;</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may incur impairment losses for intangible
assets, which may adversely affect our results of operations</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As reported in our consolidated
financial statements for the years ended December 31, 2022 and 2021, our intangible assets amounted to approximately $4.52 million and
$3.87 million as of December 31, 2022 and 2021, respectively. Intangible assets are tested for impairment whenever there is indication
that their carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of our
intangible assets exceeds their recoverable amount. The process of assessment is uncertain and complex and requires judgments in relation
to such events or changes in circumstances. If our intangible assets are determined to be impaired in the future, we would be required
to write down the carrying value by recognized impairment loss for our intangible assets in our consolidated financial statements during
the period in which the relevant intangible assets are determined to be impaired, which may in turn adversely affect our results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our results of operations may be adversely
affected by credit risk associated with our financial assets through profit and loss </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our financial assets primarily
consist of trade and other receivables and bank balances and cash. We recognize loss allowances for expected credit allowances (&#8220;ECL&#8221;)
on financial assets measured at amortized costs. We measure loss allowances at an amount equal to lifetime ECL. When determining whether
the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, we consider reasonable
and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on our historical experience and informed credit assessment and including forward-looking information.
Any decrease in value of a financial asset is recorded as other losses, and therefore will directly affect our results of operations.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Our business depends on the market recognition of our &#8220;Lichen&#8221;
brand name </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that the market
awareness and reputation of our &#8220;Lichen&#8221; brand name has contributed significantly to the success and growth of our business.
We also believe that maintaining and enhancing the &#8220;Lichen&#8221; brand name is critical to maintaining our competitive advantage.
Our ability to maintain our brand reputation depends on a number of factors, some of which are beyond our control. As we continue to grow
in size, expand our services and extend our geographical coverage through our own growth and expansion, and through our education support
services provided to the Partnered Institutions, it may become difficult to maintain quality and consistency in the services we provide,
which may lead to diminishing confidence in our &#8220;Lichen&#8221; brand name as well as our financial and taxation solution services,
education support services and software and maintenance services. Numerous factors can potentially impact the reputation of our &#8220;Lichen&#8221;
brand name, including but not limited to customers&#8217; satisfaction with our financial and taxation solution services, education support
services and software and maintenance services, performance of the external experts, negative press, and unaffiliated parties using our
brand name. If our brand is tarnished, customers&#8217; interest in us may decrease and our business could be materially and adversely
affected. If we are unable to maintain or sustain our brand reputation and recognition, we may also be unable to maintain or increase
customers&#8217; patronage, which may cause material adverse effects on our business, financial condition and results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our revenue was mainly derived from financial
and taxation solution services projects, which are not recurring in nature and there is no assurance that our customers will provide us
with new business</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our revenue was mainly derived
from financial and taxation solution services projects which are non-recurring in nature. For the years ended December 31, 2022, 2021,
and 2020, revenue generated from our financial and taxation solution services amounted to approximately $26.28 million, $26.49 million,
and $23.34 million, representing approximately 77.73%, 77.24%, and 76.10% of our total revenue, respectively. Our customers are not obliged
to renew such agreements with us should their business no longer requires our services. Further, the fees for our financial and taxation
solution services are primarily based on, amongst others, the nature and estimated scope of services. However, there can be no assurance
that we will be able to maintain or raise the level of our fees we charge our customers in the future, or even if we are able to maintain
or raise such fees, we cannot assure you that we will be able to attract prospective customers to engage us for the relevant financial
and taxation solution services at such increased fee rates. There is no guarantee that with our continued efforts, we will be able to
secure new businesses from recurring customers effectively or at all at the same level of fees we charged. Accordingly, the number and
scale of agreements and the amount of revenue we are able to secure may vary significantly from year to year, and it may be difficult
to accurately forecast the volume and size and scale of future business.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event that we are unable
to maintain our business with our recurring customers or to expand and diversify our customer base by sourcing new customers at desired
levels or at all, or to develop and expand our service diversity, or to meet the requirements of our customers regarding service quality
and delivery or any other requirements of our customers at reasonable or affordable costs, our relationship with our customers, our business,
financial condition and results of operations could be materially and adversely affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may not be able to sufficiently guarantee
the legal compliance and service quality standards of the Partnered Institutions under the Partnership Agreements and failure of the Partnered
Institutions to meet requisite standard of service quality and compliance could materially and adversely affect our reputation, business,
financial condition and results of operations</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our customers, being the Partnered
Institutions under the partnership agreements (the &#8220;Partnership Agreements,&#8221; each a &#8220;Partnership Agreement&#8221;),
are required to meet basic standards of service quality and compliance as stipulated in the Partnership Agreements when operating their
business under our &#8220;Lichen&#8221; brand name. However, there is no assurance that Partnered Institutions will be able to continuously
maintain such basic standards and our brand name will suffer as a result of their non-fulfillment by delivering subpar services. There
is also no assurance that the Partnered Institutions will be in continuous compliance with the relevant PRC laws and regulations in obtaining
the necessary approvals, licenses and permits and making all necessary registrations and filings for their education business in the PRC.
As a consequence, our reputation and our &#8220;Lichen&#8221; brand name may be tarnished. Lichen Zixun has terminated two Partnership
Agreements with two Partnered Institutions which did not or could not obtain relevant licenses or permits for conducting education and
training activities. In the event any of the Partnered Institutions fail to be in compliance with the PRC laws and regulations resulting
in penalty or closure orders from the relevant authorities in the PRC, our reputation and marketing activities may be hampered and our
reputation and business, financial condition and results of operations may be materially and adversely affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Failure to maintain our relationship with
our external experts could materially and adversely affect our business, financial condition and results of operations</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this annual
report, we have a team of 47 external experts. These external experts primarily conduct courses for the Partnered Institutions, participate
in our promotional activities and events and occasionally provide financial and taxation solution services to our customers on an &#8220;as
needed&#8221; basis. The external experts are one of the key components of our education support services and financial and taxation solution
services, which we believe distinguishes us from our competitors. We believe that the knowledge and know-how of the external experts,
enables us to stay at the forefront as a service provider in financial and taxation solution and education support services in the PRC
and to continue to develop financial and taxation related course contents and innovative solutions. However, our current and future competitors
may compete with us for the external experts. There is no assurance that the external experts will continue to partner and cooperate with
us or will not cooperate with our competitors after the expiry of the terms under the Expert Cooperation Agreements (defined below). If
we are unable to maintain our relationship with the external experts, our business and results of operations could be materially and adversely
affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may not be successful in developing and
enhancing our teaching and learning materials provided to the Partnered Institutions or our self-developed software to keep abreast with
the latest developments in the relevant laws and regulations in the PRC and technological changes</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The laws and regulations in
relation to the financial and taxation sectors are constantly evolving in the PRC. For example, since January 2012, China has begun the
pilot program to replace the business tax with value-added tax in several provinces and the reform was officially implemented nationwide
in May 2016. In 2016, the new tax management system of &#8220;Golden Tax System Phase III&#8221; was established in China. In 2018, the
National People&#8217;s Congress and Chinese People&#8217;s Political Consultative Conference launch the institutional reform of the state
council, which points out that the reform of the tax collection and management system, and the combination of provincial and provincial
level and local taxation institutions. In addition, with the issuance of the Accounting Standard for Small Enterprises in 2011 and the
Opinions of the State Council on Supporting the Sound Development of Micro and Small Enterprises in 2014, the PRC government established
a standard to regulate the accounting measurement and now encourages micro and small enterprises to seek professional financial and taxation
solution advice and services. We currently rely on our R&amp;D department to improve our teaching and learning materials provided to the
Partnered Institutions. We are responsible for conducting studies into the trending topics in relation to the financial and taxation solution
sector. With respect to our self-developed software, the introduction of new technology and emergence of new industry standards may render
our self-developed software obsolete and uncompetitive. For the years ended December 31, 2022, 2021, and 2020, we incurred R&amp;D expenses
of approximately $1.06 million, $1.08 million, and $0.93 million, respectively. We expect to continue to invest in our human and capital
resources to ensure our teaching and learning materials, as well as our self-developed software, reflect the latest developments and changing
customer needs. If we fail to develop and enhance our teaching and learning materials provided to the Partnered Institutions so as to
keep up with and reflect the latest financial and taxation developments in the PRC, or to introduce updated versions of our existing self-developed
software or introduce new software, our brand reputation and relationship among our customers and with the Partnered Institutions may
be materially affected, thus our results of operations, financial condition and prospects may be materially and adversely affected.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may not be able to enforce the restrictive
covenants of the employment contracts against our employees, confidentiality and non-compete agreements against our senior management,
and Expert Cooperation Agreements against the external experts, to prevent them from directly competing with us within the restraint period</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Generally, our employees and
our senior management enter into employment contracts and separate confidentiality and non-compete agreements with us, respectively. The
external experts enter into expert cooperation agreements with us (the &#8220;Expert Cooperation Agreements,&#8221; each an &#8220;Expert
Cooperation Agreement&#8221;). All of the aforesaid contracts and agreements are subject to restrictive covenants governed by PRC law.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If any dispute arises between
our employees, senior management or external experts and us, we may not necessarily be able to enforce these employment contracts or confidentiality
and non-compete agreements against our employees or senior management or Expert Cooperation Agreements against the external experts, and
the enforceability of restrictive covenants may only be determined by the courts on a case-by-case basis. It is thus difficult to predict
the outcome of the proceedings or gauge the level of legal protection that such proceedings may provide. If we cannot enforce the restrictive
covenants of the employment contracts, confidentiality and non-compete agreements or Expert Cooperation Agreements, the relevant person
may leave us upon or before the expiry of their engagement and join a competitor or form a competing company immediately after leaving
us, which may disrupt our business and materially and adversely affect our financial condition and results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>We may not be able to retain members of our management
team and other key personnel</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We depend on the continued
efforts of our senior management team and other key employees for our success. Our executive officers have an average of 21 years of experience
in the PRC&#8217;s financial and taxation industry, of which an average of 14 years has been spent with us. They possess in-depth understanding
of our target industries, our customers and competitors and the laws regulating our business. In addition, our executive officers also
deliver talks and participate in seminars hosted by our Partnered Institutions. Therefore, they play an important role in formulating
and implementing appropriate strategies for achieving business success. However, we may not be able to retain the services of our key
management. The loss of service of any of our key management, in particular our executive officers, could impair our ability to operate
and make it difficult to implement our business and growth strategies. We may not be able to replace such persons within a reasonable
period of time or with another person of equivalent expertise and experience in a timely manner, or at all, which may severely disrupt
our business operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, our R&amp;D team
is responsible for maintaining high-quality teaching and learning materials provided to the Partnered Institutions and our software technicians
are responsible for designing and developing our self-developed software. However, we cannot assure you that any of the core R&amp;D team
or software technicians will continue his/her employment with us or won&#8217;t leave their position due to other reasons beyond our control.
The loss of service of any member of our core R&amp;D team or software technicians could impair our ability to or delay the development
of our teaching and learning materials and self-developed software which contributes an important part of our education support services
and software and maintenance services. As a result, our business, financial condition and results of operations may be materially and
adversely affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our business, financial condition and results
of operations may be affected if our customers do not pay the progress payments in full or on schedule or if we fail to bill</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under our financial and taxation
solution services, we normally receive progress payments from our customers at various stages of our services rendered, as stipulated
in the agreements.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the years ended December
31, 2022 and 2021, our average trade receivables turnover days were approximately 40.4 days and 33.8 days, respectively, which were largely
in line with our general credit period of 30 days. There can be no assurance that progress payments will be timely paid to us and in full
in accordance with the progress payment schedules. Should we fail to receive progress payments from our customers for our work performed
under the financial and taxation solution projects, our business, financial condition and results of operations may be materially and
adversely affected.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our financial and taxation solution services
may attract liability </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our financial and taxation
solution services normally involve providing advice to our customers. A customer who relies on our advice may suffer loss if we are negligent
in providing such advice and the customer may have legal cause to claim compensation against us. In this regard, we are exposed to possible
claims or lawsuits arising from such complaints. Should we experience any incident, such as claims or lawsuits, our &#8220;Lichen&#8221;
brand name and our financial position may be adversely affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our self-developed software products are
exposed to product liability risk </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our financial and taxation
training software and financial and taxation analysis software are designed to be used by our customers for learning and teaching purposes
and practical business purposes, respectively, and may be critical to our customers&#8217; business operations. Any bugs, defects or errors
in our software may cause damage to our customers&#8217; system and hardware, and adversely affect the performance of such software or
our customers&#8217; operations. There is no assurance that we have discovered and corrected all bugs, defects or errors in our self-developed
software in our testing process. As such, we may incur additional costs in rectifying the defects or defending any potential claims or
lawsuits against us. We do not maintain any product liability insurance for our self-developed software at present. If any of our customers
initiates a claim or lawsuit with regard to our self-developed software against us, we may be liable to monetary damages or other liabilities
and our reputation, business, financial condition and results of operations may be adversely affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are exposed to software source code storage
risk </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our source codes and master
copies of self-developed software are stored at our premises. We have implemented various measures, such as a restrictive access system,
to safeguard these source codes and master copies of software. We also back up the source codes of our self-developed software from time
to time. Nevertheless, there is no guarantee that such measures are sufficient or effective for the protection of the source codes and
master copies of our self-developed software. Any damage to or loss of our source codes and master copies of self-developed software could
adversely affect our business, financial condition and results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Any loss or deterioration of our relationship
with external software developers may affect our business, financial condition and results of operations </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We engage external software
developers to design and develop our software prototype. Any failure on our part to properly optimize, operate, safeguard the intellectual
properties including the source code of the software prototype, or perform our contractual obligations under agreements with them may
cause substantial harm to our business relationship with software developers. Our external software developers may fail to provide satisfactory
software prototype or perform their obligations under the relevant agreements. They may also terminate agreements with us or demand commercial
terms that are less favorable to us than under our existing agreements in the future. They may choose to partner with our competitors,
allowing our competitors to enhance their software products and better compete against us. Any loss or deterioration of our relationship
with external software developers may affect our business, financial condition and results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may not be able to successfully implement
our strategies, or achieve our business objectives and our business, operating results and financial position may be materially and adversely
affected </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business strategies are
intended to be accomplished by implementing various future business plans. We intend to allocate our net proceeds from the initial public
offering to establish representative offices in Beijing City and Chengdu City, recruit additional staff to support our business expansion,
acquire other companies engaging in provision of financial and taxation solution services in the PRC, strengthen our R&amp;D capabilities
and expand the self-developed software offered by our Subsidiaries, and further improve our &#8220;Lichen&#8221; brand recognition through
multi-channel marketing. There is no assurance that our business plans will materialize in accordance with the plan as set out in &#8220;Use
of Proceeds&#8221; in this annual report, or at all, or that our business strategies will be fully or partially accomplished. In the event
that we fail to accomplish our business plans or to do so in a timely manner, we may not be able to achieve our planned future business
growth and our results of operations may be materially and adversely affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, our future business
plans may result in significant capital expenditures, selling expenses, and administrative and other operating costs incurred by us, which
may or may not be recoverable, or may or may not bring in a positive result to our revenue. There is no assurance that we will successfully
implement our strategies or that our strategies, even if implemented, will result in us achieving our objectives. Our business, financial
condition and results of operations may be materially and adversely affected if our business objectives are not achieved.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Protection of intellectual property rights
may not prevent third parties and/or our competitors&#8217; infringement on our teaching and learning materials or self-developed software,
which could weaken our competitive position and harm our business and results of operations </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our success depends upon,
among other things, the protection of copyrights of our teaching and learning materials or self-developed software and other intellectual
property rights. We rely on a combination of copyrights, trademarks, contractual restrictions and other software security technologies
to protect, and restrict unauthorized access to, our intellectual property rights in teaching and learning materials or self-developed
software. As of the date of the annual report, Lichen Zixun has registered <span style="background-color: white">four trademarks in Hong
Kong and the PRC and Lichen Education has registered eight copyrights for our financia</span>l and taxation training software and financial
and taxation analysis software in the PRC.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For our software developed
by external software developers, we also own all the rights with respect to the software and are entitled to request the software developers
to provide all source codes of the software pursuant to the agreements for software upgrade or development between our Subsidiaries and
the software developers. The efforts that we take to protect our intellectual property rights may not always be sufficient or effective.
Protecting our intellectual property rights can become costly and time consuming and may not always be successful. Our customers, being
the Partnered Institutions under the Partnership Agreements, may disseminate our teaching and learning materials through the internet
or other media without our consent. In addition, our self-developed software products are subject to the risks of piracy, such as reverse
engineering, secondary development, unauthorized copying or other misappropriation by our customers or other third parties. If we fail
to prevent the infringement of our intellectual property rights, the rights could be diminished and our competitive position could suffer,
which could harm our business and results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The validity, enforceability
and scope of protection available under the relevant intellectual property laws in China are uncertain and still evolving. Implementation
and enforcement of Chinese intellectual property-related laws have historically been deficient and ineffective. Accordingly, intellectual
property and confidentiality legal regimes in China may not afford protection to the same extent as in the United States or other countries.
The experience and capabilities of Chinese courts in handling intellectual property litigation varies, and outcomes are unpredictable.
Further, such litigation may require a significant expenditure of cash and may divert management&#8217;s attention from our operations,
which could harm our business, financial condition and results of operations. An adverse determination in any such litigation could materially
impair our intellectual property rights and may harm our business, prospects and reputation.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may face disputes from time to time relating
to the intellectual property rights of third parties. We cannot assure you that our teaching and learning materials supplied to the Partnered
Institutions under the Partnership Agreements or our self-developed software do not or will not infringe intellectual property rights
of third parties </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have and may continue to
be involved in legal and other disputes in the ordinary course of our business, including allegations against us for potential infringement
of third-party copyrights or other intellectual property rights. Participation in such litigation and legal proceedings may also cause
us to incur substantial expenses and divert the time and attention of our management. We may be required to pay damages or incur settlement
expenses. Any similar claim against us, even without any merit, could also hurt our reputation and brand image. Any such event could have
a material and adverse effect on our business, financial condition and results of operations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have limited insurance coverage to protect
us against all risks associated with our business operations </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Currently, we only maintain
motor vehicle insurance policies and social insurance policies for our employees in the PRC. We believe our insurance coverage is consistent
with the industry practice in the PRC and we have not experienced any material insurance claims in relation to our business as of the
date of the annual report. We do not maintain insurance to cover all our assets or properties or any business interruption insurance.
Any damage to our assets or properties due to natural disasters or accidents and any business disruption could result in our incurring
substantial costs and diversion of resources, which would have an adverse effect on our business and results of operations.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Relating to Our Industry</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The financial and taxation solution service,
education support service and software and maintenance service industries rely on manpower and the increase in our staff costs may materially
and adversely affect our operations, profitability and financial condition</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The operations of our Subsidiaries
are labor-intensive and our Subsidiaries relies on a stable supply of financial and taxation personnel and practitioners and R&amp;D personnel
in the PRC, in particular, our internal consultants and software R&amp;D staff. As of the date of this annual report, we have not experienced
any shortage of staff in the PRC. For the years ended December 31, 2022, 2021, and 2020, the staff costs under cost of revenues were approximately
$10.52 million, $11.08 million, and $9.10 million, respectively. The average annual wage of employees in the financial and software industry
in the PRC has been increasing in recent years and may continue to increase in future. If we are unable to identify and employ other appropriate
means to reduce our staff costs, or pass such increase in our staff costs to our customers, the results of our operations, profitability
and financial condition may be adversely affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our customer base is primarily concentrated
on business enterprises and Partnered Institutions in the PRC. Any slowdown of the enterprises&#8217; growth and development in the PRC
or demands for financial and taxation solution services, education support services or software and maintenance services could have a
material adverse effect on our business, financial condition and results of operations </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of our revenue during
the years ended December 31, 20212 and 2021 was generated in the PRC. According to Frost &amp; Sullivan, the growing number of enterprises
and rapid development of small and medium-sized enterprises in the PRC lead to the demand for quality financial and taxation solution
services. In addition, amongst other factors, the increased awareness of business enterprises in the PRC to compliance requirements with
respect to financial and taxation laws and accounting standards, the inclination to improve their financial taxation or internal control
systems to improve their cost efficiency, financial management model and productivity in an increasingly competitive business environment,
the increasingly common use of artificial intelligence and big data to devise efficient financial and taxation management models and solutions,
and the difficulties for small and medium-sized enterprises to attract or recruit experienced financial and taxation personnel, as such
enterprises may not be able to offer competitive remuneration package, have also driven demands for financial and taxation solution services.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">With respect to education
support services, according to Frost &amp; Sullivan, high-end comprehensive accountants are highly welcomed by modern enterprises, which
in turn creates demand and opportunities for education support services. In addition, the continuous development of internet technologies
and increasingly complex financial and taxation system have also driven business enterprises to adopt financial and taxation software
in their operation processes to improve their efficiency. However, we cannot assure you that there will be continuous development of business
enterprises in the PRC or growth in demand of our services or products in the future. If there is any slowdown of business growth or development
in the PRC or demand for our services or products due to policy changes or change in business practices or operating environment, our
business, financial condition and results of our operations will be materially and adversely affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We face significant competition in various
geographical locations where we offer our financial and taxation solution services, and if we fail to compete effectively, we may lose
market share and our profitability could be adversely affected </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to Frost &amp; Sullivan,
the financial and taxation solution services market in the PRC is rapidly evolving, highly fragmented and competitive. There is no enterprise
that currently dominates this industry or that occupies the leading position in this industry. According to Frost &amp; Sullivan, the
top 10 &#8220;Solution Service Specialists&#8221; in the PRC, defined as service providers that focus on the market of financial and taxation
solution service, only accounted for approximately 2.6% of the total market share in terms of revenue in 2019. Competition is expected
to persist and intensify in the near future. We, in particular, face intense competition in our financial and taxation solution services
in the geographical locations where we offer such services from many different smaller sized organizations that focus on providing similar
services. As a result of such intense competition, the number of our customers may decrease. We may be required to reduce our financial
and taxation solution services fees in response to competition in order to retain or attract customers. As a result, our revenue and profitability
may be adversely affected. We cannot assure you that we will be able to compete successfully against current or potential competitors.
If we are unable to maintain our competitive position or otherwise respond to market competition effectively, we may lose our market share
and our profitability could be adversely affected.</p><div>

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

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

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

</div><div><a id="m_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-variant: small-caps"><b>Item
4. Information&#160;on&#160;the&#160;Company</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>4.A. History and Development of the Company
</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Corporate History </b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lichen China Limited was incorporated on April
13, 2016 under the laws of the Cayman Islands. As of the date of this annual report, the authorized share capital of the Company is US$50,000
divided into 1,000,000,000 Class A Ordinary Shares and 250,000,000 Class B Ordinary Shares, of which 17,500,000 Class A Ordinary Shares
and 9,000,000 Class B Ordinary Shares are issued and outstanding. The Company is a holding company and is currently not actively engaging
in any business. Lichen China Limited controls and receives the economic benefits of its PRC subsidiaries&#8217; business operation, if
any, through equity ownership.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Legend Consulting BVI was incorporated on December
20, 2013 under the laws of the British Virgin Islands with limited liability. Legend Consulting BVI is a wholly owned subsidiary of the
Company. Legend Consulting BVI is a holding company and is currently not actively engaging in any business.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Legend Consulting HK was formed on January 8,
2014 under the laws of Hong Kong. Legend Consulting HK is a wholly owned subsidiary of Legend Consulting BVI. It is a holding company
and is not actively engaging in any business.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lichen Zixun was established on April 14, 2004
under the laws of the PRC. Lichen Zixun is a wholly owned subsidiary of Legend Consulting HK and is our main operating entity.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lichen Education was established on July 30, 2014
under the laws of PRC. Lichen Education is a wholly owned subsidiary of Lichen Zixun and is our operating entity.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Transfers of Cash between Our Company and Our
Subsidiaries</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently have not
maintained any cash management policies that dictate the purpose, amount and procedure of cash transfers between the Company, our subsidiaries,
or investors. Rather, the funds can be transferred in accordance with the applicable PRC laws and regulations. To the extent cash or assets
in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or
for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us or our subsidiaries by the PRC government to transfer cash or assets.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under existing PRC foreign
exchange regulations, payment of current account items, such as profit distributions and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange, or the SAFE, by complying
with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior
approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures
under PRC foreign exchange regulations, such as the overseas investment registrations by our shareholders or the ultimate shareholders
of our corporate shareholders who are PRC residents. Approval from, or registration with, appropriate government authorities is, however,
required where the RMB 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. The PRC government may also at its discretion restrict access in the future to foreign currencies
for current account transactions. Current PRC regulations permit our PRC subsidiaries to pay dividends to the Company only out of their
accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. As of the date of this report,
there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong
(including funds from Hong Kong to the PRC), except for transfer of funds involving money laundering and criminal activities. Cayman Islands
law prescribes that a company may only pay dividends out of its profits. Other than that, there is no restrictions on Lichen China Limited&#8217;s
ability to transfer cash to investors. See &#8220;Risk Factors - Risks Related to Doing Business in China - To the extent cash or assets
in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or
for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us or our subsidiaries by the PRC government to transfer cash or assets,&#8221; &#8220;Risk Factors - Risks Related to Doing Business
in China - We 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 adverse effect on
our ability to conduct our business,&#8221; and &#8220;Risk Factors - Risks Related to Doing Business in China - Our PRC subsidiaries
are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability
to conduct our business.&#8221;</p><div>

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

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

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    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a holding company,
we may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for our cash and
financing requirements. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt
may restrict their ability to pay dividends to us. Lichen China Limited is permitted under the laws of the Cayman Islands to provide funding
to our subsidiaries incorporated in the British Virgin Islands and Hong&#160;Kong through loans or capital contributions without restrictions
on the amount of the funds. Our subsidiaries are permitted under the respective laws of the British Virgin Islands and Hong Kong to provide
funding to Lichen China Limited through dividend distribution without restrictions on the amount of the funds. There are no restrictions
on dividends transfers from HK to BVI and BVI to the Cayman Islands. Current PRC regulations permit our WFOE&#160;to pay dividends to
the Company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The PRC has currency
and capital transfer regulations that require us to comply with certain requirements for the movement of capital. The Company is able
to transfer cash (US Dollars) to its PRC subsidiaries through an investment (by increasing the Company&#8217;s registered capital in a
PRC subsidiary). The Company&#8217;s subsidiaries within China can transfer funds to each other when necessary through the way of current
lending. The transfer of funds among companies are subject to the Provisions on Private Lending Cases, which was implemented on August
20, 2020 to regulate the financing activities between natural persons, legal persons and unincorporated organizations. As advised by our
PRC counsel, Tianyuan Law Firm, the Provisions on Private Lending Cases does not prohibit using cash generated from one subsidiary to
fund another subsidiary&#8217;s operations. We have not been notified of any other restriction which could limit our PRC subsidiaries&#8217;
ability to transfer cash between PRC subsidiaries. The Company&#8217;s subsidiaries in the PRC have not transferred any earnings or cash
to the Company to date. As of the date of this report, there has not been any assets or cash transfer between the holding company and
its subsidiaries. As of the date of this report, there has not been any dividends or distributions made to US investors. The Company&#8217;s
business is primarily conducted through its subsidiaries. The Company is a holding company and its material assets consist solely of the
ownership interests held in its PRC subsidiaries. The Company relies on dividends paid by its subsidiaries for its working capital and
cash needs, including the funds necessary: (i) to pay dividends or cash distributions to its shareholders, (ii) to service any debt obligations
and (iii) to pay operating expenses. As a result of PRC laws and regulations (noted below) that require annual appropriations of 10% of
after-tax income to be set aside in a general reserve fund prior to payment of dividends, the Company&#8217;s PRC subsidiaries are restricted
in that respect, as well as in other respects noted below, in their ability to transfer a portion of their net assets to the Company as
a dividend.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">With respect to transferring
cash from the Company to its subsidiaries, increasing the Company&#8217;s registered capital in a PRC subsidiary requires the filing of
the local commerce department, while a shareholder loan requires a filing with the State Administration of Foreign Exchange or its local
bureau. Aside from the declaration to the State Administration of Foreign Exchange, there is no restriction or limitations on such cash
transfer or earnings distribution.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">With respect to the payment
of dividends, we note the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PRC
regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with accounting standards
and PRC regulations (an in-depth description of the PRC regulations is set forth below);</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
PRC subsidiaries are required to set aside, at a minimum, 10% of their net income after taxes, based on PRC accounting standards, each
year as statutory surplus reserves until the cumulative amount of such reserves reaches 50% of their registered capital;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Such
reserves may not be distributed as cash dividends;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
PRC subsidiaries may also allocate a portion of their after-tax profits to fund their staff welfare and bonus funds; except in the event
of a liquidation, these funds may also not be distributed to shareholders; the Company does not participate in a Common Welfare Fund;
and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
incurrence of debt, specifically the instruments governing such debt, may restrict a subsidiary&#8217;s ability to pay shareholder dividends
or make other cash distributions.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If, for the reasons
noted above, our subsidiaries are unable to pay shareholder dividends and/or make other cash payments to the Company when needed, the
Company&#8217;s ability to conduct operations, make investments, engage in acquisitions, or undertake other activities requiring working
capital may be materially and adversely affected. However, our operations and business, including investment and/or acquisitions by our
subsidiaries within China, will not be affected as long as the capital is not transferred in or out of the PRC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the fiscal years
ended December 31, 2020, Lichen Zixun made dividend payments of RMB30 million (approximately $4.3 million) to the then eventual shareholders
of Lichen Zixun, who are PRC individuals. The Company made no such dividend, distribution or transfer during the fiscal year ended December
31, 2022 and 2021. As of the date of this report, the Company or its subsidiaries have made no other transfers, dividends, or distributions
to investors and no investors have made transfers, dividends, or distributions to the Company or its subsidiaries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 10, 2023,
Lichen China Limited made payments of $6 million to its subsidiary Legend Consulting BVI for investment. As of the date of this report,
no other dividends, distributions or transfers has been made between Lichen China Limited and any of its subsidiaries. For the foreseeable
future, the Company intends to use the earnings for research and development, to develop new products and to expand its production capacity.
As a result, we do not expect to pay any cash dividends in the foreseeable future.&#160;Also, as of the date of this report, no cash generated
from one subsidiary is used to fund another subsidiary&#8217;s operations and we do not anticipate any difficulties or limitations on
our ability to transfer cash between subsidiaries.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Item 8. Financial Information &#8211;
A. Consolidated Statements and Other Financial Information &#8211; Dividend Policy&#8221; and &#8220;<span style="background-color: white">Item
3. Key&#160;</span>Information &#8212; 3.D. Risk Factors &#8212; Risks Relating to our Corporate Structure &#8211; <i>We rely on dividends
and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any
limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to
conduct our business</i>&#8221;.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Implication of the Holding Foreign Companies
Accountable Act (the &#8220;HFCAA&#8221;)</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">U.S. laws and regulations, including the Holding
Foreign Companies Accountable Act, or HFCAA, may restrict or eliminate our ability to complete a business combination with certain companies,
particularly those acquisition candidates with substantial operations in China.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 24, 2021, the SEC adopted interim final
rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. An identified issuer will be required
to comply with these rules if the SEC identifies it as having a &#8220;non-inspection&#8221; year under a process to be subsequently established
by the SEC. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022,
legislation entitled &#8220;Consolidated Appropriations Act, 2023&#8221; (the &#8220;Consolidated Appropriations Act&#8221;) was signed
into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies
Accountable Act and amended the HFCAA 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, thus reducing the time period for triggering
the prohibition on trading. If our auditor cannot be inspected by the Public Company Accounting Oversight Board, or the PCAOB, for two
consecutive years, the trading of our securities on any U.S. national securities exchanges, as well as any over-the-counter trading in
the U.S., will be prohibited. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework
for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely
registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA.
The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public
accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position
taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable
to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because
of positions taken by PRC authorities in those jurisdictions, which determinations were vacated on December 15, 2022.</p><div>

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

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 26, 2022, the&#160;PCAOB&#160;announced
that it had signed a Statement of Protocol (the &#8220;SOP&#8221;) with the China Securities Regulatory Commission and the Ministry of
Finance of China. The SOP,&#160;together with two protocol agreements governing inspections and investigations (together, the &#8220;SOP
Agreement&#8221;), establishes a specific, accountable framework to make possible complete inspections and investigations by the&#160;PCAOB&#160;of
audit firms based in mainland China and Hong Kong, as required under U.S. law.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 15, 2022, the PCAOB announced that
it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China
and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate
completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue
to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong
Kong is subject to uncertainties and depends on a number of factors out of our and our auditor&#8217;s control. The PCAOB continues to
demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023
and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated
that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of the annual report, TPS Thayer,
our auditor for the fiscal year ended December 31, 2022 and 2021, headquartered in Sugar Land, Texas, is subject to laws in the United
States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. TPS
Thayer&#8217;s registration with the PCAOB took effect in September 2020 and it is currently subject to PCAOB inspections. As of the date
of the annual report, B&amp;V, our auditor for the fiscal year ended December 31, 2020, withdrew its registration from the PCAOB in January
2022.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">However, we cannot assure you whether Nasdaq or
regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor&#8217;s
audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or
experience as it relates to the audit of our financial statements. In the event it is later determined that the PCAOB is unable to inspect
or investigate completely the Company&#8217;s auditor because of a position taken by an authority in a foreign jurisdiction, then such
lack of inspection could cause trading in the Company&#8217;s securities to be prohibited under the HFCAA and AHFCAA, and ultimately results
in a determination by a securities exchange to delist the Company&#8217;s securities. The delisting of our Class A Ordinary Shares, or
the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless.&#160;In
addition, under the AHFCAA, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is
not inspected by the PCAOB for two consecutive years instead of three, and this ultimately could result in our Class A Ordinary Shares
being delisted by and exchange. See &#8220;<span style="background-color: white">Item 3. Key&#160;</span>Information &#8212; 3.D. Risk
Factors &#8212; Risks Related to Doing Business in China <i>&#8211; </i>The recent joint statement by the SEC and PCAOB, proposed rule
changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to
be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not
inspected by the PCAOB. These developments could add uncertainties to our offering&#8221; on page 24 and &#8220;Trading in our securities
may be prohibited under the HFCAA and as a result an exchange may determine to delist our securities if it is later determined that the
PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction&#8221;
on page 25. We cannot assure you whether Nasdaq or other regulatory authorities will apply additional or more stringent criteria to us.
Such uncertainty could cause the market price of our Class A Ordinary Shares to be materially and adversely affected.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Recent Regulatory Development in the PRC</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Regulations on Mergers
and Acquisitions of Domestic Companies by Foreign Investors (the &#8220;M&amp;A Rules&#8221;), adopted by six PRC regulatory agencies
in 2006 and amended in 2009, include, among other things, provisions that purport to require that an offshore special purpose vehicle,
formed for the purpose of an overseas listing of securities through acquisitions of domestic enterprises in China or assets and controlled
by enterprises or individuals in China, 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. On September&#160;21, 2006, pursuant to the M&amp;A Rules&#160;and other PRC laws, the CSRC
published on its official website relevant guidance regarding its approval of the listing and trading of special purpose vehicles&#8217;
securities on overseas stock exchanges, including a list of application materials. However, substantial uncertainty remains regarding
the scope and applicability of the M&amp;A Rules&#160;to offshore special purpose vehicles.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July&#160;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. These opinions and any related implementation rules&#160;to
be enacted may subject us to additional compliance requirement in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">Pursuant
to Cybersecurity Review Measures which were issued on December&#160;28, 2021 and became effective on February&#160;15, 2022, network platform
operators holding over one million users&#8217; personal information must apply with the Cybersecurity Review Office for a cybersecurity
review before any public offering at a foreign stock exchange. However, given the Cybersecurity Review Measures were relatively new, there
are substantial uncertainties as to the interpretation, application and enforcement of the Cybersecurity Review Measures. It remains uncertain
whether we should apply for cybersecurity review prior to any offshore offering and that we would be able to complete the applicable cybersecurity
review procedures in a timely manner, or at all, if we are required to do so. In addition, on November&#160;14, 2021, the Cyberspace Administration
of China (the &#8220;CAC&#8221;) published the Administration Regulations on Network Data Security (Draft for Comments), or the Draft
Measures for Network Data Security, which provides that data processors conducting the following activities shall apply for cybersecurity
review: (i)&#160;merger, reorganization or separation 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)&#160;overseas listing
of data processors processing over one million users&#8217; personal information; (iii)&#160;listing in Hong Kong which affects or may
affect national security; (iv)&#160;other data processing activities that affect or may affect national security. The CAC solicited comments
on this draft, but there is no timetable as to when it will be enacted.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">On
February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies
(the &#8220;Overseas Listing Trial Measures&#8221;) and five relevant guidelines, which became effective on March 31, 2023.&#160;</span>
According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either
in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (1) such securities
offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (2) the intended
securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council
in accordance with law; (3) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s)
and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining
the order of the socialist market economy during the latest three years; (4) the domestic company intending to make the securities offering
and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion
has yet been made thereof; or (5) there are material ownership disputes over equity held by the domestic company&#8217;s controlling shareholder(s)
or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Overseas Listing
Trial Measures also provides that if the issuer meets both the following criteria, the overseas securities offering and listing conducted
by such issuer will be deemed as indirect overseas offering by PRC domestic companies: (1) 50% or more of any of the issuer&#8217;s operating
revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal
year is accounted for by domestic companies; and (2) the issuer&#8217;s main business activities are conducted in China, or its main place(s)
of business are located in China, or the majority of senior management staff in charge of its business operations and management are PRC
citizens or have their usual place(s) of residence located in China. Where an issuer submits an application for initial public offering
to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted.
In addition, the Overseas Listing Trial Measures provide that the direct or indirect overseas listings of the assets of domestic companies
through one or more acquisitions, share swaps, transfers or other transaction arrangements shall be subject to filing procedures in accordance
with the Overseas Listing Trial Measures. The Overseas Listing Trial Measures also requires subsequent reports to be filed with the CSRC
on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings
and listings.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">At a press conference
held for these new regulations (&#8220;Press Conference&#8221;), officials from the CSRC clarified that the domestic companies that have
already been listed overseas on or before March 31, 2023 shall be deemed as existing issuers (the &#8220;Existing Issuers&#8221;). Existing
Issuers are not required to complete the filling procedures immediately, and they shall be required to file with the CSRC upon occurrences
of certain subsequent matters such as follow-on offerings of securities. According to the Overseas Listing Trial Measures and the Press
Conference, the existing domestic companies that have completed overseas offering and listing before March 31, 2023, such as us, shall
not be required to perform filing procedures for the completed overseas securities issuance and listing. However, from the effective date
of the regulation, any of our subsequent securities offering in the same overseas market or subsequent securities offering and listing
in other overseas markets shall be subject to the filing requirement with the CSRC within three working days after the offering is completed
or after the relevant application is submitted to the relevant overseas authorities, respectively. If it is determined that any approval,
filing or other administrative procedures from other PRC governmental authorities is required for any future offering or listing, we cannot
assure you that we can obtain the required approval or accomplish the required filings or other regulatory procedures in a timely manner,
or at all. If we fail to fulfill filing procedure as stipulated by the Trial Measures or offer and list securities in an overseas market
in violation of the Trial Measures, the CSRC may order rectification, issue warnings to us, and impose a fine of between RMB1,000,000
and RMB10,000,000. Persons-in-charge and other persons that are directly liable for such failure shall be warned and each imposed a fine
from RMB500,000 to RMB5,000,000. Controlling shareholders and actual controlling persons of us that organize or instruct such violations
shall be imposed a fine from RMB1,000,000 and RMB10,000,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February&#160;24,
2023, the CSRC published the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities
Offering and Listing by Domestic Enterprises (the &#8220;Provisions on Confidentiality and Archives Administration&#8221;), which came
into effect on March 31, 2023. The Provisions on Confidentiality and Archives Administration requires that, in the process of overseas
issuance and listing of securities by domestic entities, the domestic entities, and securities companies and securities service institutions
that provide relevant securities service shall strictly implement the provisions of relevant laws and regulations and the requirements
of these provisions, establish and improve rules&#160;on confidentiality and archives administration. Where the domestic entities provide
with or publicly disclose documents, materials or other items related to the state secrets and government work secrets to the relevant
securities companies, securities service institutions, overseas regulatory authorities, or other entities or individuals, the companies
shall apply for approval of competent departments with the authority of examination and approval in accordance with law and report the
matter to the secrecy administrative departments at the same level for record filing. Where there is unclear or controversial whether
or not the concerned materials are related to state secrets, the materials shall be reported to the relevant secrecy administrative departments
for determination. However, there remain uncertainties regarding the further interpretation and implementation of the Provisions on Confidentiality
and Archives Administration.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this annual report, <span style="background-color: white">we
and our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the
business operations of our PRC subsidiaries. In addition, </span>as of the date of this annual report, <span style="background-color: white">we
and our PRC subsidiaries are not required to obtain approval or permission from the CSRC or the CAC or any other entity that is required
to approve our PRC subsidiaries&#8217; operations or required for us to offer securities to foreign investors under any currently effective
PRC laws, regulations, and regulatory rules.</span> If it is determined that we are subject to filing requirements imposed by the CSRC
under the Overseas Listing Regulations or approvals from other PRC regulatory authorities or other procedures, including the cybersecurity
review under the revised <span style="background-color: white">Cybersecurity Review Measures</span>, for our future offshore offerings,
it would be uncertain whether we can or how long it will take us to complete such procedures or obtain such approval and any such approval
could be rescinded. Any failure to obtain or delay in completing such procedures or obtaining such approval for our offshore offerings,
or a rescission of any such approval if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities
for failure to file with the CSRC or failure to seek approval from other government authorization for our offshore 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 our offshore 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 Class A Ordinary Shares. The CSRC or other PRC regulatory authorities also may take actions requiring us, or
making it advisable for us, to halt our offshore offerings before settlement and delivery of the securities 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 their approvals or accomplish the required filing or other regulatory procedures for our prior offshore 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 Class A Ordinary Shares.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If the CSRC, CAC or other regulatory agencies
later promulgate new rules or explanations requiring that we obtain their approvals for this offering and any follow-on offering, we may
be unable to obtain such approvals and we may face sanctions by the CSRC, CAC or other PRC regulatory agencies for failure to seek their
approval which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors and
the securities currently being offered may substantially decline in value and be worthless. For more details, see &#8220;<span style="background-color: white">Item
3. Key&#160;</span>Information &#8212; 3.D. Risk Factors &#8211; Risks Related to Doing Business in China.&#8221;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27pt">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Corporate Information</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our principal executive office is located B2306,
Block B Tower 3, Jinjiang Wanda Plaza Commercial Complex 888 Century Avenue Meiling Street, Jinjiang City Fujian, PRC. The telephone number
of our principal executive offices is +86-595-85633335. Our registered office provider in Cayman Islands is Ocorian Trust (Cayman) Limited.
Our registered office in Cayman Islands is at Windward 3, Regatta Office Park, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands. Our
registered agent in the United States is Cogency Global Inc., 122 E 42nd St 18th Fl, New York, NY 10168. &#160;&#160;We maintain a corporate
website at&#160;http://www.lichenzx.com. We do not incorporate the information on our website into this report and you should not consider
any information on, or that can be accessed through, our website as part of this report.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><span style="text-decoration:underline">B. Business Overview</span></b></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a leading financial
and taxation service provider in China, in terms of revenue, as cited in the industry report of Frost &amp; Sullivan. We have operated
as a dedicated financial and taxation solution service specialist of professional services in China for over 18 years. We focus on providing
(i) financial and taxation solution services; (ii) education support services; and (iii) software and maintenance services in the PRC
under our &#8220;Lichen&#8221; brand. With over 18 years of operation history, we have gained substantial experience and established a
solid reputation with our proven track record in the PRC.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Leveraging our business relationships
with our Partnered Institutions, our expertise and experience obtained in the financial and taxation solution services market, and our
experience in developing financial and taxation training software and financial and taxation analysis software by our R&amp;D department,
we launched a new business line of software and maintenance services in 2019 to expand our software product offerings to enterprise customers,
universities, colleges and educational institutes and have started to generate revenue from provision of such services since then.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In recognition of our expertise
and experience earned from over 18 years in the financial and taxation solution services industry, we have built up our reputation as
a financial and taxation solution services provider of professional services in the PRC. From 2012 to 2021, we were recognized as one
of the Top 50 Providers of Management Consulting Services in China for ten consecutive years by the China Enterprise Confederation Management
Advisory Committee.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Partnered Institutions,
located in 10 provinces or municipalities and 20 cities in the PRC, are education services providers which mainly engage in the organization
of various seminars, talks and training courses to entrepreneurs, senior executives, as well as financial and taxation executives. Through
our business relationships with these Partnered Institutions, we are able to, on the one hand, provide our education support services
to them and, on the other hand, by leveraging their business networks and their geographical coverage, promote our brand name and services
to the participants of these seminars, talks and courses organized by them.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Recent Developments</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 8, 2023, the Company
completed its initial public offering on the Nasdaq Capital Market. In this offering, 4,000,000 Class A Ordinary Shares were issued at
a price of $4.00 per share. The gross proceeds received from the initial public offering totaled $16 million. The Offering closed on February
8, 2023 and the Class A Ordinary Shares began trading on February 6, 2023 on the Nasdaq Capital Market under the ticker symbol &#8220;LICN.&#8221;</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Our Revenues Model and Core Services</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We primarily provide (i) financial
and taxation solution services; (ii) education support services; and (iii) software and maintenance services in the PRC. The connections
and synergies amongst our services are illustrated in the diagram below:</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_002.jpg"/></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The financial and taxation
solution services provided to our enterprise customers mainly comprise financial and taxation related management consultation, internal
control management consultation, annual or regular consultation, and internal training and general consultation.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The education support services
provided to our Partnered Institutions mainly comprise the provision of marketing, operational and technical support and the sales of
teaching and learning materials.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The software and maintenance
services provided to our enterprise customers mainly comprise the sales of financial and taxation analysis software and sales of financial
and taxation training software.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Financial and Taxation Services</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We focus on our financial
and taxation solution services to business enterprises in the PRC. We believe that every enterprise, regardless of its size, should adopt
a sound financial and taxation management system for growth and sustainable development. Our financial and taxation solution services
are customized based on the specific needs and requirements of our customers.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">When we accept an engagement
for financial or taxation solution services, we will first assess the customer&#8217;s needs and background so that we can have a general
picture of the problem they face and the potential solution suitable for the case. Thus, we can quote a service fee based on our preliminary
analysis on the total hours and experts to be used on this case according to its nature and the scope of service. The service fee is calculated
on a case-by-case basis. We negotiate and fix the fee before the engagement start and collected in each phase of the engagement.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our team consists of internal
consultants and external experts with extensive experience and knowledge in the financial and taxation solution services industry. As
of the date of this annual report, our team is comprised of 47 external experts and 254 internal consultants of our company that are responsible
for providing financial and taxation solutions to our customers. In particular, all of our internal consultants possess professional qualifications
in accounting and the majority of our project managers or directors were intermediate accountants, senior accountants or certified public
accountants, as of June 30, 2022. In addition, as of June, 2022, over 80.0% of our external experts were registered certified public accountants
or registered certified tax agents, and over 85.0% of our external experts possessed a master&#8217;s degree or doctoral degree, with
a number of them recognized as leading individuals in the financial and taxation field, who have served as lecturers in major universities
in the PRC, published teaching materials, books and case studies on a wide range of taxation, risk management and corporate governance
related subjects and have been granted awards or subsidies from the governmental bodies, including the State Council of the PRC.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have established and implemented
stringent policy for selection of our external experts and recruitment of our internal consultants. When selecting a suitable candidate,
we will take into account a number of factors, including their academic background, professional qualifications, working experience, reputation
and influence in the financial and taxation industry. With our consultants and experts under the supervision and guidance of our management
team, we believe that we are capable of providing customized and practical solutions to cater to our customers&#8217; diversified financial
and taxation needs in an effective manner. The experience and expertise of our team is designed to also help enhance the quality and standard,
and ensure consistency, of our services.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We generally enter into Expert
Cooperation Agreements with the external experts. Set out below is a summary of the principal terms of the Expert Cooperation Agreement:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 29%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Validity period</span></td>
    <td style="width: 71%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fixed term of five years from the date of the Expert Cooperation Agreement.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Payment terms</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We typically apportion 50% of the amount received under the financial and taxation solution projects to the external expert by way of progress payment if we require their assistance in these projects.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Intellectual property rights</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any intellectual property rights arising from the implementation of the Expert Cooperation Agreement belong to our Subsidiaries.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Confidentiality</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any technology secrets and trade secrets are to be kept confidential by the external expert and this obligation survives the expiration of the Expert Cooperation Agreement for a period of five years.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exclusivity</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The external expert will not provide results of the collaborations with our Subsidiaries on education courses and financial and taxation solution projects or related services to any third parties during the term of the Expert Cooperation Agreement.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Restrictive covenant</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The external experts are prohibited from dealing with our customers directly during the term of the Expert Cooperation Agreement and three years after its expiration.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Termination</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Expert Cooperation Agreement may be terminated by mutual agreement reached by both parties.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Workflow of our financial and taxation solution
projects</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Once customers inform us of
their needs, we undertake a preliminary assessment and proposal to analyze the feasibility of the customer projects and to set out the
timeline of the projects. We then enter into agreements with customers. Thereafter, we conduct an on-site inspection and on-site training,
provide diagnosis reports, and have ongoing discussions with customers until they are satisfied with our recommendations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We endeavor to utilize stringent
quality control over the services we provide to our customers, with the goal of providing customized solutions based on the actual business
and financial condition of each customer. We have devised a number of tools and measures to ensure that consistent, professional and high-quality
services can be rendered by our consultants and experts to our customers. Further, we keep abreast of the relevant financial and taxation
laws and regulations in the PRC and economic development, such that our advice to our customers corresponds with the latest trends and
development in the financial and taxation regulations and policies of the PRC and is practical to our customers in light of the then existing
business environment.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">With the experience of our
internal consultants, we are able to tailor solutions to our customers&#8217; needs. Our internal consultants, apart from possessing professional
qualifications in accounting, are also experienced personnel in the financial and/or taxation sectors, as our internal recruitment policies
require our internal consultants and project managers to possess at least three and seven years of relevant working and/or consultancy
experience, respectively. As such, we believe that our internal consultants have ample experience in the financial and/or taxation sectors
to execute our financial and taxation solution projects.</p><div>

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

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

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    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our work cycle typically spans
a period of 10 to 16 weeks, with approximately two to four weeks allocated to planning and designing the diagnosis report, seven to nine
weeks allocated to implementing the consultation plan and providing guidance to our customers and one to three weeks allocated to assessment.
We typically assign three internal consultants to form a working team. Our internal consultants are also required to provide their services
on an as-requested basis for our annual and regular consultation services.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our internal consultants will,
depending on the complexity of the project, work on-site from time to time. During on-site inspections, our internal consultants will
strive to understand the business operations and goals of our customers by:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">conducting
interviews with directors, senior management and employees of the enterprise;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing
corporate and financial documents, including those relating to history and corporate structure, organization structure, human resources
management, internal control measures and sales invoice;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing
business plans of the enterprise; and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iv)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">observing
the day-to-day operations of the enterprise, etc.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Such on-site inspections can
assist our internal consultants in devising the project diagnosis report. The project diagnosis report aims to point out the shortcoming,
if any, of the current system of the enterprise and enables the enterprise to achieve its goals. The diagnosis report is then submitted
to our quality control department for its approval before we submit the final version to our customers to implement. The implementation
of the approved diagnosis report relies on our internal consultants to provide training to the employees of the customers and on-site
guidance, to ensure the implementation process can adhere to the actual needs and problems of the enterprise, and to provide timely advice
to the enterprise whenever the enterprise encounters any issues or difficulties during implementation.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">By implementing the recommended
measures set out in the project diagnosis report, we believe our customers are empowered to mitigate or lower their operational and financial
risks, strengthen their management capabilities and increase their financial, taxation and/or internal control awareness, thereby improving
their results of operations and maintaining their sustainability.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Scope of our financial and taxation solution services</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>1. Financial and taxation related management consultation </i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We provide financial and taxation
related management consultation services covering four aspects, namely, (a) cost management; (b) financial risk management; (c) computerized
financial information systems; and (d) financial management system optimization. We identify weaknesses in our customers&#8217; financial
and taxation related management and provide advice and internal trainings to enhance the enterprise&#8217;s overall financial and taxation
related management capabilities.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The areas, contents and intended
benefits of our financial and taxation related management consultation services are set out below:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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        <p style="margin-top: 0; margin-bottom: 0">&#8212;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
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        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#8212;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0in; text-align: justify; text-indent: 0in"> Procurement
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p></td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Assist our customers in transforming their manual financial information management system to a computerized system, to reduce human resource costs, increase data timeliness and accuracy and improve financial management efficiency and effectiveness</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>
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    <td>&#160;</td>
    <td><p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p></td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Assist clients in strengthening financial management concepts and financial management methods, developing financial analysis tools and evaluation systems to standardize financial management objectives, thereby improving corporate management efficiency and supporting corporate development strategies</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 55; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->50<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>2. Internal control management consultation
</i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We provide internal control
management consultation services covering three aspects, namely, establishment of an (a) internal control management system; (b) internal
audit system; and (c) accounting system to enhance internal control and accounting capabilities. We identify weaknesses in our customers&#8217;
internal control, internal audit and accounting systems and recommend remedial measures to enhance the enterprise&#8217;s overall internal
control and accounting capabilities.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The areas, contents and intended
benefits of our internal control management consultation services are set forth below:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="vertical-align: bottom; width: 26%; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Area of Services</b></span></td>
    <td style="vertical-align: top; width: 1%">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 3%">&#160;</td>
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  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Establishment of an internal control management system</span></td>
    <td>&#160;</td>
    <td><p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p></td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Assist our customers in establishing or enhancing internal control management systems to monitor procedures, improve business efficiency, increase financial reliability and integrity and ensure compliance with relevant rules and regulations</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td>&#160;</td>
    <td><p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p></td>
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0in; text-indent: 0in">Adjustment of the organizational
structure and enhancement of the authority of the internal audit unit</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0in; text-indent: 0in">Improvement of the independence of internal
audit unit and internal auditors</p>
    <p style="text-indent: -0.25in; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">Building up of the internal audit unit and team</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0in; text-indent: 0in">Improvement of internal audit system
through information technology tools</p>
    <p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.25in; margin: 0pt 0 0pt -0.25in">Establishment of internal audit system</p></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Assist our customers in establishing or enhancing an internal audit system to identify and rectify operational or financial weaknesses and improve overall business efficiency and performance, in order to achieve effective control of risks through internal audit</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Establishment of accounting system</span></td>
    <td>&#160;</td>
    <td><p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#160;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0">&#9679;</p>
        <p style="margin-top: 0; margin-bottom: 0"></p></td>
    <td>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Establishment of organizational structure and division
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Standardization of business process</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Standardization of accounting process</p></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Assist our customers in establishing or enhancing the accounting systems to sort out and systemize accounting policies and procedures, strengthening the effectiveness and accuracy of accounting and practicality of financial reports and analysis</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>3. Annual or regular consultation </i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We provide annual or regular
consultation services in (a) finance; (b) taxation; and (c) post financial and management or internal control project implementation.
Our annual consultation services are generally provided immediately after our financial and taxation related management consultation projects
or internal control management consultation projects, to ensure the continuous implementation of our suggestions under the respective
projects, and to provide continuous advice and guidance on day-to-day internal operation matters for our customers. In particular, our
annual consultation services include (i) tracking and enhancing the implementation of our recommendations provided under our financial
and taxation related management consultation projects or internal control management consultation projects; and (ii) providing new suggestions
and guidance where new circumstances arise in our customers&#8217; day-to-day operations which render our previous recommendations invalid
or inapplicable.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also provide regular consultation
services on financial and taxation matters to our customers on a stand-alone basis. Our regular financial consultation services include
(i) financial consultation, which refers to providing guidance on accounting, auditing, financial analysis and financial risk management
and control, establishment of financial management systems and daily financial consultations; (ii) compliance consultation, which refers
to providing our customers with information about the latest laws and regulations on financial management and assisting them to correctly
understand and adopt appropriate financial tools; and (iii) professional training, which refers to providing training on latest financial
and taxation policies of the PRC, financial management, disclosure requirements of financial reports and any other specific areas for
which our customers require training. Our regular taxation consultation services include (i) taxation consultation, which refers to assisting
our customers to identify the relevant types of taxes and preferential tax treatments applicable to them; (ii) professional training,
which refers to providing training on latest taxation policies of the PRC and their implementation; and (iii) tax inspection assistance,
which refers to assisting our customers to prepare for tax inspection conducted by the relevant tax authorities.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As part of our annual or regular
consultation services, our internal consultants, at the request of our customers, will also meet at our customers&#8217; premises once
a month to provide on-site consultation services.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>4. Internal training and general consultation
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Apart from financial and taxation
related management consultation, internal control management consultation and annual or regular consultation services, we have commenced
providing on-site internal training services to our customers, as of January 2019.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we also provide
general consultation to our customers on an ad-hoc basis at customers&#8217; requests on relatively simple matters, as compared to our
other types of consultation services which generally involve more complicated, tailor-made and in-depth analysis and practical solution
proposals.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Education Support Services</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our education support services
are mainly provided to our Partnered Institutions. As of the date of this annual report, we collaborate with 22 Partnered Institutions
in 10 provinces or municipalities and 20 cities in the PRC. The Partnered Institutions are education services providers which mainly engage
in organization of various seminars, talks and training courses to entrepreneurs, senior executives, and financial and taxation executives,
etc. From the personal and business networks of our management, as well as our marketing initiatives (being our talks, seminars hosted
by the Partnered Institutions and the website shared by the Partnered Institutions), potential customers who wish to set up education
institutions may approach us and initiate discussions with us, with an aim to becoming our Partnered Institutions.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Scope of our education support services</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>1. Marketing, operational and technical support</i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lichen Zixun enters into Partnership
Agreements with the Partnered Institutions to provide marketing, operational, technical and other support as part of our educational support
business for the Partnered Institutions. We allow the Partnered Institutions to use our &#8220;Lichen&#8221; brand name to operate their
education business and we provide our internal consultants to conduct high-end courses aimed at financial and taxation practitioners,
other support services such as marketing and operational support and information technology services to the Partnered Institutions.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>2. Sales of teaching and learning materials</i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also generate revenue from
the sales of teaching and learning materials to the Partnered Institutions. The financial and taxation related teaching and learning materials
are sold to the Partnered Institutions for their education business. We developed courses in relation to (i) accounting licensing, (ii)
accounting practice, (iii) financial management, (iv) financial tools, (v) non-financial management and (vi) taxation practice courses.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cooperation with our Partnered Institutions</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that by leveraging
the business relationships with our Partnered Institutions in the past six years, as well as the expertise and experience that we have
established in the financial and taxation solution services market over the years, we have built a unique business model and have generated
synergies amongst the services that we provide as evidenced by the growth of our business.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">For
the years ended December 31, 2022, 2021, and 2020, the total revenue from our education support services was approximately $4.41 million,
$4.64 million, and $4.56 million, representing approximately 13.04%, 13.52%, and 14.86%, respectively, of our total revenues for the same
periods.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It is a key and crucial element
of our Subsidiaries&#8217; business model and marketing strategy to cooperate with the Partnered Institutions, which has created an important
source of referrals for our Subsidiaries&#8217; financial and taxation solution services. For the years ended December 31, 2022, 2021,
and 2020, 154, 155, and 176 financial and taxation solution projects, respectively, were obtained from the referrals made by our Partnered
Institutions, representing approximately 38.79%, 38.60%, and 41.22%, respectively, of the total number of financial and taxation solution
projects and approximately 50.67%, 48.60% and 58.41%, respectively, of the revenue of financial and taxation solution services during
the same periods.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As to collaboration with these
education institution operators, we carry out internal assessments to evaluate the potential and capability of such customers. Our internal
assessments take into account the economic status, personal and business connections and the business belief of the intended education
institution operators. They are typically required to have good standing and strong financial backgrounds, and their intended business
location is expected to be in line with our Subsidiaries&#8217; strategic development plan, such that they may assist our Subsidiaries
to tap into those areas as we have planned. Should they reach our internal assessment standards, we require them to have an assessment
interview with our personnel. Our operations department will also conduct a feasibility study and consult with the institution in order
to choose a strategic location for the Partnered Institution. Upon passing the assessment interview, we will enter into a Partnership
Agreement with the intended education institution operator, after the terms of the agreement are agreed upon. Upon expiration of the Partnership
Agreement, we will conduct another internal assessment of the performance and future prospects of the Partnered Institution, to determine
whether the Partnership Agreement should be renewed.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this annual
report, we have agreements with 22 Partnered Institutions, including Jinjiang Xingminqi Accounting Vocational Training School and Quanzhou
City Lichen Accounting Vocational Training School, which are controlled by Ya Li, our CEO, and the rest of them are unrelated third parties.
Set out below are the principal terms of the Partnership Agreement:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 30%; padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Validity period</span></td>
    <td style="width: 70%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fixed term of five years from the date of the Partnership Agreement.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Payment terms</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A fixed fee is payable annually by way of bank transfer and no progress payments are resulted from the Partnership Agreement. The annual fees payable under the first year are to be settled within seven days after signing the Partnership Agreement, and the annual fees for the remaining years are to be paid in a specified month as agreed between our Subsidiaries and the Partnered Institution. For details relating to the pricing of the annual fees we charge Partnered Institutions, please refer to &#8220;Pricing&#8221; in this section. As for online courses, we charge a fixed fee ranging from RMB200 to RMB500 for each audience recruited by the Partnered Institution depending on the topics of the online courses.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exclusivity</span></td>
    <td>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Partnered Institution is prohibited from dealing
    with any third parties where the scope of cooperation is similar to the Partnership Agreement, failing which, we have the right to terminate
    the Partnership Agreement and request our Partnered Institution to pay damages.</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We will not enter into similar partnership
agreements with third parties who intend to conduct business in the Specified District without the consent of our Partnered Institution.&#160;</p></td></tr>
  <tr style="vertical-align: top">
    <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Termination</span></td>
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Subsidiaries may elect to terminate the Partnership
    Agreement if:</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">(i)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;our
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">(ii)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;the
    shareholding of our Partnered Institution has undergone changes without our prior written consent.</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our Partnered Institution may elect to terminate
the Partnership Agreement if our Subsidiaries is unable to deliver our services under the Partnership Agreement within a reasonable time
after being urged by our Partnered Institution.&#160;</p></td></tr>
  <tr style="vertical-align: top">
    <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="padding-right: 5.4pt; padding-left: 5.4pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Remedial measures</span></td>
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Where our Partnered Institution is in breach of
    the terms and conditions of the Partnership Agreement, our Subsidiaries will not return any fees already paid by the Partnered Institution
    and the Partnered Institution has to pay us a sum equivalent to two years of service fees as a penalty.</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Where our Subsidiaries is in breach of the
terms and conditions of the Partnership Agreement, our Subsidiaries will return the remaining portion of the fees paid which is proportionate
to the remaining contract period under the Partnership Agreement to the Partnered Institutions.&#160;</p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Software and Maintenance Services</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lichen Zixun has been providing
a financial and taxation training software and academic affairs management system to our Partnered Institutions as part of our services
under the Partnership Agreements. Leveraging our understanding of corporate needs on financial and taxation management and analysis tools
in daily operation of our enterprise customers, we began in 2017 to invest and develop our first financial and taxation analysis software,
namely, Enterprise Financial Intelligence Analysis System V1.0, and have commercialized it for sale to our enterprise customers since
2019.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">With respect to our Lichen
Education Accounting Practice System V1.0, a financial and taxation training system that was developed in 2014, it is focused on students&#8217;
or users&#8217; practice experience by resembling, illustrating and providing practices on various accounting tasks, such as bookkeeping,
tax computation, filing tax returns and issuing valued-added tax invoices in actual business practices. Thereafter, we updated and developed
some new training systems based on Lichen Education Accounting Practice System V1.0.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Lichen Education has eight
copyrights for financial and taxation training software, to date. As of the date of this annual report, we have not experienced any product
recalls, liability claims or material complaints on our software products. For details, please see &#8220;Research and Development&#8221;
under the &#8220;Business&#8221; section.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>After Sales Services</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our customers who engage us
for our financial and taxation related or internal control related management consultation services may attend courses provided by the
Partnered Institutions. Continuous trainings can enhance the financial and taxation concepts of our customers and ensure the continuous
implementation of the financial and taxation solutions we provided to them. We also provide general customer care by responding to customer
queries from time to time, in order to timely resolve their problems.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From time to time, the Partnered
Institutions will also host talks and seminars conducted by our experienced senior management personnel, internal consultants or external
experts and invite our customers to attend. As for our Partnered Institutions, we provide continuous support to them, including operational
and technical support in school management and operation and trainings to Partnered Institutions&#8217; staff and employees. With respect
to our software products, we offer software installation, training and after sales technical and maintenance, such as telephone, instant
communication and remote support services within one year of purchase for our financial and taxation training software and financial and
taxation analysis software.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Sales and Marketing</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe brand recognition
to &#8220;Lichen&#8221; is critical to our ability to attract new customers and retain business collaboration and maintain our relationships
with our existing clientele, and our promotion and marketing efforts are designed to enhance our brand awareness and reputations among
them. Generally, we attract new customers with referrals from our Partnered Institutions and personal and business networks of our executives
and directors.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we organize marketing
activities, such as seminars, talks and consultation events with our Partnered Institutions, business federations and business associations,
leveraging our accumulated resources and connections. Through the business relationships with our Partnered Institutions, we strive to
provide our education support services to them, and by leveraging their business networks and their geographical coverage, we endeavor
to promote our brand name and services to the participants of these seminars, talks and courses organized by them. We have deployed external
experts and internal consultants to participate in and deliver more than 1,000 talks, courses and seminars organized for their target
audience.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To highlight our efforts,
we have co-hosted the 2018 China Management Consulting Innovation Forum with the China Enterprise Confederation Management Advisory Committee
and hosted the 2019 Excellent Financial Manager Summit Forum in Xiamen, both of which were well attended by business leaders, senior government
officials, university professors and financial and taxation executives.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also promote our brand
to a wide audience nationwide by multi-marketing strategies, which comprise (i) production and broadcasting of financial and taxation
videos and programs, (ii) internet and conventional advertisement placing, and (iii) organizing and sponsoring marketing events and activities.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>(i) Production and broadcasting of financial
and taxation videos and programs </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 12pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that broadcasting
our financial and taxation videos and programs on television and the internet can promote our brand image to a wider group of targeted
audiences, by matching the content of the programs with the relevant television programs and/or internet websites and domains. Our external
experts, internal consultants and senior management have participated in our promotional activities, such as appearing on television broadcasts
and popular online video websites that feature our practical financial and taxation videos and programs. The television programs, which
include the participation of our external experts, have been broadcasted on various selected television channels, while our videos, featuring
our external experts, internal consultants and senior management, have been shown on popular and selected third-party online video platforms,
such as iQIYI, Tencent Video, TouTiao, Sohu Video, Bilibili, etc.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 12pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>(ii) Internet and conventional advertisement
placing </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We plan to place advertisements
on the internet and through social media platforms, all of which could be conveniently accessed by our targeted customers. We also intend
to publish advertisements in selected financial magazines and newspapers. In addition, we plan to lease billboard advertising space and
light box displays situated on highways and floor spaces, pillars and ceiling spaces in airports and metro stations, as well as the interiors
and exteriors of trains, in order to attract potential new customers. According to Frost &amp; Sullivan, it is a common advertising method
for financial and taxation solution service providers to promote their services and brand awareness through placing advertisements on
billboard and/or light box displays as well as other internet and conventional advertisement placing. We believe that strategic locations
and high visibility of our billboards may give us an opportunity to engage in high-profile brand building. We will mainly place our advertisements
in Beijing, Shanghai, Xiamen and Chengdu. We will also enhance the advertising spaces by integrating newer technologies, applications
and techniques. We plan to include QR codes printed on our advertisements providing convenient access to the website of our Company and
our online financial and taxation videos and programs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 12pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>(iii) Organizing and sponsoring marketing
events and activities </i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We plan to further promote
our brand by organizing national financial competitions and sponsoring different types of events and activities tailored for participation
by high-end entrepreneurs. We encourage our Partnered Institutions and enterprise customers to participate in the national financial competitions.
We also plan to sponsor high-end entrepreneurs&#8217; events and activities, such as golf tournaments, to expand and strengthen our client
base. We have already organized and sponsored four golf tournaments. After each golf tournament, our players are invited to attend awards
ceremonies and banquets, which provide them with opportunities to exchange business contacts and allow our sales and marketing personnel
to approach our targeted and potential customers.</p><div>

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




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Customers</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our customers primarily consist
of business enterprises in respect of our financial and taxation solution services, Partnered Institutions in respect of our education
support services, and business enterprises and universities, colleges or other educational institutes for our software and maintenance
services.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have a diverse customer
base consisting of listed companies, state-owned enterprises, government authorities and other business enterprises, especially small
and medium-sized enterprises, in the PRC, spanning across more than 20 industries, such as manufacturing, wholesale or retail, food processing,
information technology, software and related technical services, construction, property development, commercial and financial services,
agriculture and fishery, catering, hotel and accommodation, transportation, postal services and warehousing, telecommunication, broadcasting
and media services, research and development, oil refinery, gas or electricity supply, environment management, public facilities management,
culture, sports and entertainment, water supply, repairs and public administration. Besides spreading across different industry sectors,
we also enjoy a customer base with broad geographical locations in the PRC.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the years ended December
31, 2022, 2021, and 2020, sales to our five largest customers amounted to approximately $2.05 million, $2.03 million, and $1.3 million,
representing approximately 6.07%, 5.90%, and 4.22%, respectively, of our total revenue. As of the date of this annual report, we have
no customer that accounts for more than 10% of our revenue.</p><div>

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

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

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    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Suppliers</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our suppliers primarily consist
of the external experts, education and office materials providers, including education materials and textbooks, software developers and
technology vendors, and a media company in the PRC. For the years ended December 31, 2022, 2021, and 2020, purchases from our five largest
suppliers amounted to approximately $1.92 million, $2.07 million, and $1.84 million, which accounted for approximately 76.59%, 84.30%
and 68.39%, respectively, of our total purchases.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Research and Development</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We place strong emphasis on
the R&amp;D of our services. In order to maintain our market position and to further expand market share in our services, it is paramount
to continuously keep ourselves up-to-date with the latest market demand and trends and develop services, in our efforts to surpass the
services offered by our competitors in terms of quality and practicality. For the years ended December 31, 2022, 2021, and 2020, we incurred
R&amp;D expenses of approximately $1.06 million, $1.08 million, and $0.93 million, respectively. Our R&amp;D department is responsible
for the development of teaching and learning materials on new topics for our Partnered Institutions, financial and taxation training software,
and financial and taxation analysis software. As of the date of this annual report, all of the staff of our R&amp;D department possess
a tertiary education diploma or undergraduate degree.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our R&amp;D department is
responsible for developing, updating and improving our software products for educational purposes and business and commercial use. As
of the date of this annual report, we had 15 software technicians, with an average working experience of more than 15 years. All of them
possessed a bachelor&#8217;s degree or master&#8217;s degree. The software R&amp;D team identifies the needs of the market by obtaining
feedback from our Partnered Institutions, receiving first-hand information on market needs, industry trends and practical experiences
from our internal consultants and external experts through their interaction and exchanges with enterprise clients during their provision
of financial and taxation solution services, observing offerings by our competitors and through internal discussion. Once a market need
is identified, the software R&amp;D team will conduct feasibility studies to assess the market demand and design detailed specifications
on functions and performance.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our financial and taxation
analysis software, namely, Enterprise Financial Intelligence Analysis System V1.0, is designed for our enterprise customers in the industrial
and manufacturing industries to conduct business management analysis on the CRM system, inventory sharing, product lifecycle management
and supply chain management, which enables them to improve their operation and financial process and business efficacy. Our financial
and taxation training software, mainly including virtual accounting practice software designed to simulate different tasks of an accountant
such as preparation of general ledgers, cost management, taxation and budgeting etc. in real daily practice, assists our Partnered Institutions
to illustrate the actual roles and work of an accountant in business practices to their participants.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">With our dedicated efforts
and investments in various R&amp;D initiatives and projects, we have developed (i) 16 sets of teaching and learning materials covering
various financial and taxation related topics, (ii) eight financial and taxation training software, and (iii) one financial and taxation
analysis software to support and complement various types of services offered by our Subsidiaries. In addition, Lichen Education has registered
eight copyrights for software developed by our Subsidiaries, as of the date of this annual report.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Seasonality</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our services historically
have not been subject to seasonal variations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Insurance</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not have any business
liability, interruption or litigation insurance coverage for our operations in China. Insurance companies in China offer limited business
insurance products. While business interruption insurance is available to a limited extent in China, we have determined that the risks
of interruption, cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms
make it impractical for us to have such insurance. Therefore, we are subject to business and product liability exposure. See &#8220;Risk
Factors &#8211; We have limited insurance coverage to protect us against all risks associated with our business operations.&#8221;</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Regulation</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operation in China is
subject to a number of PRC laws and regulations. This section summarizes the most significant PRC laws and regulations relevant to our
business and operations in China and the key provisions of such regulations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Regulations on Foreign Investment</span></i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Foreign Investment Law
of the PRC was adopted by the 2nd session of the thirteenth National People&#8217;s Congress on March 15, 2019 and became effective on
January 1, 2020. The Foreign Investment Law sets out the basic regulatory framework for foreign investments and proposes to implement
a system of pre-entry national treatment with a negative list for foreign investments, pursuant to which (i) foreign natural persons,
enterprises or other organizations, collectively the foreign investors, shall not invest in any sector forbidden by the negative list
for access of foreign investment, (ii) for any sector restricted by the negative list, foreign investors shall conform to the investment
conditions provided in the negative list, and (iii) sectors not included in the negative list shall be managed under the principle that
domestic investment and foreign investment shall be treated equally. The Foreign Investment Law also sets forth necessary mechanisms to
facilitate, protect and manage foreign investments and proposes to establish a foreign investment information report system in which foreign
investors or foreign-funded enterprises shall submit the investment information to competent departments of commerce through the enterprise
registration system and the enterprise credit information publicity system.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 30, 2019, the
Ministry of Commerce and the State Administration for Market Regulation issued the Measures for the Reporting of Foreign Investment Information,
which came into effect on January 1, 2020 and replaced Interim Administrative Measures. Since January 1, 2020, for foreign investors carrying
out investment activities directly or indirectly in China, the foreign investors or foreign-invested enterprises shall submit investment
information to the commerce authorities pursuant to these measures.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Special Administrative Measures for Entrance
of Foreign Investment (Negative List) (2020 Version)</span></i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Special Administrative
Measures for Entrance of Foreign Investment (Negative List) (2020 Version), or the Negative List, which was promulgated jointly by the
Ministry of Commerce and the National Development and Reform Commission on June 23, 2020 and became effective on July 23, 2020, replaced
and abolished the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2019 Version) regulating the access
of foreign investors to China. Pursuant to the Negative List, foreign investors should refrain from investing in any of prohibited sectors
specified in the Negative List, and foreign investors are required to obtain the permit for access to other sectors that are listed in
the Negative List but not classified as &#8220;prohibited&#8221;. The Negative List covers 12 industries. Fields not covered in the Negative
List shall be administrated under the principle of equal treatment to domestic and foreign investments.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a Cayman Islands company
and our businesses by nature in China are mainly financial and taxation solution services, education support services and software and
maintenance services, which are not restricted or prohibited for foreign investors by the Negative List.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Regulations on Intellectual Property Rights</span></i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Patent</i>.&#8195; Patents
in the PRC are principally protected under the Patent Law of the PRC. The duration of a patent right is 10 years, 15 years or 20 years
from the date of application, depending on the type of patent right.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Copyright</i>.&#8195;Copyrights
in the PRC, including copyrighted software, is principally protected under the Copyright Law of the PRC and related rules and regulations.
Under the Copyright Law, the term of protection for copyrighted software is 50 years.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Trademark</i>.&#8195;The
PRC Trademark Law has adopted a &#8220;first-to-file&#8221; principle with respect to trademark registration. Registered trademarks are
protected under the Trademark Law of the PRC and related rules and regulations. Trademarks are registered with the Trademark Office of
the SAIC. Where registration is sought for a trademark that is identical or similar to another trademark which has already been registered
or given preliminary examination and approval for use in the same or similar category of commodities or services, the application for
registration of such trademark may be rejected. Trademark registrations are effective for a renewable ten-year period, unless otherwise
revoked.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Domain Names</i>.&#8195;Domain
name registrations are handled through domain name service agencies established under the relevant regulations, and applicants become
domain name holders upon successful registration.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have adopted necessary
mechanisms to register, maintain and enforce intellectual property rights in the PRC. However, we cannot assure you that we can prevent
our intellectual property from all the unauthorized use by any third party, neither can we promise that none of our intellectual property
rights would be challenged any third party.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Regulations on Internet Information Services</span></i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the Administrative
Measures on Internet Information Services promulgated by the State Council on September 25, 2000, and amended on January 8, 2011, internet
information services are classified into two categories: (1) profitable internet information services; and (2) non-profitable internet
information services. Profitable internet information services refer to the provision, via the internet, of information or webpage development
etc. for payment to internet users. Non-profitable internet information services refer to the provision, via the internet, of open or
sharable information for free to internet users. PRC applies the license system to profitable internet information services and applies
the record-filing system to non-profitable internet information services. We have completed the registration required by the measures
for the website we operate.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Regulations Relating to Taxation&#160;</span></i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Regulations on Dividend Withholding Tax</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Enterprise
Income Tax 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 20%. Pursuant to the Arrangement between Mainland China
and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion 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 State Administration of Taxation
on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or Circular 81, 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 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the Circular
on Several Issues regarding the &#8220;Beneficial Owner&#8221; in Tax Treaties, which was issued on February 3, 2018 by the SAT, effective
as of April 1, 2018, when determining the applicant&#8217;s status of the &#8220;beneficial owner&#8221; regarding tax treatments in connection
with dividends, interests or royalties in the tax treaties, several factors, including without limitation, whether the applicant is obligated
to pay more than 50% of its income in twelve months to residents in any third country or region, whether the business operated by the
applicant constitutes the actual business activities, and whether the counterparty country or region to the tax treaties does not levy
any tax or grant tax exemption on relevant incomes or levy tax at an extremely low rate, will be taken into account, and it will be analyzed
according to the actual circumstances of the specific cases. This circular further provides that applicants who intend to prove his or
her status of the &#8220;beneficial owner&#8221; shall submit the relevant documents to the relevant tax bureau according to the Announcement
on Issuing the Measures for the Administration of Non-Resident Taxpayers&#8217; Enjoyment of the Treatment under Tax Agreements.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 14, 2019, the State
Administration of Taxation issued the Notice on the Administrative Measures for Non-resident Enterprises to Enjoy Contractual Benefits
(Circular No. 35 of the State Administration of Taxation in 2019, Circular 35), which was implemented from January 1, 2020. According
to Circular 35, non-resident enterprises may enjoy the benefits by the way of &#8220;self-judgment, declaration and enjoyment, and retention
of relevant information for future reference&#8221;. If a non-resident enterprise judges that it meets the conditions for enjoying the
contractual benefits, it may enjoy the contractual benefits at the time of tax declaration or through the withholding agent. At the same
time, it shall collect and retain relevant information for reference in accordance with Circular 35, and accept the follow-up management
of the tax authorities.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Regulations on Enterprise Income Tax</i>&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the Enterprise
Income Tax Law which was issued by the National People&#8217;s Congress on March 16, 2007 and last revised and came into effect on December
29, 2018, and the Implementation Rules to the Enterprise Income Tax Law issued by the State Council on December 6, 2007 and effective
on January 1, 2008 and was revised on April 23, 2019, both domestic and foreign-invested enterprises established under the laws of foreign
countries or regions whose &#8220;de facto management bodies&#8221; are located in the PRC are considered resident enterprises, and will
generally be subject to EIT at the rate of 25% of their global income. Under the Implementing Rules of the Enterprise Income Tax Law,
a &#8220;de facto management body&#8221; is defined as a body that has material and overall management and control over the manufacturing
and business operations, personnel and human resources, finances and properties of an enterprise. A circular issued by the State Administration
of Taxation of the PRC in April 2009 and amended in 2017, regarding the standards used to classify certain Chinese invested enterprises
controlled by Chinese enterprises or Chinese enterprise groups and established outside of China as &#8220;resident enterprise&#8221;,
which also clarified that dividends and other income paid by such PRC &#8220;resident enterprises&#8221; will be considered PRC source
income and subject to PRC withholding tax, currently at a rate of 10%, when paid to shareholders outside of the PRC. This circular also
subjects such PRC &#8220;resident enterprises&#8221; to various reporting requirements with the PRC tax authorities. We believe that Lichen
China Limited or any of our subsidiaries outside of China is not 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 bodies&#8221;.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Regulations on Value-Added Tax</i>&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2011, the Ministry
of Finance and the State Administration of Taxation promulgated the Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax.
In March 2016, the Ministry of Finance and the State Administration of Taxation further promulgated the Notice on Fully Promoting the
Pilot Plan for Replacing Business Tax by Value-Added Tax. On March 20, 2019, the Ministry of Finance, the State Administration of Taxation
and General Administration of Customs issued Announcement on Policies for Deepening the VAT Reform jointly, under which the VAT rates
under the basic mechanism is 13% for the sectors such as operating and financial leases of equipment, 9% for sectors such as transportation,
postal, basic telecommunication, and construction services as well as sales and leases of real property and real property rights, 0% for
exported services and 6% for all remaining services, including financial services. Unlike business tax, a taxpayer is allowed to offset
the qualified input VAT paid on taxable purchases against the output VAT chargeable on the modern services provided. Furthermore, according
to Announcement of the State Taxation Administration on Matters relating to Expanding the Scope of the Pilot Scheme for Issuance of Special
VAT Invoices by Small-Scale Taxpayers issued by State Administration on February 3, 2019, the basic mechanism may not apply to small-scale
taxpayers who may pay the VAT taxes at the levy rates of 3% and 5% on the basis of their sales amount. As of the date of this annual report,
our PRC subsidiaries are generally subject to VAT rates of 6%.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Regulations Relating to Foreign Exchange&#160;</span></i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Regulations on Foreign Currency Exchange</i>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The principal regulations
governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, most recently amended in August 2008.
Under the PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest payments and trade
and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with
certain procedural requirements. By contrast, approval from or registration with appropriate government authorities is required where
RMB is to be converted into foreign currency and remitted out of China to pay capital account items, such as direct investments, repayment
of foreign currency-denominated loans, repatriation of investments and investments in securities outside of China.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2012, SAFE promulgated
the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, which substantially
amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign
exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment
of RMB proceeds derived by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested
enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same
entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated another circular in May
2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must
be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in the PRC based
on the registration information provided by SAFE and its branches. On February 13, 2015, SAFE promulgated the Notice on Further Simplifying
and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13. After SAFE Notice 13 became
effective on June 1, 2015, instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and
overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations from qualified banks.
The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration.&#160;</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 30, 2015, SAFE promulgated
Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested
enterprises nationwide. Circular 19 came into force and replaced both previous Circular 142 and Circular 36 on June 1, 2015. On June 9,
2016, SAFE promulgated Circular 16 to further expand and strengthen such reform. Under Circular 19 and Circular 16, foreign-invested enterprises
in the PRC are allowed to use their foreign exchange funds under capital accounts and RMB funds from exchange settlement for expenditure
under current accounts within its business scope or expenditure under capital accounts permitted by laws and regulations, except that
such funds shall not be used for (i) expenditure beyond the enterprise&#8217;s business scope or expenditure prohibited by laws and regulations;
(ii) investments in securities or other investments than banks&#8217; principal-secured products; (iii) granting of loans to non-affiliated
enterprises, except where it is expressly permitted in the business license; and (iv) construction or purchase of real estate for purposes
other than self-use (except for real estate enterprises).</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2017, SAFE promulgated
the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or
SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities
to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution,
the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for
previous years&#8217; losses before remitting the profits. Further, according to SAFE Circular 3, domestic entities shall make detailed
explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing
the registration procedures in connection with an outbound investment.&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Regulations on Foreign Exchange Registration
of Overseas Investment by PRC Residents</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 24pt; text-align: justify; text-indent: 12pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">SAFE issued SAFE Circular
on Relevant Issues Relating to Domestic Resident&#8217;s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles,
or SAFE Circular 37, that became effective in July 2014, replacing the previous SAFE Circular 75. SAFE Circular 37 regulates foreign exchange
matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing
or conduct round trip investment in China. Under SAFE Circular 37, a SPV refers to an offshore entity established or controlled, directly
or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate
onshore or offshore assets or interests, while &#8220;round trip investment&#8221; refers to direct investment in China by PRC residents
or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights.
SAFE Circular 37 provides that, before making contribution into an SPV, PRC residents or entities are required to complete foreign exchange
registration with SAFE or its local branch. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the
Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular
37, requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their
establishment or control of an offshore entity established for the purpose of overseas investment or financing.&#160;</p><div>




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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">PRC residents or entities
who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration as required before the
implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified banks. An amendment
to the registration is required if there is a material change with respect to the SPV registered, such as any change of basic information
(including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges
of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent
notice, or making misrepresentation on or failure to disclose controllers of the foreign-invested enterprise that is established through
round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant foreign-invested enterprise,
including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation,
to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities
to penalties under PRC foreign exchange administration regulations.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our PRC resident beneficial
owners subject to these registration requirements have registered with the Jinjiang SAFE branch and/or qualified banks to reflect the
recent changes to our corporate structure.</p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Regulations on Dividend Distribution</span></i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under our current corporate
structure, the Company may rely on dividend payments from Lichen Education and Lichen Zixun, which are wholly foreign-owned enterprises
incorporated in China, to fund any cash and financing requirements we may have. The principal regulations governing distribution of dividends
of foreign-invested enterprises include Foreign Investment Law of the People&#8217;s Republic of China and Company Law of the People&#8217;s
Republic of China. Under these laws, wholly foreign-owned enterprises in China may freely make remittance inward and outward in RMB or
foreign exchange of capital contribution, profits, capital yield, income from asset disposal, intellectual property licensing fees, indemnity
obtained according to law or income from compensation and liquidation. In addition, wholly foreign-owned enterprises in China are required
to allocate at least 10% of their respective accumulated profits each year as a statutory reserve fund, if any, to fund the reserve fund
until the statutory reserves fund has reached 50% of the registered capital of the enterprises. Wholly foreign-owned companies may, at
their discretion, allocate a portion of their after-tax profits based on PRC accounting standards to optional reserve funds. After making
up the losses and allocating reserve funds, the remaining after-tax profits of wholly foreign-owned enterprises may be distributed to
the shareholders. As of December 31, 2021, and June 30, 2022, the statutory reserves fund of Lichen Zixun has reached 50% of the registered
capital of the enterprise. As of December 31, 2020 and June 30, 2021, the statutory reserves fund of Lichen Education is nil as it has
not made any profit after tax.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Regulations Relating to Employment</span></i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The PRC Labor Law and the
Labor Contract Law require that employers must execute written employment contracts with full-time employees. If an employer fails to
enter into a written employment contract with an employee within one year from the date on which the employment relationship is established,
the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the
employee&#8217;s salary for the period from the day following the lapse of one month from the date of establishment of the employment
relationship to the day prior to the execution of the written employment contract. All employers must compensate their employees with
wages equal to at least the local minimum wage standards. Violations of the PRC Labor Law and the Labor Contract Law may result in the
imposition of fines and other administrative sanctions, and serious violations may result in criminal liabilities.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Enterprises in China are required
by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namely a pension plan,
a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing
provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances,
of the employees as specified by the local government from time to time at locations where they operate their businesses or where they
are located. Failure to make adequate contributions to various employee benefit plans may be subject to fines and other administrative
sanctions.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Currently, we are making contributions
to the plans based on the minimum standards, although the PRC laws required such contributions to be based on the actual employee salaries
up to a maximum amount specified by the local government. Therefore, in our consolidated financial statements, we have made an estimate
and accrued a provision in relation to the potential make-up of our contributions for these plans as well as to pay late contribution
fees and fines. If we are subject to late contribution fees or fines in relation to the underpaid employee benefits, our financial condition
and results of operations may be adversely affected. See &#8220;Risk Factors &#8212; Risks Relating to Doing Business in the People&#8217;s
Republic of China &#8212; Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may
subject us to penalties.&#8221;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Regulations Relaing to Overseas Securities
Oferring and Listing</span></i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On 17 February 2023, the CSRC
promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the &#8220;Overseas Listing
Trial Measures&#8221;) and relevant five guidelines, which became effective on 31 March 2023. The Overseas Listing Trial Measures comprehensively
improve and reform the existing regulatory regime for overseas offering and listing of PRC domestic companies&#8217; securities and will
regulate both direct and indirect overseas offering and listing of PRC domestic companies&#8217; securities by adopting a filing-based
regulatory regime. According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in
overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information.
Where a listed company that has been issued and listed overseas transfer of listing, it shall report the specific situation to the CSRC
within 3 working days from the date of the occurrence and announcement of relevant matters. See &#8220;Risk Factors &#8212; Risks Relating
to Doing Business in the People&#8217;s Republic of China &#8212;The filing, approval or other administration requirements of the CSRC
or other PRC government authorities may be required in connection with our future offshore offering under PRC law, and, if required, we
cannot predict whether or for how long we will be able to complete the filing procedure with the CSRC and obtain such approval or complete
such filing, as applicable.&#8221;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this annual
report, our operations are run in compliance with the all PRC regulations disclosed above.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>C. Organizational structure. </b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="background-color: white">The following
is a list of our subsidiaries as of the date of this annual report.</span></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: White">
    <td style="border-bottom: Black 1.5pt solid; width: 32%; font-weight: bold">Subsidiaries</td><td style="width: 2%; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 32%; font-weight: bold; text-align: center">Place of Incorporation</td><td style="width: 2%; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; width: 32%; font-weight: bold; text-align: center">Incorporation Time</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Legend Consulting Limited (BVI)</td><td>&#160;</td>
    <td style="text-align: center">British Virgin Islands</td><td>&#160;</td>
    <td style="text-align: center">December 20, 2013</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Legend Consulting Limited (HK)</td><td>&#160;</td>
    <td style="text-align: center">Hong Kong SAR</td><td>&#160;</td>
    <td style="text-align: center">January 8, 2014</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Fujian Lichen Management Consulting Limited (PRC)</td><td>&#160;</td>
    <td style="text-align: center">People&#8217;s Republic of China</td><td>&#160;</td>
    <td style="text-align: center">April 14, 2004</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Xiamen Lichen Education Service Limited (PRC)</td><td>&#160;</td>
    <td style="text-align: center">People&#8217;s Republic of China</td><td>&#160;</td>
    <td style="text-align: center">July 30, 2014</td></tr>
  </table><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following diagram illustrates the corporate
structure of Lichen China Limited and its subsidiaries as of the date of this annual report:</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_003.jpg"/></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 68; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->63<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>D. Property, Plant and Equipment</b></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">Real property</span></i></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no private land and
property ownership in China. The right to possess the property is held by the government and the right to use the property has been transferred
to our operating subsidiaries in PRC.</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: left; font-weight: bold">Location</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Description and tenure</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Use of<br/>
 property</td><td style="text-align: center; font-style: italic; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-style: italic; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Approximate<br/>
Gross Floor<br/>
Area <i>(sq.m.)</i>&#160;</b></p></td><td style="text-align: center; padding-bottom: 1.5pt; font-style: italic">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: justify">&#160;</td><td>&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i><span style="text-decoration:underline">Leased property </span></i></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Intellectual Property</b></p><div>

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

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

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

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</div><p style="margin: 0">&#160;</p><div>

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    <td style="text-align: center; width: 1%">&#160;</td>
    <td style="text-align: center; width: 22%"><img alt="" src="image_008.jpg"/></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Copyrights</i></p><div>

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

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    <td style="padding-left: 5.25pt; text-align: center; text-indent: -5.25pt">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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

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

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

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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">October 18, 2023 </span></td></tr>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">January 14, 2024 </span></td></tr>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">October 24, 2023 </span></td></tr>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">January 4, 2024 </span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The software copyrights we
owned have the effective protection period of 50 years from the registration date for each registered copyright according to the Copyright
Law in China. It is not renewable or extendable. We plan to continue upgrading our software and register copyright of the updated software.
We believe the expiration of the copyrights will not have material impact on our business.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in">As of the date of this annual
report, we have not (i) received any intellectual property infringement-related complaints or claims against us; (ii) been notified of
any infringement of any intellectual property of any third party by us or of any of our intellectual property being infringed by any third
party; and (iii) been involved in any litigation in relation to claims of infringement of intellectual property.</p><div>

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

</div><div><a id="m_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-variant: small-caps"><b>Item
4A. Unresolved Staff Comments</b></span></p><div>

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

</div><p style="text-indent: 0.5in; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">None.</p><div>

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

</div><div><a id="m_007"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-variant: small-caps"><b>Item 5. Operating and Financial
Review and Prospects</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>You should read the following discussion and
analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the
related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties.
Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements
as a result of various factors, including those set forth under &#8220;<span style="background-color: white">Item 3. Key&#160;</span>Information
&#8212; 3.D. Risk Factors&#8221; and elsewhere in this annual report.</i>&#160;</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in">We are a leading financial
and taxation service provider in China, in terms of revenue, according to the industry report of Frost &amp; Sullivan. We have operated
as a dedicated financial and taxation solution service specialist of professional and high-quality services in China for over 18 years.
We focus on providing (i) financial and taxation solution services; (ii) education support services; and (iii) software and maintenance
services in the PRC under our &#8220;Lichen&#8221; brand. With over 18 years of operation history, we have gained substantial experience
and established a solid reputation with our proven track record in the PRC.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In recognition of our expertise
and experience earned from over 18 years in the financial and taxation solution services industry, we have built up our reputation as
a dedicated financial and taxation solution services provider of professional and high-quality services in the PRC. From 2012 to 2021,
we had been recognized as one of the Top 50 Providers of Management Consulting Services in China for ten consecutive years by the China
Enterprise Confederation Management Advisory Committee.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
order to curtail the COVID-19 pandemic, the Chinese government has established a series of restrictions, including some lockdown rules,
and during this period, we provided our consulting services to our clients online and postponed or reduced part of the on-site procedures.
Due to the impact of the COVID-19 pandemic, we had a 4.93% decrease in revenue for the six months ended June 30, 2022 compared to the
six months ended June 30, 2021. At the same time, our cost of revenues increased by 1.27% due to the extended project period and the
increase in personnel cost, and our net income decreased to approximately $4.33 million for the six months ended June 30, 2022, from
approximately $4.87 million for the six months ended June 30, 2021, a decrease of 11.14%. Although, the effects of the COVID-19 pandemic
on our financial results were limited, we expect to continue our new business model that combines remote and on-site consultation services
after the COVID-19 pandemic subsides.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 8, 2023, the Company completed its initial public offering on the National Association of Securities Dealers Automated Quotations
(&#8220;NASDAQ&#8221;). In this offering, 4,000,000 Class A Ordinary Shares were issued at a price of $4.00 per share. The gross proceeds
received from the initial public offering totaled USD 16 million. The Offering closed on February 8, 2023 and the Class A Ordinary Shares
began trading on February 6, 2023 on The Nasdaq Capital Market under the ticker symbol &#8220;LICN.&#8221;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>5.A.
<i>Operating Results</i>.</b></span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operating results are primarily affected by the following factors:</span></p><div>

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

</div><table cellpadding="0" cellspacing="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: 0.5in"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></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"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Growth
                                            of the Chinese Economy</span></p>
                                                                     <p style="font: 10pt Times New Roman, Times, Serif; margin: 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 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
    operate our business within China and the growth or decline of the Chinese economy in general affects our business.</span></p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Industry
                                            Demand</span></p>
                                                         <p style="font: 10pt Times New Roman, Times, Serif; margin: 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 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Since
    China is still a developing country, the financial and taxation solution industry has barely reached its full capacity and the current
    and potential demand for financial and taxation solutions is still expected to remain at a relatively high level.</span></p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></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"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Contract
                                            Pricing and Terms</span></p>
                                                         <p style="font: 10pt Times New Roman, Times, Serif; margin: 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 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
    provide our clients with high-quality financial and taxation solution services, a fair price and reasonable terms are essential for
    us to operate successfully in the industry in the long term.</span></p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></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"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Competition</span></p>
                                                         <p style="font: 10pt Times New Roman, Times, Serif; margin: 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 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    financial and taxation solution consulting market is highly dispersed and competitive with a large number of participants. To maintain
    the goodwill and reputation under the brand &#8220;Lichen&#8221; is essential for the Company to grow.</span></p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></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"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Strategic
                                            Acquisitions and Investments</span></p>
                                                         <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Strategic
    acquisitions could significantly reinforce our market position with larger scale of operation, consolidation of resources, expanding
    customer base and more market share. Specifically, by merging with providers of various operational sizes and/or with different industry
    specialty, establishing representative offices in more cities, recruiting additional staff to support our business expansion plans,
    would firmly expand our business and strengthen our market position; and the ability to access capital is also very important to
    execute our acquisition strategy. We do not have acquisition targets now and the proceeds from this offering will not be used for
    acquisitions.</span></p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></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"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Changes
                                            to Government Policies</span></p>
                                                         <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
    has highly complicated taxation regulations and the fast-changing business environment we operate in is constantly adapting to these
    policy changes.</span></p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></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"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
                                            Ability to Broaden Service Offerings and Diversify Our Customer Base</span></p>
                                                         <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Service
    offerings dictate our added value to our customers and the profitability of the Company; and the diversification of our customer
    base in turn dictates the range of services we offer.</span></p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Impact
of COVID-19 on our business</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Following
the global outbreak of COVID-19 in early 2020, our business operations and service provision to our customers in the PRC were temporarily
disrupted since the Chinese New Year holidays of 2020, due to temporary suspension of operation of our offices, the Partnered Institutions
and our enterprise customers in response to the respective local government&#8217;s policies. We have resumed operation in full since
February 10, 2020. We had been closely monitoring and evaluating the effect of the COVID-19 pandemic on our services, especially financial
and taxation solution services provided to our enterprise customers and education support services provided to our Partnered Institutions.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Meanwhile,
considering that the PRC government has gradually relaxed the lockdown measures or travel restrictions and allowed resumption of business,
the reported number of new cases had dropped from the height of the crisis and the slowdown in the decrease in revenue and gross profit
of our Lichen Group as illustrated below, we believe that the adverse effect on, and business interruption to, us as a result of the
of COVID-19 pandemic is only temporary in nature.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due
to the impact of the COVID-19 pandemic, as compared to the year ended December 31, 2019, the total revenue of our Group for the year
ended December 31, 2020 decreased by approximately $0.93 million, which was attributable to the decrease in revenue generated from financial
and taxation solution services by approximately $1.68 million, but offset by the increase in revenue generated from education support
services and software and maintenance services by approximately $0.05 million and $0.70 million, respectively. There is no further impact
for the year ended December 31, 2021 as the total revenue of our Group for the year ended December 31, 2021 increased by approximately
$3.63 million to approximately $34.30 million from approximately $30.67 million for the year ended December 31, 2020. The increase was
primary due to the resumption of our business and operations and the increase in the number of our consulting services orders. During
March and April 2022, many cities in China have been affected by COVID-19, especially the southeast coastal city. Our business has been
affected as well. The total revenue of our Group for the six months ended June 30, 2022 decreased by approximately $0.84 million, or
4.93%, to approximately $16.15 million from approximately $16.99 million for the six months ended June 30, 2022. The total revenue of
our Group for the year ended December 31, 2022 decreased by approximately $0.49 million to approximately $33.81 million from approximately
$34.30 million for the year ended December 31, 2021. There is no further impact for the year ended December 31, 2022.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a whole, our business and services were subject to different degree of delays, due to temporary suspension of business operations, lockdown
measures and travel restrictions. In particular, our internal consultants and external experts have not been able to provide certain
on-site consultation or meet face-to-face with our enterprise customers or deliver in-person seminars or talks at premises of our Partnered
Institutions. For our financial and taxation solution services, save for the postponed completion of 24 financial and taxation related
management or internal control management consultation projects resulting in expected delay in recognition of revenue of approximately
RMB2.29 million (approximately $0.35 million) and cancellation or termination of 43 annual or regular consultation projects resulting
in expected loss of revenue of approximately RMB13.18 million (approximately $2.02 million), our management confirmed that the COVID-19
pandemic had not resulted in any substantial delay or difficulties in discharging our obligations under any financial and taxation solution
service contracts or agreements, and we had not been subject to any late charges or damages imposed on us by our customers. The aforesaid
postponed projects were completed and the relevant revenue of approximately RMB2.29 million (approximately $0.35 million) was fully recognized
by June 2020.&#160;</span></p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Partnered Institutions had temporarily suspended the provision of in-person trainings, seminars or talks to their participants, owing
to travel restrictions, lockdown and/or quarantine measures imposed by local governments as well as the governments&#8217; recommendation
to maintain social distancing to reduce the chance of transmission of COVID-19. To mitigate the disruption of our services provided to
our Partnered Institutions, we commenced offering technical support to online education courses to our Partnered Institutions. Since
late May 2020, our Partnered Institutions resumed provision of in-person trainings, seminars and talks. As of the date of this prospectus,
none of our Partnered Institutions has terminated our services or requested compensation from our Group due to disruptions attributed
to the COVID-19 pandemic.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
our software and maintenance services, due to temporary suspension of business operations or classes, six enterprise customers and eight
universities or colleges cancelled their order of software, and accordingly we recorded loss of revenue of approximately RMB3.7 million
(approximately $0.54 million) for the year ended December 31, 2020. Given that sales of software and maintenance support services do
not generally require a lot of face-to-face meetings with our customers on a day-to-day basis, we have not encountered or experienced,
and do not expect to encounter, any material disruption to our software and maintenance services due to the COVID-19 pandemic. There
is no order cancelled during the fiscal year ended December 31, 2022 and 2021 by any of our customers or universities or colleges.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that the COVID-19 pandemic caused a certain level of business disruption and had a negative impact to business results and financial
performance of business enterprises in the PRC, which are our major customers for financial and taxation solution services As a consequence,
business owners and entrepreneurs tended to tighten their budgets, reduced expenditures or postponed their projects in order to mitigate
the impact of COVID-19 to their businesses at the initial stage of the outbreak. In addition, certain projects were referred by our Partnered
Institutions. Due to the temporary suspension of in-person trainings, seminars or talks held by our Partnered Institutions, our promotion
through these in-person activities to participants of our Partnered Institutions was also disrupted.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Following
the resumption of in-person trainings, seminars or talks by our Partnered Institutions in late May 2020, our promotion to participants
of our Partnered Institutions or referrals from Partnered Institutions gradually resumed. Since the pandemic has been downgraded and
the social order and economy is recovering, we believe that the demand in our financial and taxation solution services should continue
to pre-pandemic levels.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><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">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Key
Components of Results of Operations</b></span></p><div>

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

</div><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">Comparison
of Years Ended December 31, 2022 and 2021</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table summarizes the consolidated results of our operations for the years ended December 31, 2022 and 2021, respectively, and
provides information regarding the dollar and percentage increase or (decrease) during such periods.</span></p><div>

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

</div><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">(All
amounts, other than percentages, in thousands of U.S. dollars)</span></p><div>

</div><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><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31, 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="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31, 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Amount</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="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">As&#160;% <br/> of <br/> Revenues</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">
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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="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right">(40.30</td><td style="padding-bottom: 1.5pt; text-align: left">)%</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right">(1.50</td><td style="padding-bottom: 1.5pt; text-align: left">)%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right">(1.38</td><td style="padding-bottom: 1.5pt; text-align: left">)%</td></tr>
  <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>
    <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: 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">(7,433</td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(7,168</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(20.90</td><td style="text-align: left">)%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(265</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-bottom: 1.5pt">Total operating expenses</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">(9,544</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right">(28.23</td><td style="padding-bottom: 1.5pt; text-align: left">)%</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 1.5pt">Income from operations</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">10,648</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 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>
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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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</div><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>&#160;</p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
generate revenue from the provision of financial and taxation solution services, education support services and software and maintenance
services. Our total revenue was approximately $33.81 million for the year ended December 31, 2022, compared to approximately $34.30 million
for the year ended December 31, 2021, a decrease of approximately $0.49 million, or 1.43%. Such decrease was due to an approximately
$0.21 million decrease in revenue from financial and taxation solution services, an approximately $0.23 million decrease in revenue from
our education support services, and an approximately $0.05 million decrease in revenue from our software and maintenance services, which
we began providing in the year ended December 31, 2019.</span></p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
from financial and taxation solution services amounted to approximately $26.28 million, or 77.73% of total revenue, for the year ended
December 31, 2022, decreased by $0.21 million, or 0.80%, from approximately $26.49 million for the year ended December 31, 2021. Such
decrease was primarily due to the depreciation of RMB by 9.24% in fiscal year 2022 from December 31, 2021 to December 31, 2022. Revenue
from financial and taxation solution services amounted to approximately RMB 176.65 million for the year ended December 31, 2022, increased
by RMB 5.84 million, or 3.42% from approximately RMB 170.91 million for the year ended December 31, 2021. Such increase was mainly due
to continuous expansion of the branding and business that brought new clients and orders. The quantity of the customers increased by
68 from 516, or 13.18% for the year ended December 31, 2021 to 584 for the year ended December 31, 2022.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
from education support services decreased by $0.23 million, or 4.88%, from approximately $4.64 million or 13.52% of total revenue, for
the year ended December 31, 2021, to approximately $4.41 million, or 13.04 % of total revenue for the year ended December 31, 2022. Such
decrease was primarily due to the impact of the COVID-19 pandemic.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operations for software and maintenance services began in March 2019. Revenue from this business amounted to approximately $3.12 million,
or 9.22% of total revenue, for the year ended December 31, 2022, decreased by $0.05 million, or 1.61%, from approximately $3.17 million
for the year ended December 31, 2021. The main reason is due to the depreciation of RMB by 9.24% in fiscal year 2022 from December 31,
2021 to December 31, 2022.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
cost of revenue includes employee salaries, registration fees paid to our Partner Institutions and amortization of software in software
sales. Our cost of revenue decreased by $0.21 million, or 1.50%, to approximately $13.61 million for the year ended December 31, 2022,
from approximately $13.82 million for the year ended December 31, 2021. Such decrease was in line with our decreased revenue.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
selling and marketing expenses consist primarily of online and offline promotion, video broadcast promotion and self-media promotion.
Our selling and marketing expenses increased by $0.10 million, or 5.08%, to approximately $2.11 million for the year ended December 31,
2022, from approximately $2.01 million for the year ended December 31, 2021. Such increase was primarily due to the strengthened online
promotion of the company. As a percentage of revenue, selling and marketing expenses increased to 6.24% for the year ended December 31,
2022, from 5.86% for the year ended December 31, 2021.</span></p><div>

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

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

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



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our general and administrative
expenses consist primarily of compensation for management, social security payment, depreciation of property and equipment, amortization
of intangible assets and IPO related expense. Our general and administrative expenses increased by $0.27 million, or 3.70%, to approximately
$7.43 million for the year ended December 31, 2022, from approximately $7.17 million for the year ended December 31, 2021. As a percentage
of revenue, general and administrative expenses increased to 21.99% for the year ended December 31, 2022, from 20.90% for the year ended
December 31, 2021.&#160;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify">

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

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

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



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of the foregoing,
we recorded income from operations of approximately $10.65 million for year ended December 31, 2022, compared $11.30 million for the year
ended December 31, 2021.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify">

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
other income (expense)</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
had approximately $0.09 million in total other income (expense) for the year ended December 31, 2022, as compared to approximately $0.22
million in total other income for the year ended December 31, 2021. Total other income (expenses) for the year ended December 31, 2022
consisted of other income, net, in the amount of approximately $0.03 million and interest income in the amount of approximately $0.06
million. Total other income (expenses) for the year ended December 31, 2021 consisted of other income, net, in the amount of approximately
$0.19 million and interest income in the amount of approximately $0.03 million.</span></p><div>

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

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

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



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We recorded income tax expenses
of approximately $2.92 million for the year ended December 31, 2022, as compared to approximately $3.05 million for the year ended December
31, 2021; a decrease of approximately $0.13 million, or 4.19%. The decrease in the income tax expense mainly resulted from the decrease
in our revenue.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify">

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

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

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



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of the cumulative
effect of the factors described above, our net income decreased by approximately $0.64 million, or 7.61%, to approximately $7.82 million
for the year ended December 31, 2022, from approximately $8.46 million for the year ended December 31, 2021.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify">

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>5.B.
<i>Liquidity and Capital Resources</i>.</b></span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(All
amounts in thousands of USD, except for share and per share data, unless otherwise noted)</b></span></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Year Ended<br/> December&#160;31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">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="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</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: 76%; text-align: justify">Net cash provided by operating activities</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">10,766</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">7,304</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">Net cash used in investing activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,842</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">561</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Net cash used in financing activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(327</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 1.5pt">Effects of exchange rate changes on cash and cash equivalents</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">(1,843</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">315</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Net increase (decrease) in cash</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5,754</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8,180</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 1.5pt">Cash, beginning of period</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">16,845</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">8,665</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; padding-bottom: 4pt">Cash, end of period</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">22,599</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">16,845</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><div>

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

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

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->72<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

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

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



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash provided by operating
activities was approximately $10.77 million for the year ended December 31, 2022, as compared to approximately $7.30 million for the year
ended December 31, 2021. For the year ended December 31, 2022, net cash provided by operating activities was mainly resulted from the
net income of $7.82 million, and the depreciation of property and equipment and the amortization of intangible, right-of-use and other
assets in the amount of approximately $2.73 million, the due to the related parties in the amount of approximately $1.02 million, the
deferred IPO costs in the amount of approximately $0.10 million and the prepayments and other current assets in the amount of approximately
$0.71 million. For the year ended December 31, 2021, net cash provided by operating activities was mainly resulted from the net income
of $8.46 million, the unearned revenues in the amount of approximately $0.14 million, and the depreciation of property and equipment and
the amortization of intangible and other assets in the amount of approximately $2.54 million, the accounts receivable in the amount of
approximately $1.45 million and the prepayments and other current assets in the amount of approximately $2.37 million.</p><div>

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

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

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

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



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in investing
activities was approximately $2.84 million for the year ended December 31, 2022, as compared to approximately $0.56 million in net cash
provided in investing activities for the year ended December 2021. Net cash provided in investing activities for the year ended December
31, 2022 was mainly resulted from the purchases of property plant and equipment in the amount of approximately $1.95 million and purchase
of intangible assets in the amount of approximately $0.89 million, while net cash used in investing activities for the year ended December
31, 2021 was mainly resulted from the purchases of property and equipment in the amount of approximately $0.03 million and disposal of
property and equipment in the amount of approximately $0.59 million.</p><div>

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

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net
cash used in financing activities was approximately $0.33 million for the year ended December 31, 2022 consisted entirely of repayments
on short-term loans in the amount of approximately $0.33 million. The company has no net cash used in financing activities for the year
ended December 31, 2021.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts
receivable represents our right to consideration in exchange for goods and services that we have transferred to the customers before
payment is due. Accounts receivable is stated at the historical carrying amount, net of an estimated allowance for uncollectible accounts.
We review on a periodic basis for doubtful accounts for the outstanding trade receivable balances based on historical collection trends,
aging of receivables and other information available. Additionally, we evaluate individual customer&#8217;s financial condition, credit
history, and the current economic conditions to make specific bad debt provisions when it is considered necessary, based on (i) our specific
assessment of the collectability of all significant accounts; and (ii) any specific knowledge we have acquired that might indicate that
an account is uncollectible. The facts and circumstances of each account may require us to use substantial judgment in assessing its
collectability. The allowance is based on management&#8217;s best estimates of specific losses on individual exposures, as well as a
provision on historical trends of collections. Account balances are charged off against the allowance after all means of collection have
been exhausted and the potential for recovery is considered remote. Our management continues to evaluate the reasonableness of the valuation
allowance policy and update it if necessary. There was no allowance for accounts receivable set up by us as of December 31, 2022 and
2021, respectively.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
aging of all accounts receivable balance is within one year as of December 31, 2022.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unbilled receivable represents
the Company&#8217;s right to consideration in exchange for goods and service, which is the percentage of completion of revenue recognized
in excess of accounts receivable.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We made capital expenditures
of approximately $2.84 million and approximately $0.03 million for the years ended December 31, 2022 and 2021, respectively. In these
periods, our capital expenditures were mainly used for purchasing the office located in Shanghai for our operation and the development
for our software. We plan to continue to make capital expenditures to meet the needs that result from the expected growth of our business.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify"></p><div>

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

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

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
holders of our ordinary shares are entitled to such dividends as may be declared by our Board of Directors subject to the Cayman Islands
Companies Act. The Directors may from time to time declare dividends (including interim dividends) and distributions on the issued and
outstanding shares of the Company and authorize payment of the same out of the funds of the Company lawfully available therefor. Dividends
may also be declared or paid out of share premium account or otherwise permitted by the Cayman Islands Companies Act, provided that in
no circumstances may we pay a dividend 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><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Off-Balance
Sheet Commitments and Arrangements</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
did not have any off-balance sheet commitments or arrangements as of December 31, 2022.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>5.C.
Research and Development, Patent and Licenses, etc.</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Please
refer to &#8220;Item 4. Information on the Company &#8211; D. Property, Plant and Equipment &#8211; Intellectual Property.&#8221;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>5.D.
Trend Information.</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><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 that
are reasonably likely to have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital
resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial
condition or results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>5.E.
Critical Accounting Policies.</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">An
accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are
highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes
in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually
evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various
other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the
financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting
policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.</span></p><div>

</div><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">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial
statements and other disclosures included in this annual report. When reviewing our financial statements, you should consider (i) our
selection of critical accounting policies, (ii) the judgments and other uncertainties affecting the application of such policies and
(iii) the sensitivity of reported results to changes in conditions and assumptions.</span></p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company adopted ASC Topic 606, Revenue from Contracts with Customers, effective as of January 1, 2019. Accordingly, the consolidated
financial statements for the years ended December 31, 2022, 2021 and 2020 are presented under ASC 606. The core principle of the guidance
is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is the transaction price
the Company expects to be entitled to in exchange for the promised goods or services in a contract in the ordinary course of the Company&#8217;s
activities and is recorded net of value-added tax (&#8220;VAT&#8221;). To achieve that core principle, the Company applies the following
steps:</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Step
1: Identify the contract (s) with a customer</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Step
2: Identify the performance obligations in the contract</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Step
3: Determine the transaction price</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Step
4: Allocate the transaction price to the performance obligations in the contract</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 15pt; text-align: justify; text-indent: 21pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 15pt; text-align: justify; text-indent: 21pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Step
5: Recognize revenue when (or as) the entity satisfies a performance obligation</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No
practical expedients were used when the Company adopted the ASC 606. Revenue recognition policies for each type of revenue stream are
as follows:</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Financial
and taxation solution services</i></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenues
from financial and taxation solution services for which control of services is transferred over time is recognized progressively based
on the contract costs incurred to date (primarily comprising staff costs and industry expert cost by reference to the time as recorded
in the monthly working record incurred to date) as compared to the total costs to be incurred under the transaction (by reference to
the total budgeted time of the respective project) to depict the Company&#8217;s performance in transferring control of services promised
to a customer. The Company recognizes revenues over time only if it can reasonably measure its progress toward complete satisfaction
of the performance obligation. The Company normally requires the customers to pay a deposit upon entering into the service contracts.
Progress payments are normally billed with the final payment received upon completion of the contract.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Education
support services - sales of teaching and learning materials</i></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenues
from the sales of educational materials for which control of assets is transferred at a point in time is recognized when the goods are
delivered to customers. The Company does not provide any sales-related warranties. There is no right of return by customers under the
Company&#8217;s standard contract terms.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Education
support services - Provision of marketing, operation and technical support services</i></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenues
from provision of marketing, operation and technical support services from the partnered institutions is recognized on a straight-line
basis over the term of the partnership agreement. The transaction price inclusive of value added tax as received from customers in advance
is recognized as a unearned revenue at the time of the initial transaction and is released on a straight-line basis over the period of
service (usually one year).</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Standard
software is a right to use license because the software has standalone functionality and the customer can use the software as it is available
at a point in time. The Company recognizes revenues for such licenses at a point in time when the customer has received licenses and
thus has control over the software. In case there is an update of the standard software, end customers or distributors are required to
pay additional consideration to buy upgraded version. Revenues from maintenance services is recognized over time within the service period.</span></p><div>

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

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

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->75<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unearned
revenue is recorded when a payment is received from a customer before the Company transfers the related services. Unearned revenue is
recognized as revenue when the Company performs the services under the contract.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Disaggregated
information of revenues by services:</span></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For the years ended December 31,</b></span></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
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    <td style="width: 64%; text-align: left">Financial and taxation solution services</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">23,338</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">4,635</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,558</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,118</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,169</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; padding-bottom: 1.5pt">Revenue</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">33,805</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="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">30,667</td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s Chief Executive Officer, Mr.Ya Li, has been identified as the chief operating decision-maker (&#8220;CODM&#8221;), who
is responsible for overall performance of all the service lines and reviews of the consolidated results when making decisions about allocating
resources and assessing the performance of the Company as a whole. We set up departments by functionality but not by service lines. All
services lines are supervised by one vice president, who directly reports to CEO; and selling and operation functions are supervised
by other vice presidents. As our clients from all the three services could be the same, and we treated the services as a whole consulting
package to our clients. For example, while providing our financial solution services, we also try to sell our software to the clients
to assist them with office software upgrades. Additionally, we do not separate or allocate our research and development activities to
selling functions or other supporting functions into these services. The Company prepares the forecast annually by departments instead
of services. We set up certain revenue targets by service lines; however, we do not prepare other forecasts by services lines for costs
or expenses. Our CEO, the CODM, reviews the forecasts annually and reviews finance performance monthly. He reviews the consolidated balance
sheets, statements of operations, and cash flows thoroughly and raises his review comments at the group level. The Board of Directors
reviews the finance performance annually at the group level as well. Furthermore, there is no compensation based on the performance of
a single service line as the Company considered the compensation is based on the performance result of the total target set at the beginning
of the year, which is based on the whole performance of the three service lines. Hence, the Company has only one single operating segment.
The Company does not distinguish between markets or segments for the purpose of internal reporting. The Company&#8217;s long-lived assets
are all located in the PRC and substantially all of the Company&#8217;s revenues are derived from the PRC. Therefore, no geographical
segments are presented in these financial statements.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Value
added tax (&#8220;VAT&#8221;)</span></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
represents the invoiced value of goods and service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%,
depending on the type of products sold or service provided. Entities that are VAT general taxpayers are allowed to offset qualified input
VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable.
All of the VAT returns filed by the Company&#8217;s subsidiaries in PRC remain subject to examination by the tax authorities for five
years from the date of filing.</span></p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows the liability method of accounting for income taxes in accordance with ASC 740 (&#8220;ASC 740&#8221;), Income Taxes.
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are
recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated
financial statements. 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.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is not subject to tax on income or capital gain under the current tax laws of U.S. And the Company is subject to tax on income
or capital gain under the tax laws of PRC.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">An
uncertain tax position is recognized as a benefit only if it is &#8220;more likely than not&#8221; that the tax position would be sustained
in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on
examination. For tax positions not meeting the &#8220;more likely than not&#8221; test, no tax benefit is recorded. For the years ended
December 31, 2022, 2021 and 2020, no uncertain tax position is recognized. Penalties and interest incurred related to underpayment of
income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes
have been incurred during the years ended December 31, 2022, 2021 and 2020. All of the tax returns of the Company&#8217;s subsidiaries
in PRC remain subject to examination by the tax authorities for five years from the date of filing.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s PRC subsidiaries are required to allocate at least 10% of their after-tax profit to the general reserve in accordance
with the PRC accounting standards and regulations. The allocation to the general reserve will cease if such reserve has reached to 50%
of the registered capital of respective company. These reserves can only be used for specific purposes and are not transferable to the
Company in form of loans, advances, or cash dividends. There is no such regulation of providing statutory reserve in Hong Kong. None
of the statutory surplus reserves were recognized for the years ended December 31, 2022, 2021 and 2020.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advertising
expenditures are expensed as incurred and such expenses were included as part of selling and marketing expenses. For the years ended
December 2022, 2021 and 2020, the advertising expenses amounted to approximately $1.43 million, $1.35 million and $1.1 million, respectively.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Comprehensive
income consists of two components, net income and other comprehensive income. Other comprehensive income refers to revenue, expenses,
gains and losses that under GAAP are recorded as an element of equity but are excluded from net income. Other comprehensive income consists
of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company computes earnings per share (&#8220;EPS&#8221;) in accordance with ASC 260, Earnings per Share. ASC 260 requires companies to
present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period.
Diluted EPS presents the dilutive effect on a per-share basis of the potential Ordinary Shares (e.g., convertible securities, options
and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential Ordinary
Shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the
calculation of diluted EPS.</span></p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Fair
value of financial instruments</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ASC
825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize
the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as
follows:</span></p><div>

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

</div><table cellpadding="0" cellspacing="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: 0.5in"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></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">Level
    1&#8201;&#8212;&#8201;inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in
    active markets.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></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">Level
    2&#8201;&#8212;&#8201;inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets,
    quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable
    and inputs derived from or corroborated by observable market data.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></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">Level
    3&#8201;&#8212;&#8201;inputs to the valuation methodology are unobservable.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
fair value of the Company&#8217;s financial instruments, including cash, accounts receivable, other receivables &#8211; related party,
accounts payable, accrued expenses and other current liabilities, due to the related parties, and short-term bank loans, approximate
their recorded values due to their short-term maturities as of December 31, 2022 and 2021.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">New
Accounting Pronouncements Not Yet Adopted</span></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.
Under the Jumpstart Our Business Startups Act of 2012, as amended (&#8220;the JOBS Act&#8221;), the Company meets the definition of an
emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards,
which delays the adoption of these accounting standards until they would apply to private companies.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2016, the FASB amended guidance related to the impairment of financial instruments as part of ASU 2016-13: Financial Instruments
&#8211; Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will be effective January 1, 2020. The
guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance
based on the estimate of expected credit loss. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic
326, Financial Instruments - Credit Losses, which clarified that receivables from operating leases are not within the scope of Topic
326 and instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842. On May
15, 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting the Board&#8217;s credit losses standard,
ASU 2016-13. Specifically, ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the
fair value option for financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of the credit
losses guidance in ASC 326-20, (3) are eligible for the fair value option under ASC 825-10, and (4) are not held-to-maturity debt securities.
For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15,
2019, including interim periods therein. An entity may early adopt the ASU in any interim period after its issuance if the entity has
adopted ASU 2016-13. For all other entities, the effective date will be the same as the effective date of ASU 2016-13. In November 2019,
the FASB issued ASU 2019-11, &#8220;Codification Improvements to Topic 326, Financial Instruments &#8211; Credit Losses.&#8221; ASU 2019-11
is an accounting pronouncement that amends ASU 2016-13, &#8220;Financial Instruments &#8211; Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments.&#8221; The ASU 2019-11 amendment provides clarity and improves the codification to ASU 2016-03.
The pronouncement would be effective concurrently with the adoption of ASU 2016-03. The pronouncement is effective for fiscal years beginning
after December 15, 2019 and interim periods within those fiscal years. In February 2020, the FASB issued ASU No. 2020-02, which provides
clarifying guidance and minor updates to ASU No. 2016-13 &#8211; Financial Instruments &#8211; Credit Loss (Topic 326) (&#8220;ASU 2016-13&#8221;).
ASU 2020-02 amends the effective date of ASU 2016-13, such that ASU 2016-13 and its amendments will be effective for the Company for
interim and annual periods in fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact this ASU
will have on its consolidated financial statements and related disclosures.</span></p><div>

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

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

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, as part of its Simplification Initiative to
reduce the cost and complexity in accounting for income taxes. This standard removes certain exceptions related to the approach for intra
period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities
for outside basis differences. It also amends other aspects of the guidance to help simplify and promote consistent application of GAAP.
The amendments in these ASUs are effective for the Company&#8217;s fiscal years, and interim periods within those fiscal years beginning
October 1, 2022. The Company does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption
of this guidance on the Company&#8217;s consolidated financial statements.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Except
for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the consolidated
financial position, statements of operations and cash flows.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">LICN
is a holding company incorporated in the Cayman Islands with no material operations of its own. We conduct our operations primarily in
the PRC through our subsidiaries in PRC.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result, LICN&#8217;s ability to pay dividends may depend upon dividends paid by 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.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
date, inflation in the PRC has not materially impacted our results of operations. However, we can provide no assurance that we will not
be affected in the future by higher rates of inflation in the PRC. For example, certain operating costs and expenses, such as employee
compensation and office operating expenses may increase as a result of higher inflation. Additionally, because a substantial portion
of our assets consists of cash and short-term investments, high inflation could significantly reduce the value and purchasing power of
these assets. We are not able to hedge our exposure to higher inflation in China.</span></p><div>

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

</div><div><a id="m_008"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item&#160;6.
Directors, Senior Management and Employees</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>6.A.
Directors and Senior Management</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table provides information regarding our executive officers and directors as of the date hereof:</span></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Name</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Age</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Position(s)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 31%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ya Li</span></td><td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 8%; text-align: center">44</td><td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 59%; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Executive Officer, Chairman of the Board, and Director</span></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">Zhixiang Fang</span></td><td style="text-align: left">&#160;</td>
    <td style="text-align: center">51</td><td style="text-align: left">&#160;</td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Financial Officer</span></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">Yi Deng</span></td><td style="text-align: left">&#160;</td>
    <td style="text-align: center">43</td><td style="text-align: left">&#160;</td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</span></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">Zhihuang Deng <sup>(1)(2)(3)</sup></span></td><td style="text-align: left">&#160;</td>
    <td style="text-align: center">54</td><td style="text-align: left">&#160;</td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent Director</span></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">Lourdes Felix <sup>(1)(2)(3)</sup></span></td><td style="text-align: left">&#160;</td>
    <td style="text-align: center">56</td><td style="text-align: left">&#160;</td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent Director</span></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">Kipton Cariaga <sup>(1)(2)(3)</sup></span></td><td style="text-align: left">&#160;</td>
    <td style="text-align: center">36</td><td style="text-align: left">&#160;</td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent Director</span></td></tr>
  </table><div>

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

</div><table cellpadding="0" cellspacing="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: 0.25in"><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">Member
    of the Audit Committee</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.25in"><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">Member
    of the Compensation Committee</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.25in"><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">Member
    of the Nominating Committee</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Ya
Li, Chief Executive Officer, Chairman of the Board and Director</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Li has served as our Chairman since January 4, 2017, Chief Executive Officer and Director since January 19, 2018. Mr. Li has over 21
years of experience in accounting, education and finance. From September 2013 to September 2014, Mr. Li was the chairman and a member
of the supervisory board of Peixin International Group N.V., a listed company on the Warsaw Stock Exchange in Poland (WSE stock code:
PEX) and a member of the audit committee and remuneration committee of the said supervisory board. Mr. Li was the general manager of
Jinjiang Xingminqi Financial Consulting Co., Ltd from January 2006 to September 2013. From April 2003 to December 2005, Mr. Li became
the principal of Jinjiang Xingminqi Accounting Vocational Training School (&#8220;Jinjiang School&#8221;). Prior to establishing in April
2004, Mr. Li was an assistant lecturer at Anhui University of Finance and Economics from February 1999 to June 2000. Mr. Li joined Jinjiang
Jiu Shen Company Limited from July 2000 to December 2002 as the chief financial officer in charge of the development of financial strategies
and maintaining of financial reports. Mr. Li obtained his bachelor&#8217;s degree of management, majoring in accountancy from a program
jointly organized by China Central Radio and TV University (currently known as The Open University of China) and Beijing Technology and
Business University in April 2010.</span></p><div>

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


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Zhixiang
Fang, Chief Financial Officer</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Fang has over 24 years of experience in accounting and has served as our Chief Financial Officer since July 2018. From April 2021 to
February 2022, Mr. Fang is the independent director of Mobile Internet (China) Holdings Limited. Prior to that, Mr. Fang has served as
the deputy general manager of Lichen Zixun since 2013. Prior to joining us, Mr. Fang was the director of audit at Fujian Tianlun Group
Company Limited from December 2008 to January 2011. Mr. Fang was a lecturer in the teaching division of Chizhou University from July
1995 to December 2008. Mr. Fang obtained his diploma in accounting from Anhui University of Technology (previously known as Anhui Commercial
College), in June 1995. He later completed a part-time top-up course in accountancy at Hefei University of Technology in January 2008.
In December 2009, Mr. Fang became a member of the Chinese Institute of Certified Public Accountants. In May 1999, Mr. Fang was qualified
as a Medium Level Accountant in the PRC.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Deng has been a member of us for over 15 years. He was appointed as a director on April 15, 2018. Since December 2013, Mr. Deng became
a deputy general manager of Lichen Zixun. He is primarily responsible for overseeing the overall operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Deng has been working at Huaqiao University as an instructor of postgraduate students since September 2018. In July 2017, Mr. Deng was
awarded the Small and Medium Enterprises Management Consultancy Services Expert and Database Expert in the PRC. Mr. Deng also has abundant
exposure to entrepreneurship training. In July 2009 and August 2014, Mr. Deng joined two entrepreneurship training courses organized
by China Employment Training Technical Instruction Center and subsequently obtained relevant qualifications as an entrepreneurship instructor.
Mr. Deng was also employed by Quanzhou Ocean Institute as a guest professor for two years in October 2013.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
June 2016, Mr. Deng obtained a master&#8217;s degree in business management from Huaqiao University. He graduated from Anhui University
Law School in 2009. Mr. Deng obtained his Junior College Education in law from Anhui Sanlian Career Technical College (currently known
as Anhui Sanlian University) in 2003.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Zhihuang
Deng, Independent Director and Chair of Compensation Committee</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Deng has over 25 years of experience in legal practice in the PRC. Since June 2020, he has been appointed as the independent director
and serving as the chairman of the remuneration committee and a member of each of the audit committee and nomination committee of Yik
Wo International Holdings Ltd., a company listed on GEM of the Stock Exchange (stock code: 8659). He is responsible for, among other
things, evaluating the performance of directors and senior management, monitoring the integrity of the company&#8217;s financial statements
and annual reports and accounts, reviewing the company&#8217;s financial controls and risk management and internal control systems and
making recommendations on any proposed changes to the board of directors to complement the company&#8217;s corporate strategy. In July
2019, Mr. Deng became a senior partner at Beijing Yingke (Fuzhou) Law Firm. Mr. Deng was a senior partner at Fujian Zhixinheng Law Firm
from October 2005 to June 2019. Mr. Deng became a lawyer at Fujian Huawei Law Firm from April 2005 to October 2005. From April 1995 to
March 2005, Mr. Deng was a prosecutor of Fujian Province Fuzhou City People&#8217;s Procuratorate.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Deng obtained his bachelor&#8217;s degree in law from Fujian Normal University in June 1992. After graduation, Mr. Deng became a lecturer
at Fujian Mechanical and Electrical School (currently known as Fujian University of Technology) from August 1992 to April 1995.</span></p><div>

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


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Lourdes
Felix, Independent Director and Chair of Audit Committee</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ms.
Felix is a female Hispanic entrepreneur and corporate finance executive with 30 years of combined experience in capital markets, public
accounting and in the private sector. She presently serves as Chief Executive Officer, Chief Financial Officer and Director of BioCorRx
Inc. (OTCQB: BICX), a leader in addiction treatment solutions and related disorders. She has been with BioCorRx since October 2012. Ms.
Felix is one of the founders of BioCorRx Pharmaceuticals Inc., a majority owned subsidiary of BioCorRx Inc. She has been instrumental
in capital procurement, completing multi-million dollars equity financing and accomplished in structuring and negotiating transactions
and favorable terms with investment banks. Along with other executives of the company, Ms. Felix rebranded the company, restructured
and expanded the business model to position it for long term growth in the addiction treatment space and drug development. Prior to joining
BioCorRx, she had experience in several private sectors, public accounting including audit and public company experience. She has expertise
in finance, accounting, budgeting and internal control principals including GAAP, SEC, and SOX Compliance. Ms. Felix has thorough knowledge
of federal and state regulations and has successfully managed and produced SEC regulatory filings. She has extensive experience in developing
and managing financial operations. Ms. Felix obtained a Bachelor of Science degree in Accounting from University of Phoenix in 2005.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Kipton
Cariaga, Independent Director and Chair of Nominating Committee</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr.
Cariaga has over 10 years of experience in the financial industry. His expertise is in sales, marketing, education, equity and derivative
markets, and strategic planning. In May 2020, Mr. Cariaga founded Citrus Capital Consulting which offers business consulting services
to startup companies looking to expand into international markets. Since August 2021, Mr. Cariaga is a General Partner in Citrus Grove
Capital Management, a market-neutral hedge fund that helps wealthy individuals diversify their holdings. Since July 2020, Mr. Cariaga
serves as a General Partner in Shanghai Fengyu Investment Management Co. LTD, an international fund based in Shanghai. From 2014 to present,
he has been an options trader and business development specialist working in the family office of Orange Grove Trading Company. Mr. Cariaga
studied finance at California State University from 2006 to 2011 and in 2009, during his college days he worked for JPMorgan Chase and
became a licensed investment professional holding a FINRA Series 6, and 63 license as well as a California Life-Only insurance license
from 2010 to 2014.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None
of the directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>6.B.
Compensation</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Employment
Agreements </b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have entered into an employment agreement with each of our executive officers and employee directors. Each of them 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. We may also terminate an executive officer&#8217;s employment without cause upon advance written notice. The executive
officer and employee director may resign at any time with an advance written notice.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Compensation
of Directors and Executive Officers </b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the fiscal year ended December 31, 2022, we paid an aggregate of RMB 2,786,641 (approximately US$414,304), which is the total amount
of base salary plus bonus, in cash to our executive officers and employee directors. For the fiscal year ended December 31, 2021, we
paid an aggregate of RMB2,787,291 (approximately US$432,312), which is the total amount of base salary plus bonus, in cash to our executive
officers and employee directors. For the fiscal year ended December 31, 2020, we paid an aggregate of RMB2,788,601 (approximately US$404,286),
which is the total amount of base salary plus bonus, in cash to our executive officers and employee directors. Due to the impact of the
COVID-19 pandemic, the total revenue in 2020 has decreased, and thus we did not pay bonus to our Chief Executive Officer for the fiscal
year ended December 31, 2020. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to
our executive officers and directors.</span></p><div>

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

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

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>6.C.
Board Practices</b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Board
of Directors</b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 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 consists of five (5) directors, a majority of whom are independent as such term is defined by the Nasdaq Capital Market.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
director may vote in respect of any contract or transaction in which he is interested, provided, however that the nature of the interest
of any director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote on that matter.
A general notice or disclosure to the directors or otherwise contained in the minutes of a meeting or a written resolution of the directors
or any committee thereof of the nature of a director&#8217;s interest shall be sufficient disclosure and after such general notice it
shall not be necessary to give special notice relating to any particular transaction. Provided that proper disclosure has been given
to the directors as mentioned above, a director may be counted for a quorum upon a motion in respect of any contract or arrangement which
he shall make with our company, or in which he is so interested and may vote on such motion.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Committees
of the Board of Directors </b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
established three committees under the Board of Directors: an audit committee, a compensation committee and a nominating committee, and
adopted a charter for each of the three committees. Copies of our committee charters will be posted on our corporate investor relations
website. Each committee&#8217;s members and functions are described below.&#160;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration:underline">Audit
Committee</span></i>. Our Audit Committee consists of Mr. Zhihuang Deng, Ms. Lourdes Felix, and Mr. Kipton Cariaga. Ms. Lourdes Felix serves
as the chair of our audit committee. We have determined that these three individuals satisfy the &#8220;independence&#8221; requirements
of Nasdaq Rule 5605 and Rule 10A-3 under the Securities Exchange Act of 1934. Our Board of Directors has determined that Ms. Lourdes
Felix qualifies as an audit committee financial expert and has the accounting or financial management expertise as required under Item
407(d)(5)(ii) and (iii) of Regulation S-K of the SEC. The primary duties of the Audit Committee are, among other things:</span></p><div>

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

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">Make
    recommendations to the Board in relation to the appointment;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">Re-appoint
    and remove of the external auditor;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">Monitor
    the reporting of our Company&#8217;s financial statements, annual reports, accounts and half-year reports; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">Review
    and supervise our financial controls, internal control and risk management systems.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration:underline">Compensation
Committee</span></i>. Our compensation committee consists of Mr. Zhihuang Deng, Ms. Lourdes Felix, and Mr. Kipton Cariaga. Mr. Zhihuang
Deng serves as the chairperson of our compensation committee. The primary duties of the compensation committee are, among other things:</span></p><div>

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

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">Make
    recommendations to the Board in relation to our policy and structure for all Directors&#8217; and senior management&#8217;s compensation;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">Make
    recommendations to the Board on the compensation packages of individual directors and senior management personnel; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">Review
    performance-based compensation and to ensure that none of the Directors determine their own compensation.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>


</div><!-- Field: Page; Sequence: 87; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->82<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i><span style="text-decoration:underline">Nominating
Committee</span></i>. Our nominating committee consists of Mr. Zhihuang Deng, Ms. Lourdes Felix, and Mr. Kipton Cariaga. Mr. Kipton Cariaga
serves as the chairperson of our nominating committee. The primary duties of the Nominating Committee are, among other things:</span></p><div>

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

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

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

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
Cayman Islands law, our directors have a duty to act honestly, in good faith and with a view to our best interests. Our directors
also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable
circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our amended and restated memorandum
and articles of association. A shareholder may in certain circumstances have rights to damages if a duty owed by the directors is
breached.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 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 all the powers necessary for managing, and for directing and supervising, our business affairs. The functions
and powers of our Board of Directors include, among others:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.1pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.1pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

</div><table cellpadding="0" cellspacing="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: 0.5in"><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>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">approving
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 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><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
business and affairs of the company are managed under the direction of our Board. Each of our directors has attended all meetings either
in person, via telephone conference, or through written consent for special meetings. Shareholders will be given specific information
on how they can direct communications to the officers and directors of the Company at our annual shareholders&#8217; meetings. All communications
from shareholders are relayed to the members of the Board.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Board
Diversity</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><b>Board
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</div><table cellpadding="0" cellspacing="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">
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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; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yes</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">Disclosure
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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; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: left">Part I: Gender Identity</td><td>&#160;</td>
    <td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="width: 56%">Directors</td><td style="width: 1%">&#160;</td>
    <td style="width: 9%; text-align: center">1</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 9%; text-align: center">4</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 9%; text-align: center">0</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 9%; text-align: center">0</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: left">Part II: Demographic Background</td><td>&#160;</td>
    <td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: left">Underrepresented Individual in Home Country Jurisdiction</td><td>&#160;</td>
    <td colspan="10" style="text-align: center">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>LGBTQ+</td><td>&#160;</td>
    <td colspan="10" style="text-align: center">&#8212;</td><td style="text-align: left">&#160;</td></tr>
  </table><div>


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

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

</div><!-- Field: Page; Sequence: 88; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->83<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>6.D.
Employees</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this annual report, we have 399 employees. All of our employees are located in the PRC.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 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 out the number of our employees, excluding external experts, categorized by functions as of the date of this annual
report:</span></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Function</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="width: 88%">Management</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">12</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">14</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: White">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
strive to maintain a high-quality work force with specialized financial and taxation industry expertise. As a general recruitment policy,
we typically require our internal consultants and project managers to possess at least three and seven years of related working experience,
respectively.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
internal consultants carry out their services for financial and taxation solution projects under the supervision of our project managers.
Annual performance evaluations are conducted on our internal consultants and project managers, so that our team of internal consultants
and project managers may comprise a balanced mix of professional and experienced members, in an effort to provide quality services to
our customers. In accordance with applicable PRC laws and regulations, we have made contributions to social security insurance funds
(including pension, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance plans) and housing
provident funds for our employees. None of our employees are represented by a labor organization. As of the date of this annual report,
we did not experience any strikes or significant labor disputes which materially affected our operations, and we believe we have maintained
good relationship with our employees.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>6.E.
Share Ownership</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Except
as specifically noted, the following table sets forth information with respect to the beneficial ownership of our Class A Ordinary Shares
as of the date of this annual report by:</span></p><div>

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

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">Each
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">Each
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">All
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
calculations in the table below are based on 17,500,000 Class A Ordinary Shares and 9,000,000 Class B Ordinary Shares issued and outstanding
as of the date of this annual report. Holders of Class A Ordinary Shares will be entitled to one (1) vote per share. Holders of Class
B Ordinary Shares will be entitled to ten (10) votes per share.&#160; Information with respect to beneficial ownership has been furnished
by each director, officer or beneficial owner of more than 5% of either Class A Ordinary Shares or Class B Ordinary Shares. Beneficial
ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power
with respect to securities.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><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 shares beneficially owned
by a person and the percentage ownership of that person, we have included 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 shares, however,
are not included in the computation of the percentage ownership of any other person. Unless otherwise indicated in the footnotes, the
address for each principal shareholder is in the care of our Company at B2306, Block B Tower 3, Jinjiang Wanda Plaza Commercial Complex
888 Century Avenue Meiling Street, Jinjiang City Fujian Province People&#8217;s Republic of China. As of the date hereof, we have 15
shareholders of record.</span></p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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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">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</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">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</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">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</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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    <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: 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)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Meizhen Li</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)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Zhen Wang</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">900,000</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">-</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="font-family: Times New Roman, Times, Serif; font-size: 10pt">* </span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Shishan Wu</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">900,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5.00</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</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="font-family: Times New Roman, Times, Serif; font-size: 10pt">* </span></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.25in; text-align: left">Peng Ye</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">675,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3.75</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</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="font-family: Times New Roman, Times, Serif; font-size: 10pt">* </span></td><td style="text-align: left">&#160;</td></tr>
  </table><div>

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

</div><table cellpadding="0" cellspacing="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: 0.25in"><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">&lt;
    1%</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.25in"><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">Beneficial
    ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the Class
    A Ordinary Shares and Class B Ordinary Shares. All shares represent only Class A Ordinary Shares and Class B Ordinary Shares held
    by shareholders as no options are issued or outstanding.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.25in"><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">Calculation
    based on 17,500,000 Class A Ordinary Shares and 9,000,000 Class B Ordinary Shares issued and outstanding. Holders of Class A Ordinary
    Share are entitled to one (1) vote per share. Holders of Class B Ordinary Shares are entitled to ten (10) votes per share. </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.25in"><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">Ya
    Li is deemed to beneficially own 9,000,000 Class B Ordinary Shares through Silver Sky Investment Limited, a British Virgin Islands
    company holding 9,000,000 shares of our Class B Ordinary Shares. Ya Li has the sole voting and dispositive power of all the shares
    held by Silver Sky Investment Limited.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)
    </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">Wenjuan
    Chen is deemed to beneficially own 2,250,000 Class A Ordinary Shares through Sensation Corporate Service Co., Limited, a Hong Kong
    company holding 2,250,000 shares of our Class A Ordinary Shares. Wenjuan Chen has the sole voting and dispositive power of all the
    shares held by Sensation Corporate Service Co., Limited. </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)</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">Yinong
    Wu is deemed to beneficially own 1,125,000 Class A Ordinary Shares through China EC Investment (Hong Kong) Limited, a Hong Kong company
    holding 1,125,000 shares of our Class A Ordinary Shares. Yinong Wu has the sole voting and dispositive power of all the shares held
    by China EC Investment (Hong Kong) Limited.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(6)</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">Weinan
    Shi is deemed to beneficially own 1,125,000 Class A Ordinary Shares through Dong Chang Ventures Limited, a British Virgin Islands
    company holding 1,125,000 shares of our Class A Ordinary Shares. Weinan Shi has the sole voting and dispositive power of all the
    shares held by Dong Chang Ventures Limited.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Page; Sequence: 90; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->85<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><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">&#160;</span></p><div>

</div><div><a id="m_009"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
7. Major Shareholders and Related Party Transactions</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>7.A.
Major Shareholders</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Please
refer to &#8220;Item 6. Directors, Senior Management and Employees &#8212; 6.E. Share Ownership.&#8221; </span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>7.B.
Related Party Transactions</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 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><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Item 6. Directors, Senior Management and Employees&#8212;6.C. Board Practices&#8212;Terms of Directors and Officers.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 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><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Employment
Agreements and Indemnification Agreements</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Item 6. Directors, Senior Management and Employees&#8212;6.B. Compensation&#8212;Employment Agreements.&#8221;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Other
Related Party Transactions</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; text-align: justify; margin: 0pt; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
table below sets forth the major related parties and their relationships with the Company as of December&#160;31, 2022 and 2021:</span></p><div>

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

</div><table cellpadding="0" cellspacing="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; background-color: white">
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  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: #CCEEFF">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

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

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">$</td><td style="text-align: right">105</td><td style="text-align: left">&#160;</td></tr>
  <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; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
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  </table><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in; background-color: white">Balances
due to Ya Li and Quanzhou School are the result of the normal business transactions stated above. The balance due to Ya Li comprise mainly
payments made on behalf such as deferred IPO costs, whereas the balance due to Quanzhou represents amounts received in advance for services
to be performed. The balances were all unsecured, non-interest bearing and payable on demand.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

</div><!-- Field: Page; Sequence: 91; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_010"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
8. Financial Information</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.
Consolidated Statements and Other Financial Information</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Please
refer to &#8220;Item 18. Financial Statements.&#8221;</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lichen
Education, our operating subsidiary in the PRC, has involved in legal and other disputes in the ordinary course of our business, including
but not limited to allegations against us for potential infringement of third-party copyrights or other intellectual property rights.
However, we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our
business or financial condition.</span></p><div>

</div><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">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Litigation
or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial costs and diversion of
our resources, including our management&#8217;s time and attention. For potential impact of legal or administrative proceedings on us,
see &#8220;Item 3. Key&#160;Information &#8212; 3.D. Risk Factors&#8212;Risks Relating to Our Business and Industry &#8212; <i>We may
face disputes from time to time relating to the intellectual property rights of third parties. We cannot assure you that our teaching
and learning materials supplied to the Partnered Institutions under the Partnership Agreements or our self-developed software do not
or will not infringe intellectual property rights of third parties</i>&#8221;.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not have any plan to declare or pay any cash dividends on our Class A or Class B Ordinary Shares in the foreseeable future. We
currently intend to retain most, if not all, of our available funds and any future earnings to support operations and to finance the
growth and development of our business. Any future determination relating to our dividend policy will be made at the discretion of our
Board of Directors and will depend on a number of factors, including future earnings, capital requirements, financial condition and future
prospects and other factors the Board of Directors may deem relevant.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we determine to pay dividends on any of our Class A or Class B Ordinary Shares in the future, as a holding company, we will be dependent
on receipt of funds from our operating subsidiaries. Dividend distributions from our PRC subsidiaries to us are subject to PRC taxes,
such as withholding tax. In addition, regulations in the PRC currently permit payment of dividends of a PRC company only out of accumulated
distributable after-tax profits as determined in accordance with its articles of association and the accounting standards and regulations
in China. PRC regulations may restrict the ability of our PRC subsidiary to pay dividends to us. See &#8220;Item 4.B. &#8211; Regulation&#8212;Regulations
on Foreign Currency Exchange&#8221; and &#8220;Item 4.B. &#8211; Regulation&#8212;Regulations on Dividend Distribution.&#8221;</span></p><div>

</div><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">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><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">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>8.B.&#160;Significant
Changes</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Except
as otherwise disclosed in this report, we have not experienced any significant changes since the date of our audited consolidated financial
statements included herein.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_011"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
9. The Offer and Listing</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>9.A.
Offer and listing details</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>9.B.&#160;Plan
of distribution</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>9.C.
Markets</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Class A Ordinary Shares are listed on the Nasdaq Capital Market under the symbol &#8220;LICN.&#8221;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>9.D.
Selling shareholders</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>9.E.
Dilution</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>9.F.
Expenses of the issue</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_012"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
10. Additional Information</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.A.
Share capital</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.B.
Memorandum and articles of association</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following are summaries of the material provisions of our amended and restated memorandum and articles of association and the Companies
Act (as revised), insofar as they relate to the material terms of our Class A Ordinary Shares. They do not purport to be complete. Reference
is made to our amended and restated memorandum and articles of association, a copy of which is filed as an exhibit to the annual report
(and which is referred to in this section as, respectively, the &#8220;memorandum&#8221; and the &#8220;articles&#8221;).</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Meetings
of Shareholders</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
of our directors may convene general meetings of shareholders at such times and in such manner and places within or outside the Cayman
Islands as the director considers necessary or desirable. The director convening a general meeting shall give at least five days&#8217;
notice of the general meeting to those shareholders whose names on the date the notice is given appear as members in the register of
members of the Company and are entitled to vote at the meeting, and each of the Company&#8217;s directors. Our Board of Directors must
convene a general meeting upon the written request of one or more shareholders holding no less than 10% of the Company&#8217;s paid-up
capital as at the date of the deposit of the requisition carries the right of voting at general meetings of the Company.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No
business may be transacted at any general meeting unless a quorum is present at the time the meeting proceeds to business. Two shareholders
present in person or by proxy shall be a quorum. For so long as any shares are listed on the Nasdaq Capital Market (and any other stock
exchange on which the Company&#8217;s shares are listed for trading), one or more shareholders holding shares that represent not less
than one-third of the outstanding issued shares carrying the right to vote at such general meeting. If, within half an hour from the
time appointed for the meeting, a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved.
In any other case, it shall stand adjourned to the same day in the next week at the same time and place or to such other time or such
other place as the directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time
appointed for the meeting, the shareholders present shall be a quorum and may transact the business for which the meeting was called.
The chairman, if any, of our Board of Directors shall preside as chairman at every general meeting of the Company, or if there is no
such chairman, or if he shall not be present within fifteen minutes after the time appointed for the holding of the general meeting,
or is unwilling to act, the directors present shall elect one of their number to be chairman of the general meeting.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Meetings
of Directors</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the Cayman Islands Companies Act and the amended and restated articles of association of our company, the management of our company
is entrusted to our Board of Directors, who will make decisions by voting on resolutions of directors. At any meeting of directors, a
quorum will be present if two directors are present, unless otherwise fixed by the directors. If there is a sole director, that director
shall be a quorum. A director and his appointed alternate director shall be considered as only one person for the purpose of calculating
quorum. An alternate director or proxy appointed by a director shall be counted in a quorum at a meeting at which the director appointing
him is not present. An action that may be taken by the directors at a meeting may also be taken by a resolution of directors consented
to in writing by all of the directors.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Winding
Up</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of shares), assets available for distribution
among the holders of ordinary shares shall be distributed among the holders of our shares in proportion to the capital paid up. If our
assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses
are borne by our shareholders in proportion to the capital paid up.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Calls
on Ordinary Shares and forfeiture of Ordinary Shares</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Board of Directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served
to such shareholders at least 14 days prior to the specified time of payment provided that no call shall be payable at less than one
month from the date fixed for the payment of the last preceding call. The ordinary shares that have been called upon and remain unpaid
are subject to forfeiture if the call remains unpaid after a second notice by the directors in accordance with the amended and restated
articles of association.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Repurchase
of Shares</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Cayman Islands Companies Act and our amended and restated memorandum and articles of association permit us to purchase our own shares,
subject to certain restrictions and requirements. Our directors may only exercise this power on our behalf, subject to the Cayman Islands
Companies Act, our amended and restated memorandum and articles of association and to any applicable requirements imposed from time to
time by the Nasdaq, the Securities and Exchange Commission, or by any other recognized stock exchange on which our securities are listed.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Provided
the necessary shareholders and board approval have been obtained, we may issue shares on terms that are subject to redemption, at our
option or at the option of the holders of these shares, on such terms and in such manner, provided the requirements under the Cayman
Islands Companies Act have been satisfied. Under the Cayman Islands Companies Act, the repurchase of any share may be paid out of our
company&#8217;s profits, out of the share premium account or out of the proceeds of a fresh issue of shares made for the purpose of such
repurchase, or out of capital. If the repurchase proceeds are paid out of our Company&#8217;s capital, our Company must, immediately
following the date of such payment, be able to pay its debts as they fall due in the ordinary course of business. In addition, under
the Cayman Islands Companies Act, no such share may be repurchased (1) unless it is fully paid up, (2) if such repurchase would result
in there being no shares outstanding, and (3) unless the manner of purchase (if not so authorized under the amended and restated memorandum
and articles of association) has first been authorized by a resolution of our shareholders. In addition, under the Cayman Islands Companies
Act, our Company may accept the surrender of any fully paid share for no consideration unless, as a result of the surrender, the surrender
would result in there being no shares outstanding (other than shares held as treasury shares).</span></p><div>

</div><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">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Variations
of Rights of Shares</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
rights attached to any class or series of shares (unless otherwise provided by the terms of issue of the shares of that class or series),
whether or not our company is being wound-up, may be varied with the consent in writing of the holders of three-fourths of the issued
shares of that class or series or with the sanction of a special resolution passed at a separate meeting of the holders of the shares
of the class or series. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly
provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking
pari passu with such existing class of shares.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Changes
in the number of shares we are authorized to issue and those in issue</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may from time to time by resolution of shareholders in the requisite majorities:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">amend
    our amended and restated memorandum of association to increase the authorized share capital of our Company or cancel any shares which
    at the date of the passing of the resolution have not been taken or agreed to be taken by any person;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 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><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">subdivide
    our authorized and issued shares into a larger number of shares; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -15.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">consolidate
    our authorized and issued shares into a smaller number of shares.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Inspection
of Books and Records</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Holders
of our Ordinary Shares will have no general right under Cayman Islands law to inspect or obtain copies of our register of members or
our corporate records. However, we will provide our shareholders with annual audited financial statements.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Rights
of Non-Resident or Foreign Shareholders</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 governing the ownership threshold above which shareholder ownership must be disclosed.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Issuance
of additional Ordinary Shares</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 that there are sufficient authorized but unissued shares.</span></p><div>

</div><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>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Exempted
Company&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an exempted company with limited liability under the Cayman Islands Companies Act. The Cayman Islands 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. An exempted company shall not trade in the Cayman
Islands with any person, firm or corporation except in furtherance of the business of the exempted company carried on outside the Cayman
Islands:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">does
    not have to file an annual return of its shareholders with the Registrar of Companies;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">is
    not required to open its register of members for inspection;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 95; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->90<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">does
    not have to hold an annual general meeting;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">is
    prohibited from making any invitation to the public in the Cayman Islands to subscribe for any of its securities if it is not listed
    on the Cayman Islands Stock Exchange; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">may
    issue bearer shares or shares with no par value; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">may
    obtain an undertaking against the imposition of any future taxation (for a period of up to 30 years); </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">may
    register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">may
    register as an exempted limited duration company; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">may
    register as a segregated portfolio company.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><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.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.1pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.C.
Material contracts</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than those described in this annual report, we have not entered into any material agreements other than in the ordinary course of business.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.D.
Exchange controls</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Cayman Islands, British Virgin Islands and Hong Kong currently have no exchange control regulations or currency restrictions.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
existing PRC foreign exchange regulations, payment of current account items, such as profit distributions and trade and service-related
foreign exchange transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange,
or the SAFE, by complying with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign
currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC
complies with certain procedures under PRC foreign exchange regulations, such as the overseas investment registrations by our shareholders
or the ultimate shareholders of our corporate shareholders who are PRC residents. Approval from, or registration with, appropriate government
authorities is, however, required where the RMB 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. The PRC government may also at its discretion restrict access in the
future to foreign currencies for current account transactions. Current PRC regulations permit our PRC subsidiaries to pay dividends to
the Company only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
As of the date of this annual report, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of
capital within, into and out of Hong Kong (including funds from Hong Kong to the PRC), except for transfer of funds involving money laundering
and criminal activities. Cayman Islands law prescribes that a company may only pay dividends out of its profits. Other than that, there
is no restrictions on Lichen China Limited&#8217;s ability to transfer cash to investors. See &#8220;Item 3 &#8211; Transfers of Cash
between Our Company and Our Subsidiaries&#8221; and &#8220;Item 3.D. Risk Factors - Risks Relating to Doing Business in China - To the
extent cash or assets in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available
to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations
on the ability of us or our subsidiaries by the PRC government to transfer cash or assets,&#8221; &#8220;Item 3.D. Risk Factors - Risks
Relating to Doing Business in China - We 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 adverse effect on our ability to conduct our business,&#8221; and &#8220;Item 3.D. Risk Factors - Risks Relating to Doing
Business in China - Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may have
a material adverse effect on our ability to conduct our business.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 96; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.E</b>.&#160;<b>Taxation</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Cayman
Islands Taxation</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 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 levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is
no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government
of the Cayman Islands, except for stamp duties which may be applicable on instruments executed in, or after execution brought within
the jurisdiction of the Cayman Islands. The Cayman Islands is a party to a double tax arrangement entered with the United Kingdom in
2010, but otherwise 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><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
an exempted company incorporated in the Cayman Islands, the Company is required to pay an annual government fee (&#8220;Government Fee&#8221;),
which is determined on a sliding scale by reference to the level of its authorized share capital. The Government Fee is payable at the
end of January in every year and is based on the level of the authorized share capital at the time when the fee is due.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Payments
of dividends and capital in respect of our Class A Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding
will be required on the payment of a dividend or capital to any holder of our Class A Ordinary Shares, nor will gains derived from the
disposal of our Class A Ordinary Shares be subject to Cayman Islands income or corporation tax.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No
stamp duty is payable in the Cayman Islands in respect of the issue of the shares or on an instrument of transfer in respect of a share
of a Cayman company except those which hold interests in land in the Cayman Islands and except where the relevant document or instrument
is executed in or brought to the Cayman Islands, or produced before a Cayman Islands court.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>People&#8217;s
Republic of China Taxation</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><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 a &#8220;de facto management
body&#8221; within the PRC is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on
its global income. The implementation rules define the term &#8220;de facto management body&#8221; as the body that exercises full and
substantial control over and overall management of the business, productions, personnel, accounts and properties of an enterprise. In
April 2009, the State Administration of Taxation issued a circular, known as Circular 82, 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. Although this circular 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 State Administration of Taxation&#8217;s
general position on how the &#8220;de facto management body&#8221; test 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 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><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 17, 2017, the State Tax Administration promulgated the &#8220;Administrative Measures for Adjustment of Special Tax Investigation
and Mutual Consultation Procedures&#8221; (State Administration of Tax Practice Announcement No.6, 2017), which came into force on May
1, 2017), which provides that tax authorities have implemented special tax adjustment monitoring and management for enterprises through
related declaration review, contemporaneous data management, profit level monitoring and other means. If an enterprise is found to have
special tax adjustment risks, the tax authorities may serve a &#8220;Notice&#8221; to remind such enterprise of the tax risks.&#8194;If
an enterprise receives a special tax adjustment risk alert or finds that it has a special tax adjustment risk, it may adjust the supplementary
tax on its own. If the enterprise adjusts the supplementary tax by itself, the tax authorities may still carry out special tax investigation
and adjustment in accordance with the relevant provisions. If an enterprise requires the tax authorities to confirm the special tax adjustment
matters, such as the pricing principles and methods of related party transactions, the tax authorities shall initiate the special tax
investigation procedures. It also stipulates that if the principle of independent transactions is not met, tax authorities may implement
a special tax adjustment in the full amount of the amount deducted before tax under the following circumstances:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">(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
    enterprise and its affiliated parties transfer or accept the right to use intangible assets that do not bring economic benefits and
    collect or pay royalties;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">(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
    enterprise pays royalties to related parties that only own intangible assets but do not contribute to their value;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">(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">An
    enterprise establishes a holding company or a financing company overseas for the main purpose of financing and listing, and pays
    royalties to overseas affiliated parties only for the incidental benefits arising from the financing and listing activities;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">(4)</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
    taxable income or income amount of the enterprise or its affiliated party is reduced because the payment or collection of the price
    of the labor service transaction between the enterprise and its affiliated party does not meet the principle of independent transactions;
    and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">(5)</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
    enterprise pays fees to overseas related parties that fail to perform their functions, bear risks and have no substantial business
    activities.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
we believe all our related party transactions, including all payments by our PRC subsidiaries and consolidated affiliated entities to
our non-PRC entities, are made on an arm&#8217;s-length basis and our estimates are reasonable, the ultimate decisions by the relevant
tax authorities may differ from the amounts recorded in our financial statements and may materially affect our financial results in the
period or periods for which such determination is made.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. We do not believe that Lichen China
Limited meets all of the conditions above. Lichen China Limited is a company incorporated outside the PRC. As a holding company, its
key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions
of its Board of Directors and the resolutions of its shareholders) are maintained, outside the PRC. For the same reasons, we believe
our other entities outside of China are not PRC resident enterprises either. 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; There can be no assurance that the PRC government will ultimately take a view that is consistent with us.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
if the PRC tax authorities determine that Lichen China Limited is a PRC resident enterprise for enterprise income tax purposes, we may
be required to withhold a 20% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. In addition,
non-resident enterprise shareholders may be subject to a 10% PRC tax on gains realized on the sale or other disposition of Class A Ordinary
Shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be
subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a
PRC resident enterprise. If any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless a
reduced rate is available under an applicable tax treaty. However, it is also unclear whether non-PRC shareholders of Lichen China Limited
would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that Lichen China
Limited is treated as a PRC resident enterprise.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Provided
that the Company is not deemed to be a PRC resident enterprise, holders of our Class A Ordinary Shares who are not PRC residents will
not be subject to PRC income tax on dividends distributed by us or gains realized from the sale or other disposition of our shares. However,
under SAT Circular 7, where a non-resident enterprise conducts an &#8220;indirect transfer&#8221; by transferring taxable assets, including,
in particular, equity interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding
company, the non-resident enterprise, being the transferor, or the transferee or the PRC entity which directly owned such taxable assets
may report to the relevant tax authority such indirect transfer. Using a &#8220;substance over form&#8221; principle, the PRC tax authority
may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose
of reducing, avoiding or deferring PRC 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. We and our non-PRC resident investors may be at risk
of being required to file a return and being taxed under SAT Circular 7, and we may be required to expend valuable resources to comply
with SAT Circular 7, or to establish that we should not be taxed under these circulars. See &#8220;Risk Factors &#8212; Risks Relating
to Doing Business in China &#8212; Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact
on potential acquisitions we may pursue in the future.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>United
States Federal Income Tax Considerations</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of our
Class A Ordinary Shares by a U.S. holder (as defined below) that holds our Class A Ordinary Shares as &#8220;capital assets&#8221; (generally,
property held for investment) under the United States Internal Revenue Code of 1986, as amended (the &#8220;Code&#8221;). This discussion
is based upon existing United States federal income tax law, which is subject to differing interpretations and may be changed, possibly
with retroactive effect. No ruling has been sought from the Internal Revenue Service (the &#8220;IRS&#8221;) with respect to any United
States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary
position. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors
in light of their individual circumstances, including investors subject to special tax rules (for example, banks or other financial institutions,
insurance companies, broker-dealers, pension plans, cooperatives, traders in securities that have elected the mark-to-market method of
accounting for their securities, partnerships and their partners, regulated investment companies, real estate investment trusts, and
tax-exempt organizations (including private foundations)), holders who are not U.S. holders, holders who own (directly, indirectly, or
constructively) 10% or more of our voting stock, holders who will hold their Class A Ordinary Shares as part of a straddle, hedge, conversion,
constructive sale, or other integrated transaction for United States federal income tax purposes, or investors that have a functional
currency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized
below. In addition, this discussion does not discuss any non-United States, alternative minimum tax, state, or local tax considerations,
or the Medicare tax on net investment income. Each U.S. holder is urged to consult its tax advisors regarding the United States federal,
state, local, and non-United States income and other tax considerations with respect to the ownership and disposition of our Class A
Ordinary Shares.&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>General</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
purposes of this discussion, a &#8220;U.S. holder&#8221; is a beneficial owner of our Class A Ordinary Shares that is, for United States
federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity
treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States
or any state thereof or the District of Columbia, (iii) an estate the income of which is subject to United States federal income taxation
regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court
and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that
has otherwise elected to be treated as a United States person under applicable United States Treasury regulations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our Class
A Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities
of the partnership. Partnerships holding our Class A Ordinary Shares and partners in such partnerships are urged to consult their tax
advisors as to the particular United States federal income tax consequences of an investment in our Class A Ordinary Shares.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Passive
Foreign Investment Company Considerations</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
non-United States corporation, such as our company, will be a &#8220;passive foreign investment company,&#8221; or &#8220;PFIC,&#8221;
for United States federal income tax purposes, if, in any particular taxable year, 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 average quarterly value of its assets (as determined
on the basis of fair market value) during such year produce or are held for the production of passive income. For this purpose, cash
is categorized as a passive asset and the company&#8217;s unbooked intangibles associated with active business activities may generally
be classified as active assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains
from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate
share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
upon our income and assets and the value of our Class A Ordinary Shares, we do not believe that we were a PFIC for the taxable years
ended December 31, 2022 and 2021, and do not anticipate becoming a PFIC in the foreseeable future.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
we do not believe that we were a PFIC for the taxable year ended December 31, 2022 and 2021 and do not anticipate becoming a PFIC in
the foreseeable future, the determination of whether we are or will become a PFIC will depend in part upon the value of our goodwill
and other unbooked intangibles (which will depend upon the market value of our Class A Ordinary Shares from time-to-time, which may be
volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our market capitalization.
Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may be or become a PFIC for the
current or future taxable years. It is also possible that the IRS may challenge our classification or valuation of our goodwill and other
unbooked intangibles, which may result in our company being or becoming a PFIC for the current or one or more future taxable years.&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
determination of whether we will be or become a PFIC will also depend, in part, on the composition of our income and assets, which may
be affected by how, and how quickly, we use our liquid assets and the cash raised in our initial public offering. If we determine not
to deploy significant amounts of cash for active purposes, our risk of being classified as a PFIC may substantially increase. Because
our PFIC status for any taxable year is a factual determination that can be made only after the close of a taxable year, there can be
no assurance that we will not be a PFIC for the current taxable year or any future taxable year. If we are a PFIC for any year during
which a U.S. holder held our Class A Ordinary Shares, we generally would continue to be treated as a PFIC for all succeeding years during
which such U.S. holder held our Class A Ordinary Shares.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
discussion below under &#8220;Dividends&#8221; and &#8220;Sale or Other Disposition of Class A Ordinary Shares&#8221; is written on the
basis that we will not be or become a PFIC for United States federal income tax purposes. The United States federal income tax rules
that apply if we are a PFIC for the current taxable year or any subsequent taxable year are generally discussed below under &#8220;Passive
Foreign Investment Company Rules.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Dividends</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 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, any cash distributions (including the amount of any tax withheld) paid on our Class A Ordinary Shares
out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, will generally
be includible in the gross income of a U.S. holder as dividend income on the day actually or constructively received by the U.S. holder.
Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution
paid will generally be reported as a &#8220;dividend&#8221; for United States federal income tax purposes. A non-corporate recipient
of dividend income will generally be subject to tax on dividend income from a &#8220;qualified foreign corporation&#8221; at a reduced
United States federal tax rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding
period requirements are met.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A
non-United States corporation (other than a corporation that is a PFIC for the taxable year in which the dividend is paid or the preceding
taxable year) will generally be considered to be a qualified foreign corporation (a)&#160;if it is eligible for the benefits of a comprehensive
tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this
provision and which includes an exchange of information program, or (b) with respect to any dividend it pays on stock which is readily
tradable on an established securities market in the United States. In the event we are deemed to be a resident enterprise under the PRC
Enterprise Income Tax Law, we may be eligible for the benefits of the United States-PRC income tax treaty (which the U.S. Treasury Department
has determined is satisfactory for this purpose) and in that case we would be treated as a qualified foreign corporation with respect
to dividends paid on our Class A Ordinary Shares. Each non-corporate U.S. holder is advised to consult its tax advisors regarding the
availability of the reduced tax rate applicable to qualified dividend income for any dividends we pay with respect to our Class A Ordinary
Shares. Dividends received on the Class A Ordinary Shares will not be eligible for the dividends received deduction allowed to corporations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dividends
will generally be treated as income from foreign sources for United States foreign tax credit purposes and will generally constitute
passive category income. In the event that we are deemed to be a PRC &#8220;resident enterprise&#8221; under the Enterprise Income Tax
Law, a U.S. holder may be subject to PRC withholding taxes on dividends paid on our Class A Ordinary Shares. (See &#8220;&#8212;People&#8217;s
Republic of China Taxation&#8221;). In that case, a U.S.&#160;holder 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 Class A Ordinary Shares. A U.S.
holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for United States federal
income tax purposes, in respect of such withholdings, but only for a year in which such U.S. holder elects to do so for all creditable
foreign income taxes. The rules governing the foreign tax credit are complex. U.S. holders are advised to consult their tax advisors
regarding the availability of the foreign tax credit under their particular circumstances.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Sale
or Other Disposition of Class A Ordinary Shares</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 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, a U.S. holder will generally recognize capital gain or loss upon the sale or other disposition of
Class A Ordinary Shares in an amount equal to the difference between the amount realized upon the disposition and the U.S. holder&#8217;s
adjusted tax basis in such ordinary shares. Any capital gain or loss will be long-term if the Class A Ordinary Shares have been held
for more than one year and will generally be United States source gain or loss for United States foreign tax credit purposes. Long-term
capital gain of non-corporate U.S. holders is generally eligible for a reduced rate of taxation. The deductibility of a capital loss
may be subject to limitations. In the event that we are treated as a PRC &#8220;resident enterprise&#8221; under the Enterprise Income
Tax Law and gain from the disposition of the Class A Ordinary Shares is subject to tax in the PRC, a U.S. holder that is eligible for
the benefits of the income tax treaty between the United States and the PRC may elect to treat the gain as PRC source income. U.S. holders
are advised to consult tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our Class A Ordinary
Shares, including the availability of the foreign tax credit under their particular circumstances and the election to treat any gain
as PRC source.&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Passive
Foreign Investment Company Rules</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are a PFIC for any taxable year during which a U.S. holder holds our Class A Ordinary Shares, and unless the U.S. holder makes a mark-to-market
election (as described below), the U.S. holder will generally be subject to special tax rules that have a penalizing effect, regardless
of whether we remain a PFIC, for subsequent taxable years, on (i) any excess distribution that we make to the U.S. holder (which generally
means any distribution paid during a taxable year to a U.S. holder that is greater than 125% of the average annual distributions paid
in the three preceding taxable years or, if shorter, the U.S. holder&#8217;s holding period for the Class A Ordinary Shares), and (ii)
any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, of Class A Ordinary Shares. Under
the PFIC rules:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">such
    excess distribution and/or gain will be allocated ratably over the U.S. holder&#8217;s holding period for the Class A Ordinary Shares;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -15.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">such
    amount allocated to the current taxable year and any taxable years in the U.S. holder&#8217;s holding period prior to the first taxable
    year in which we are a PFIC, or pre-PFIC year, will be taxable as ordinary income;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -15.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">such
    amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect
    for that year; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -15.75pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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: 0.5in"><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">an
    interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year,
    other than a pre-PFIC year.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are a PFIC for any taxable year during which a U.S. holder holds our Class A Ordinary Shares and any of our non-United States subsidiaries
is also a PFIC, such U.S. holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for
purposes of the application of these rules. U.S. holders are advised to consult their tax advisors regarding the application of the PFIC
rules to any of our subsidiaries.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
an alternative to the foregoing rules, a U.S. holder of &#8220;marketable stock&#8221; in a PFIC may make a mark-to-market election.
Since our Class A Ordinary Shares have been approved for listing on Nasdaq, and provided that the Class A Ordinary Shares will be regularly
traded on Nasdaq, a U.S. holder holds Class A Ordinary Shares will be eligible to make a mark-to-market election if we are or were to
become a PFIC. If a mark-to-market election is made, the U.S. holder will generally (i) include as ordinary income for each taxable year
that we are a PFIC the excess, if any, of the fair market value of Class A Ordinary Shares held at the end of the taxable year over the
adjusted tax basis of such Class A Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis
of the Class A Ordinary Shares over the fair market value of such Class A Ordinary Shares held at the end of the taxable year, but only
to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. holder&#8217;s adjusted
tax basis in the Class A Ordinary Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election.
If a U.S.&#160;holder makes an effective mark-to-market election, in each year that we are a PFIC, any gain recognized upon the sale
or other disposition of the Class A Ordinary Shares will be treated as ordinary income and loss will be treated as ordinary loss, but
only to the extent of the net amount previously included in income as a result of the mark-to-market election. If a U.S. holder makes
a mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years unless
the Class A Ordinary Shares are no longer regularly traded on a qualified exchange or the Internal Revenue Service consents to the revocation
of the election.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
a U.S. holder makes a mark-to-market election in respect of a PFIC and such corporation ceases to be a PFIC, the U.S. holder will not
be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not a PFIC.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. holder who makes a mark-to-market election
with respect to our Class A Ordinary Shares may continue to be subject to the general PFIC rules with respect to such U.S. holder&#8217;s
indirect interest in any of our non-United States subsidiaries if any of them is a PFIC.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not 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><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
discussed above under &#8220;Dividends,&#8221; dividends that we pay on our Class A Ordinary Shares will not be eligible for the reduced
tax rate that applies to qualified dividend income if we are a PFIC for the taxable year in which the dividend is paid or the preceding
taxable year. In addition, if a U.S. holder owns our Class A Ordinary Shares during any taxable year that we are a PFIC, such holder
would generally be required to file an annual IRS Form 8621. Each U.S. holder is advised to consult its tax advisors regarding the potential
tax consequences to such holder if we are or become a PFIC, including the possibility of making a mark-to-market election.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Information
Reporting</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
U.S. holders may be required to report information to the IRS relating to an interest in &#8220;specified foreign financial assets,&#8221;
including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign financial
assets exceeds US$50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception for
shares held in custodial accounts maintained with a United States financial institution). These rules also impose penalties if a U.S.
holder is required to submit such information to the IRS and fails to do so.&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, U.S. holders may be subject to information reporting to the IRS with respect to dividends on and proceeds from the sale or
other disposition of our Class A Ordinary Shares. Each U.S. holder is advised to consult with its tax advisor regarding the application
of the United States information reporting rules to their particular circumstances.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.F.
Dividends and paying agents</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.G.
Statement by experts</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable for annual reports on Form 20-F.</span></p><div>

</div><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">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.H.
Documents on display</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to the information requirements of the Exchange Act. In accordance with these requirements, the Company files reports and
other information with the SEC. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains a web site at&#160;http://www.sec.gov&#160;that contains reports and other information regarding registrants that
file electronically with the SEC.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.I.
Subsidiary Information</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
a list of our subsidiaries, see &#8220;Item 4. Information of the Company &#8211; C. Organizational Structure.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.J.
Annual Report to Security Holders</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_013"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
11. Quantitative and Qualitative Disclosures About Market Risk</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Foreign
Exchange Risk</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
of our revenues and substantially all of our expenses are denominated in RMB. In our consolidated financial statements, our financial
information that uses RMB as the functional currency has been translated into U.S. dollars. We do not believe that we currently have
any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
value of the RMB against the U.S. dollar and other currencies is affected by, among other things, changes in China&#8217;s political
and economic conditions. The PRC government allowed the RMB to appreciate by more than 20% against the U.S. dollar between July 2005
and July 2008. Between July 2008 and June 2010, the exchange rate between the RMB and the U.S. dollar had been stable and traded within
a narrow band. Since June 2010, the PRC government has allowed the RMB to appreciate slowly against the U.S. dollar, though there have
been periods when the RMB has depreciated against the U.S. dollar. In particular, on August 11, 2015, the PBOC allowed the RMB to depreciate
by approximately 2% against the U.S. dollar. It is difficult to predict how long the current situation may last and when and how the
relationship between the RMB and the U.S. dollar may change again.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the extent that we need to convert U.S. dollars into RMB for our operations, appreciation of the RMB against the U.S. dollar would have
an adverse effect on the RMB amount we receive from the conversion. Conversely, if we decide to convert RMB into U.S. dollars, appreciation
of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amounts available to us.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Interest
rate risk</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. Our interest rate risk arises primarily from short-term borrowings. Borrowings issued at variable rates and fixed rates
expose us to cash flow interest rate risk and fair value interest rate risk respectively.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Inflation
Risk</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are also exposed to inflation risk. Inflationary factors, such as increases in labor costs, could impair our operating results. Although
we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of
inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses.&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_014"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
12. Description of Securities Other than Equity Securities</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>12.A.
Debt Securities</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>12.B.
Warrants and Rights</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>12.C.
Other Securities</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>12.D.
American Depositary Shares</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><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>&#160;</b></span></p><div>

</div><div><a id="m_015"></a></div><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>PART
II</b></span></p><div>

</div><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><div>

</div><div><a id="m_016"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
13. Defaults, Dividend Arrearages and Delinquencies</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not have any material defaults in the payment of principal, interest,&#160;or any installments under a sinking or purchase fund.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_017"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
14. Material Modifications to the Rights of Securities Holders and Use of Proceeds</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>14.A.
&#8211; 14.D. Material Modifications to the Rights of Security Holders</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Item 10. Additional Information&#8221; for a description of the rights of shareholders, which remain unchanged.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>14.E.
Use of Proceeds</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><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&#160;F-1&#160;(File&#160;No.&#160;333-264624),
as amended, including the annual report contained therein, which registered 4,000,000 Class A Ordinary Shares and was declared effective
by the SEC on February 3, 2023, for our initial public offering, which completed on February 8, 2023, at an initial offering price of
US$4.00 per Class A Ordinary Share. Univest Securities, LLC was the representative of the underwriters.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">In
connection with the issuance and distribution of the Class A <span style="background-color: white">Ordinary Shares </span>in our initial
public offering, our expenses incurred and paid to others totaled approximately US$2.59&#160;million, which included US$1.50&#160;million
for underwriting discounts and commissions. None of the transaction expenses included direct or indirect 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 or others. We received
an aggregate net proceeds of approximately US$14.1&#160;million from our initial public offering.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify; background-color: white">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this annual report, we used US$1.45&#160;million of the net proceeds received from our initial public offering for internal
investment, deposit for potential acquisition, and general corporate purposes. We still intend to use the remainder of the proceeds from
our initial public offering as disclosed in our registration statements on Form&#160;F-1.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None
of these net proceeds from our initial public offering and the optional offering was 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 or others.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_018"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
15. Controls and Procedures</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-left: 0.5in; text-align: justify; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)
Disclosure Controls and Procedures.</span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
management, with the participation of our Chief Executive Officer and Chief Financial Officer, has performed an evaluation of the effectiveness
of our disclosure controls and procedures (as defined in Rule&#160;13a-15(e)&#160;under the Exchange Act) as of the end of the period
covered by this report, as required by Rule&#160;13a-15(b)&#160;under the Exchange Act.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
upon that evaluation, our management has concluded that, as of December 31, 2022, our disclosure controls and procedures were ineffective
as our management has identified a material weakness that has been identified related to our lack of sufficient financial reporting and
accounting personnel with appropriate knowledge of the generally accepted accounting principles in the United States (&#8220;U.S. GAAP&#8221;)
and SEC reporting requirements to properly address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial
statements and related disclosures to fulfill U.S. GAAP and SEC financial reporting requirements. The other material weakness that has
been identified related to our lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
remedy the identified material weaknesses, we have implemented and will continue to implement several measures to improve our internal
control over financial reporting, including: (i) that we engaged experienced financial consultant who worked closely with our internal
finance team to assist us in preparing our financial statements and related disclosures in accordance with U.S. GAAP; (ii) that our Chief
Financial Officer received additional training in U.S. GAAP through self-study and webinar courses, and began to periodically review
major accounting literature updates provided by a major accounting firm which provide an overview of recent U.S. accounting pronouncements.
(iii) conducting regular and continuous U.S. GAAP training programs and webinars for our financial reporting and accounting personnel;
(iv) improving financial oversight function for handling complex accounting issues under U.S. GAAP. However, the implementation of these
measures may not fully address the deficiencies in our internal control over financial reporting. We are not able to estimate with reasonable
certainty the costs that we will need to incur to implement these and other measures designed to improve our internal control over financial
reporting. See &#8220;Item 3.D. Risk Factors&#8212;Risks Relating to Our Business&#8212; <i>If we fail to establish and maintain proper
internal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could
be impaired</i>.&#8221;</span></p><div>

</div><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">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the JOBS Act, we qualify as an &#8220;emerging growth company as we recorded revenues less than US$1.235 billion in our most recent
fiscal year, which allows us to 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, in the assessment of the emerging growth company&#8217;s internal control over financial reporting.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Neither
we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control under the Sarbanes-Oxley
Act for purposes of identifying and reporting any weakness in our internal control over financial reporting, which, however, will be
required once we become a public company and after we cease to be an &#8220;emerging growth company&#8221; as such term is defined in
the JOBS Act. Had we performed a formal assessment of our internal control over financial reporting or had our independent registered
public accounting firm performed an audit of our internal control over financial reporting, additional control deficiencies may have
been identified.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)
Management&#8217;s annual report on internal control over financial reporting.</span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><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 Rule&#160;13a-15(f)&#160;and&#160;15d-15(f)&#160;under
the Exchange Act. Our management evaluated the effectiveness of our internal control over financial reporting, as required by Rule&#160;13a-15(c)&#160;of
the Exchange Act, based on criteria established in the framework in Internal Control-Integrated Framework (2013)&#160;issued by the Committee
of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control
over financial reporting was not effective as of December 31, 2022 due to a material weakness identified in our internal control over
financial reporting as described above.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 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><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><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. In addition, projections
of any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(c)
Attestation report of the registered public accounting firm.</span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">This
annual report on Form&#160;20-F&#160;does not include an attestation report of our registered public accounting firm due to a transition
period established by rules of the SEC for newly public companies.&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(d)
Changes in internal control over financial reporting.</span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
have been no changes in our internal controls over financial reporting occurred during the fiscal year ended December 31, 2022, that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="mm_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-variant: small-caps"><b>Item
16. [Reserved]</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_019"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
16A. Audit Committee Financial Expert</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
audit committee consists of Mr. Zhihuang Deng, Ms. Lourdes Felix, and Mr. Kipton Cariaga and is chaired by Ms. Lourdes Felix. Mr. Zhihuang
Deng, Ms. Lourdes Felix, and Mr. Kipton Cariaga each satisfies the &#8220;independence&#8221; requirements of Rule 5605 of the Corporate
Governance Rules of Nasdaq Stock Market and meets the independence standards under Rule 10A-3 under the Exchange Act. We have determined
that Ms. Lourdes Felix qualifies as an &#8220;audit committee financial expert.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_020"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
16B. Code of Ethics</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has adopted a Code of Business Conduct and Ethics that applies to the Company&#8217;s directors, officers, employees and advisors.
The Code of Business Conduct and Ethics is attached as an exhibit to this annual report. Copy of the Code of Business Conduct and Ethics
is also available on our website at https://ir.lichenzx.com.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_021"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
16C. Principal Accountant Fees and Services</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">TPS
Thayer, LLC was appointed by the Company to serve as its independent registered public accounting firm for fiscal years ended December
31, 2022 and 2021. Audit services provided by TPS Thayer, LLC for fiscal years ended December 31, 2022 and 2021 included the examination
of the consolidated financial statements of the Company.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Briggs
&amp; Veselka Co. was appointed by the Company to serve as its independent registered public accounting firm for fiscal years ended December
31, 2020. Audit services provided by Briggs &amp; Veselka Co. for fiscal years ended December 31, 2020 included the examination of the
consolidated financial statements of the Company.</span></p><div>

</div><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">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Fees
Paid to Independent Registered Public Accounting Firm</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Auditor
Fees</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><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
by TPS Thayer, LLC and Briggs &amp; Veselka Co., our independent registered public accounting firms, for the periods indicated.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify; background-color: white"></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Year Ended December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Services</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</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="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">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="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</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">US$</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">US$</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">US$</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Audit Fees(1) - TPS Thayer, LLC</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">180,000</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">257,000</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Audit Fees(1) - Briggs &amp; Veselka Co.</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">260,000</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">45,000</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">80,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt">Total</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">260,000</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">225,000</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">337,000</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Note
1: Audit fees include the aggregate fees billed in each of the fiscal years for professional services rendered by our independent registered
public accounting firm for the audit of our annual financial statements, review of the interim financial statements&#160;and for the
audits of our financial statements in connection with our initial public offering, and comfort letter in connection with the underwritten
public offering.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
policy of our audit committee is to&#160;pre-approve&#160;all audit and&#160;non-audit&#160;services provided by our independent registered
public accounting firm, including audit services and audit-related services as described above, other than those for de minimus services
which are approved by the audit committee prior to the completion of the audit.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"></p><div>

</div><!-- Field: Page; Sequence: 106; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->101<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_022"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
16D. Exemptions from the Listing Standards for Audit Committees</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_023"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_024"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
16F. Change in Registrant&#8217;s Certifying Accountant</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_025"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
16G. Corporate Governance</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a company listed on the Nasdaq Capital Market, we are subject to the Nasdaq corporate governance listing standards. However, Nasdaq rules&#160;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 corporate governance listing standards.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
we do not plan to rely on home country practice with respect to our corporate governance. However, to the extent we choose to follow
home country practice in the future, our shareholders may be afforded less protection than they otherwise would under the Nasdaq corporate
governance listing standards applicable to U.S. domestic issuers. See &#8220;Item&#160;3.D. Risk Factors&#8212;Risks Relating to Our
Class A Ordinary Share&#8212; <i>Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards
applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.</i>&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_026"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
16H. Mine Safety Disclosure</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_027"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_028"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="font-variant: small-caps">Item
</span>16J. <span style="font-variant: small-caps">Insider Trading Policies</span></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have adopted insider trading policies governing the purchase, sale, and other dispositions of our securities by directors, senior management,
and employees. A copy of the insider trading policies is attached as an exhibit to this annual report.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 107; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->102<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><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><div>

</div><div><a id="m_029"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PART
III</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_030"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
17. Financial Statements</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Item 18. Financial Statements.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_031"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
18. Financial Statements</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
consolidated financial statements are included at the end of this annual report, beginning with page F-1.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="m_032"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font: small-caps 10pt Times New Roman, Times, Serif"><b>Item
19. Exhibits</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 9%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibit
    No.</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%; 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: 90%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Description
    of Exhibit</b></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; 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; 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; 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="http://www.sec.gov/Archives/edgar/data/1876766/000121390022033054/ea161355ex3-1_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amended and Restated Memorandum and Articles of Association of Lichen China Limited (incorporated by reference to Exhibit 3.1 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)</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">&#160;</td>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif">2.1*</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="f20f2022ex2-1_lichenchina.htm">Description of the Registrant&#8217;s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.2</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">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1876766/000121390022033054/ea161355ex4-1_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Underwriter&#8217;s Warrant (incorporated by reference to Exhibit 4.1 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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; text-align: justify"><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="http://www.sec.gov/Archives/edgar/data/1876766/000121390022033054/ea161355ex10-1_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Translation of Employment Agreement by and between Lichen Zixun and Ya Li (incorporated by reference to Exhibit 10.1 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)&#160;</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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; text-align: justify"><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="http://www.sec.gov/Archives/edgar/data/1876766/000121390022033054/ea161355ex10-2_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Translation of Employment Agreement by and between Lichen Zixun and Zhixiang Fang (incorporated by reference to Exhibit 10.2 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)&#160;</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.3</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">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1876766/000121390022033054/ea161355ex10-3_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Translation of Employment Agreement by and between Lichen Zixun and Yi Deng (incorporated by reference to Exhibit 10.3 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)&#160;</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.4</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>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1876766/000121390022023271/ea158865ex10-4_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director
Offer Letter by and between the Registrant and Zhihuang Deng (incorporated by reference to Exhibit 10.4 to our registration statement
on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.5</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>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1876766/000121390022023271/ea158865ex10-5_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Offer Letter by and between the Registrant and Lourdes Felix (incorporated by reference to Exhibit 10.5 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)&#160;</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.6</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>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1876766/000121390022023271/ea158865ex10-6_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Offer Letter by and between the Registrant and Kipton Cariaga (incorporated by reference to Exhibit 10.6 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)&#160;</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.7</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>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1876766/000121390022033054/ea161355ex10-7_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Translation Form of the Expert Corporation Agreement (incorporated by reference to Exhibit 10.7 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)&#160;</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.8</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>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1876766/000121390022033054/ea161355ex10-8_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Translation Form of the Partnership Agreement (incorporated by reference to Exhibit 10.8 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)&#160;</span></a></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 108; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->103<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: justify"><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; width: 1%; text-align: justify"><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: 90%; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1876766/000121390022033054/ea161355ex21-1_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">List of Subsidiaries (incorporated by reference to Exhibit 21.1 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)&#160;</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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; text-align: justify"><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="http://www.sec.gov/Archives/edgar/data/1876766/000121390022033054/ea161355ex14-1_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)&#160;</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">11.2*</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">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="f20f2022ex11-2_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Insider Trading Policies</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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; text-align: justify"><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="f20f2022ex12-1_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certification of Chief Executive Officer Required by Rule&#160;13a-14(a)</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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; text-align: justify"><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="f20f2022ex12-2_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certification of Chief Financial Officer Required by Rule&#160;13a-14(a)</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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; text-align: justify"><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="f20f2022ex13-1_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certification of Chief Executive Officer Required by Rule&#160;13a-14(b)&#160;and Section&#160;1350 of Chapter 63 of Title 18 of the United States Code</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; text-align: justify"><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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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; text-align: justify"><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="f20f2022ex13-2_lichenchina.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certification of Chief Financial Officer Required by Rule&#160;13a-14(b)&#160;and Section&#160;1350 of Chapter 63 of Title 18 of the United States Code</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">&#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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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: White">
    <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>
    <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; 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">&#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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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: White">
    <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>
    <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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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; text-align: justify"><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; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><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 Labels 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; text-align: justify"><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; background-color: rgb(204,238,255)">
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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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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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  <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></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
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p><div>

</div><!-- Field: Page; Sequence: 109; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->104<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><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>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SIGNATURES</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt; text-align: justify"><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 on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="3" style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Lichen
    China Limited</b></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 colspan="2" 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; 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">By:&#160;</span></td>
    <td colspan="2" 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/
    Ya Li</i></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 60%"><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: 3%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 5%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name:&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 32%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ya
    Li</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"><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
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date:
May 1, 2023</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 110; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><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 -->105<!-- Field: /Sequence --></td></tr></table></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>LICHEN CHINA LIMITED</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


</div><!-- Field: Page; Sequence: 111; Options: NewSection; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->1<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Board of Directors and</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Shareholders of Lichen China Limited</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Opinion on the Financial Statements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated balance sheets of Lichen
China Limited and subsidiaries (collectively, the &#8220;Company&#8221;), as of December 31, 2022 and 2021, and the related consolidated
statements of income and comprehensive income, changes in shareholders&#8217; equity and cash flows for each of two years period ended
December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements
present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the
consolidated results of its operations and its cash flows for each of the years in the two years period ended December 31, 2022,
in conformity with accounting principles generally accepted in the United States of America.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Basis for Opinion</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audits included performing procedures to assess the risks of material
misstatements 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 provided a reasonable basis for our opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">/s/ <ix:nonNumeric contextRef="c0" name="dei:AuditorName">TPS Thayer, LLC</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have served as the Company&#8217;s auditor since 2022 <ix:nonNumeric contextRef="c0" name="dei:AuditorLocation">Sugar Land,
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">May 1, 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


</div><!-- Field: Page; Sequence: 112; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->2<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="r_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">To the Board of Directors and<br/>
Shareholders of Lichen China Limited</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Opinion on the Financial Statements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheet of Lichen China Limited and subsidiaries (collectively, the &#8220;Company&#8221;) as of December 31, 2020, and the related
consolidated statements of income and comprehensive income, changes in shareholders&#8217; equity, and cash flows for the year then ended,
and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly,
in all material respects, the financial position of the Company as of December 31, 2020 and the results of its operations and its cash
flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Basis for Opinion</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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
audit. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit 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 audit, 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audit included performing procedures to assess
the risks of material misstatement of the consolidated 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 audit provides a reasonable basis for
our opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 40%">/s/Briggs &amp; Veselka Co.</td>
    <td style="width: 60%">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>Houston, Texas</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>August 12, 2021 </td>
    <td>&#160;</td>
    </tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    </tr>
  <tr style="vertical-align: top">
    <td colspan="2">We have served as the Company&#8217;s auditor since 2021.</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 113; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->3<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>LICHEN CHINA LIMITED
</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>CONSOLIDATED BALANCE
SHEETS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>AS OF THE YEARS ENDED DECEMBER 31, 2022 AND
2021</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>(All amounts in thousands
of USD, except for share and per share data, unless otherwise noted)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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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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  <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: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">&#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: 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>
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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>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: justify">Current liabilities:</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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  <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: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><i>The accompanying notes are an integral part
of these consolidated financial statements.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


</div><!-- Field: Page; Sequence: 114; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>LICHEN CHINA LIMITED</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>CONSOLIDATED STATEMENTS
OF INCOME AND COMPREHENSIVE INCOME</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED DECEMBER 31, 2022, 2021
AND 2020</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>(All amounts in thousands
of USD, except for share and per share data, unless otherwise noted)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom">
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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)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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: 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 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="padding-left: 0.125in; text-indent: -0.125in">&#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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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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></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-left: 0.125in; text-indent: -0.125in">&#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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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><i>The accompanying notes
are an integral part of these consolidated financial statements.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>LICHEN CHINA LIMITED</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS&#8217;
EQUITY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED DECEMBER 31, 2022, 2021
AND 2020</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>(All amounts in thousands
of USD, except for share and per share data, unless otherwise noted)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

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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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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><i>The accompanying notes are an integral part
of these consolidated financial statements.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


</div><!-- Field: Page; Sequence: 116; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>LICHEN CHINA LIMITED</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF CASH FLOWS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED DECEMBER 31, 2022, 2021
AND 2020</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>(All amounts in thousands
of USD, except for share and per share data, unless otherwise noted)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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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: 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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  <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-left: 0.125in; text-indent: -0.125in">&#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="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Cash Flows from Investing 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>
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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="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromSaleOfPropertyPlantAndEquipment" scale="3" unitRef="usd">589</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 style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left; padding-bottom: 1.5pt">Net cash (used in)/provided by investing activities</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"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="3" unitRef="usd">561</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 style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Cash Flows from 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></tr>
  <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="padding-left: 0.25in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Dividend payment</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left; padding-bottom: 1.5pt">Net cash used in by financing activities</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"><div style="-sec-ix-hidden: hidden-fact-51">-</div></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 style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Effect of exchange rate changes on cash and cash equivalents</td><td style="padding-bottom: 1.5pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><i>The accompanying notes are an integral part
of these consolidated financial statements.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


</div><!-- Field: Page; Sequence: 117; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->7<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Lichen China Limited</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>FOR THE YEARS ENDED DECEMBER 31, 2022, 2021
AND 2020</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(All amounts in thousands of USD, except for
share and per share data, unless otherwise noted)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>1.</b></span></td>
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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_2" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Legend China Limited was incorporated in the Cayman
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China Limited. (&#8220;Lichen&#8221;).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_3" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Lichen is an investment holding company. Through
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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_4" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Lichen owns <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="licn:OwnsInterestsInItsSubsidiaries" scale="-2" unitRef="pure">100</ix:nonFraction>% interests in its subsidiaries,
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_011.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


</div><!-- Field: Page; Sequence: 118; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_5" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_4"><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the reporting periods, the Company has
several subsidiaries in PRC. Details of the Company and its operating subsidiaries are set out below:&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

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indirect<br/>
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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: White">
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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_7" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As shown above, Legend Consulting BVI is an investment
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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_8" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Legend Consulting HK is an investment holding
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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_9" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Lichen Zixun, which is wholly owned by Legend
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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_10" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_9"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Lichen Education, which is wholly owned by Lichen
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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_11" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Initial Public Offering </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_12" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 6, 2023, the Company announced the
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underwriting discounts.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_13" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_12"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Reorganization and Share Issuance&#160;</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_14" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_13"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 28, 2021, Lichen passed a resolution
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<ix:nonFraction contextRef="c60" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockDividendsShares" scale="0" unitRef="shares">3,600,000</ix:nonFraction> Class B Ordinary Shares (collectively, the &#8220;USD Shares&#8221;) were issued at the consideration of US$<ix:nonFraction contextRef="c61" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:SharePrice" scale="0" unitRef="usdPershares">0.0001</ix:nonFraction> per share.
Upon the completion of the share issuance, all HKD Shares issued were repurchased by Lichen at the consideration HK$<ix:nonFraction contextRef="c61" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharePrice" scale="0" unitRef="hkdPershares">0.01</ix:nonFraction> per share and
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resulting in the reduction of the authorized share capital of the Company to US$<ix:nonFraction contextRef="c52" decimals="-3" format="ixt:num-dot-decimal" name="licn:AuthorizedShareCapital1" scale="3" unitRef="usd">50,000</ix:nonFraction> divided into (a) <ix:nonFraction contextRef="c56" decimals="0" format="ixt:num-dot-decimal" name="licn:DividedShares" scale="0" unitRef="shares">400,000,000</ix:nonFraction> Class A Ordinary Shares
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in accordance with section 13 of the Cayman Islands Companies Act. The issuance of <ix:nonFraction contextRef="c56" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockCapitalSharesReservedForFutureIssuance" scale="0" unitRef="shares">5,400,000</ix:nonFraction> Class A Ordinary Shares and <ix:nonFraction contextRef="c61" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CommonStockCapitalSharesReservedForFutureIssuance" scale="0" unitRef="shares">3,600,000</ix:nonFraction> Class
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</div><div>

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</div><div>

</div><ix:continuation id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consideration paid by Lichen and its subsidiaries
has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the
beginning of the first period presented in the consolidated financial statements. As all the entities involved in the process of the Reorganization
are under common control before and after the Reorganization, the Reorganization is accounted for in a manner similar to a pooling-of-interest
with the assets and liabilities of the parties to the Reorganization carried over at their historical amounts.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_1" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric><div>
</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_2" id="_SignificantAccountingPoliciesTextBlock-c0_cont_1"><ix:nonNumeric contextRef="c0" continuedAt="_BasisOfAccountingPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:BasisOfAccountingPolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Basis of presentation</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_3" id="_SignificantAccountingPoliciesTextBlock-c0_cont_2"><ix:continuation id="_BasisOfAccountingPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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;).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 120; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_4" id="_SignificantAccountingPoliciesTextBlock-c0_cont_3"><ix:nonNumeric contextRef="c0" continuedAt="_ConsolidationPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:ConsolidationPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Principles of consolidation</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_5" id="_SignificantAccountingPoliciesTextBlock-c0_cont_4"><ix:continuation id="_ConsolidationPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The consolidated financial statements include
the financial statements of Lichen and its wholly owned subsidiaries (collectively, the &#8220;Company&#8221;). All significant inter-company
transactions and balances have been eliminated upon consolidation.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_6" id="_SignificantAccountingPoliciesTextBlock-c0_cont_5"><ix:nonNumeric contextRef="c0" continuedAt="_UseOfEstimates-c0_cont_1" escape="true" name="us-gaap:UseOfEstimates"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Use of estimate and assumptions</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_7" id="_SignificantAccountingPoliciesTextBlock-c0_cont_6"><ix:continuation id="_UseOfEstimates-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of the Company&#8217;s consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and
the reported amounts of revenues and expenses during the reporting periods presented. Estimates are adjusted to reflect actual experience
when necessary. Significant accounting estimates reflected in the Company&#8217;s consolidated financial statements include, allowance
for doubtful accounts, useful lives of long-lived assets, impairment of long-lived assets and uncertain tax position. Actual results could
differ from these estimates.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

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is translated at the average exchange rates for the periods and the equity accounts are translated at historical rates. Translation adjustments
resulting from this process are included in accumulated other comprehensive income (loss). Transaction gains and losses that arise from
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</div><div>

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</div><div>

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</div><div>

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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_14" id="_SignificantAccountingPoliciesTextBlock-c0_cont_13"><ix:nonNumeric contextRef="c0" continuedAt="licn_RelatedPartiePolicyTextBlock-c0_cont_1" escape="true" name="licn:RelatedPartiePolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Related parties</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_15" id="_SignificantAccountingPoliciesTextBlock-c0_cont_14"><ix:continuation id="licn_RelatedPartiePolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Parties, which can be a corporation or individual,
are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject
to common control or common significant influence, such as a family member or relative, shareholder, or a related corporation.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_16" id="_SignificantAccountingPoliciesTextBlock-c0_cont_15"><ix:nonNumeric contextRef="c0" continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:FairValueMeasurementPolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Fair value of financial instruments</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes
the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of
unobservable inputs. The three levels of inputs used to measure fair value are as follows:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

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instruments, including cash, accounts receivable, other receivables &#8211; related party, accounts payable, accrued expenses and other
current liabilities, due to the related parties, and short-term bank loans, approximate their recorded values due to their short-term
maturities as of December 31, 2022 and 2021.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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right to consideration in exchange for goods and services that the Company has transferred to the customers before payment is due. Accounts
receivable is stated at the historical carrying amount, net of an estimated allowance for uncollectible accounts. The Company reviews
on a periodic basis for doubtful accounts for the outstanding trade receivable balances based on historical collection trends, aging of
receivables and other information available. Additionally, the Company evaluates individual customer&#8217;s financial condition, credit
history, and the current economic conditions to make specific bad debt provisions when it is considered necessary, based on (i) the Company&#8217;s
specific assessment of the collectability of all significant accounts; and (ii) any specific knowledge we have acquired that might indicate
that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in assessing
its collectability. The allowance is based on management&#8217;s best estimates of specific losses on individual exposures, as well as
a provision on historical trends of collections. Account balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. The Company&#8217;s management continues to evaluate the reasonableness
of the valuation allowance policy and update it if necessary. There was no allowance for doubtful accounts deemed necessary as of December
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><div>

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</div><div>

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</div><div>

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the suppliers when they are embedded in the purchase price. Cost is determined using the weighted average method. Provisions are made
for excessive, slow moving, expired and obsolete inventories as well as for inventories with carrying values in excess of market. Certain
factors could impact the realizable value of inventory, so the Company continually evaluates the recoverability based on assumptions about
customer demand and market conditions. The evaluation may take into consideration historical usage, inventory aging, expiration date,
expected demand, anticipated sales price, product obsolescence and other factors. The reserve or write-down is equal to the difference
between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions.
If actual market conditions are less favorable than those projected by management, additional inventory reserves or write-downs may be
required that could negatively impact the Company&#8217;s gross margin and operating results. If actual market conditions are more favorable,
the Company may have higher gross margin when products that have been previously reserved or written down are eventually sold. As of December
31, 2022 and 2021, management compared the cost of inventories with their net realizable value and determined no inventory write-down
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</div><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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income and comprehensive income. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals
and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of
depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

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</div><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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property and equipment and intangibles with finite lives, for impairment whenever events or changes in circumstances, such as a significant
adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not
be fully recoverable. When these events occur, the Company evaluates the recoverability of long-lived assets by comparing the carrying
amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition.
If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company recognizes an impairment
loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting
the cash flows expected to be generated by the assets, when the market prices are not readily available. The adjusted carrying amount
of the assets become new cost basis and are depreciated over the assets&#8217; remaining useful lives. Long-lived assets are grouped with
other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other
assets and liabilities. Given no events or changes in circumstances indicating the carrying amount of long-lived assets may not be recovered
through the related future net cash flows, the Company did not recognize any impairment loss on long-lived assets for the years ended
December 31, 2022 and 2021. There can be no assurance that future events will not have impact on the Company&#8217;s revenue or financial
position which could result in impairment in the future.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_40" id="_SignificantAccountingPoliciesTextBlock-c0_cont_39"><ix:nonNumeric contextRef="c0" continuedAt="_SeparationOfLeaseAndNonleaseComponentsPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:SeparationOfLeaseAndNonleaseComponentsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Leases</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_41" id="_SignificantAccountingPoliciesTextBlock-c0_cont_40"><ix:continuation continuedAt="_SeparationOfLeaseAndNonleaseComponentsPolicyTextBlock-c0_cont_2" id="_SeparationOfLeaseAndNonleaseComponentsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Leases are classified at lease commencement date
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ownership of the underlying asset to the lessee by the end of the lease term. (b) the lease grants the lessee an option to purchase the
underlying asset that the lessee is reasonably certain to exercise, (c) the lease term is for the major part of the remaining economic
life of the underlying asset, (d) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that
is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset or (e) the
underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease
term. When none of the criteria meets, the lease shall be classified as an operating lease.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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asset with a corresponding liability at lease commencement date. The lease liability is calculated at the present value of the lease payments
not yet paid by using the lease term and discount rate determined at lease commencement. The right-of-use asset is calculated as the lease
liability, increased by any initial direct costs and prepaid lease payments, reduced by any lease incentives received before lease commencement.
The right-of-use asset itself is amortized on a straight-line basis unless another systematic method better reflects how the underlying
asset will be used by and benefits the lessee over the lease term.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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ASU require an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition,
measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain
quantitative and qualitative disclosures about leasing arrangements. The Company adopted ASC 842 effective on January 1, 2022 with using
a modified retrospective transition approach in the accompanying financial statements of the Company. The adoption of this standard had
a material impact on the Company&#8217;s financial position, with no material impact on the results of operations and cash flows (see
Note 7 and Note 12).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company&#8217;s
management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have
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</div><div>

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</div><div>

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31, 2022, 2021 and 2020 are presented under ASC 606. The core principle of the guidance is that an entity should recognize revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. Revenue is the transaction price the Company expects to be entitled to in exchange
for the promised goods or services in a contract in the ordinary course of the Company&#8217;s activities and is recorded net of value-added
tax (&#8220;VAT&#8221;). To achieve that core principle, the Company applies the following steps:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><div>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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to date) as compared to the total costs to be incurred under the transaction (by reference to the total budgeted time of the respective
project) to depict the Company&#8217;s performance in transferring control of services promised to a customer. The Company recognizes
revenues over time only if it can reasonably measure its progress toward complete satisfaction of the performance obligation. The Company
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</div><div>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><div>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><div>

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revenues for such licenses at a point in time when the customer has received licenses and thus has control over the software. In case
there is an update of the standard software, end customers or distributors are required to pay additional consideration to buy upgraded
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</div><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

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the Chief Executive Officer who allocates resources to and assesses the performance of the operating segments of an entity. The Group&#8217;s
reporting segments are decided based on its operating segments while taking full consideration of various factors such as products and
services, geographic location and regulatory environment related to administration of the management. Operating segments meeting the same
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_69" id="_SignificantAccountingPoliciesTextBlock-c0_cont_68"><ix:continuation id="licn_ValueAddedTaxVATPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Revenue represents the invoiced value of goods
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</div><div>

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</div><div>

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of assets and liabilities and their reported amounts in the consolidated financial statements. 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.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p></ix:continuation></ix:continuation><div>

</div><div>

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the tax laws of PRC.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_73" id="_SignificantAccountingPoliciesTextBlock-c0_cont_72"><ix:continuation id="_IncomeTaxPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">An uncertain tax position is recognized as a benefit
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&#8220;more likely than not&#8221; test, no tax benefit is recorded. For the years ended December 31, 2022, 2021 and 2020, no uncertain
tax position is recognized. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense
in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the years ended December
31, 2022, 2021 and 2020. All of the tax returns of the Company&#8217;s subsidiaries in PRC remain subject to examination by the tax authorities
for five years from the date of filing.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

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reserves can only be used for specific purposes and are not transferable to the Company in form of loans, advances, or cash dividends.
There is no such regulation of providing statutory reserve in Hong Kong. None of the statutory surplus reserves were recognized for the
years ended December 31, 2022, 2021 and 2020.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_78" id="_SignificantAccountingPoliciesTextBlock-c0_cont_77"><ix:nonNumeric contextRef="c0" continuedAt="_ComprehensiveIncomePolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:ComprehensiveIncomePolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Comprehensive income</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p></ix:nonNumeric></ix:continuation><div>

</div><div>

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net income and other comprehensive income. Other comprehensive income refers to revenue, expenses, gains and losses that under GAAP are
recorded as an element of equity but are excluded from net income. Other comprehensive income consists of a foreign currency translation
adjustment resulting from the Company not using the U.S. dollar as its functional currencies.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_81" id="_SignificantAccountingPoliciesTextBlock-c0_cont_80"><ix:continuation continuedAt="_EarningsPerSharePolicyTextBlock-c0_cont_2" id="_EarningsPerSharePolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company computes earnings per share (&#8220;EPS&#8221;)
in accordance with ASC 260, <i>Earnings per Share</i>. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured
as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents the dilutive effect on a per-share
basis of the potential Ordinary Shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning
of the periods presented, or issuance date, if later. Potential Ordinary Shares that have an anti-dilutive effect (i.e., those that increase
income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were no dilutive or anti-dilutive
potential Ordinary Shares or effect for the years ended 2022, 2021 and 2020.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_82" id="_SignificantAccountingPoliciesTextBlock-c0_cont_81"><ix:continuation continuedAt="_EarningsPerSharePolicyTextBlock-c0_cont_3" id="_EarningsPerSharePolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Reclassification</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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to the current period presentation. The reclassification had no impact on the Consolidated Balance Sheet and Consolidated Statement of
Income or Consolidated Statement of Cash Flow.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_84" id="_SignificantAccountingPoliciesTextBlock-c0_cont_83"><ix:nonNumeric contextRef="c0" continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Recent accounting pronouncements</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_85" id="_SignificantAccountingPoliciesTextBlock-c0_cont_84"><ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_2" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">New Accounting Pronouncements Adopted</span></i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_86" id="_SignificantAccountingPoliciesTextBlock-c0_cont_85"><ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_3" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2019, the FASB issued ASU No. 2019-12,
Income Taxes (&#8216;&#8216;ASU 2019-12&#8217;&#8217;), which simplifies the accounting for income taxes by removing exceptions and simplifies
the accounting for income taxes regarding franchise tax, good will, separate financial statements, enacted change in tax laws or rates
and employee stock ownership plans. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods
therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have
not yet been issued. The Company adopted the ASU on January 1, 2022, which did not have a material impact on the Company&#8217;s financial
results or financial position.&#8221;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_87" id="_SignificantAccountingPoliciesTextBlock-c0_cont_86"><ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_4" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i><span style="text-decoration:underline">New Accounting Pronouncements Not Yet Adopted</span></i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_88" id="_SignificantAccountingPoliciesTextBlock-c0_cont_87"><ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_5" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company considers the applicability and impact
of all ASUs. Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of
2012, as amended (&#8220;the JOBS Act&#8221;), the Company meets the definition of an emerging growth company, or EGC, and has elected
the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards
until they would apply to private companies.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_89" id="_SignificantAccountingPoliciesTextBlock-c0_cont_88"><ix:continuation continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_6" id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In June 2016, the FASB issued ASU 2016-13, Financial
Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, and issued subsequent amendments to the
initial guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11 and ASU 2020-02, collectively referred to as &#8220;ASC 326&#8221;.
ASC 326 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount
expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the
financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of
expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable
and supportable forecasts that affect the collectability of the reported amount. ASC 326 eliminates the probable initial recognition threshold
in current GAAP and, instead, reflects an entity&#8217;s current estimate of all expected credit losses. The Company will adopt this ASC
326 on January 1, 2023. The adoption of this standard will result in a change of the Company&#8217;s provision policy primarily for accounts
receivable, but is not expected to have a material impact on the Company&#8217;s consolidated financial statements.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation id="_SignificantAccountingPoliciesTextBlock-c0_cont_89"><ix:continuation id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Except for the above-mentioned pronouncements,
there are no new recent issued accounting standards that will have a material impact on the consolidated financial position, statements
of operations and cash flows.</p></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_CashAndCashEquivalentsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:CashAndCashEquivalentsDisclosureTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>3.</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Cash</b></span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_CashAndCashEquivalentsDisclosureTextBlock-c0_cont_2" id="_CashAndCashEquivalentsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Cash consist of cash on hand, cash in banks, which
are unrestricted as to withdrawal or use, and have insignificant risk of changes in value. Cash is denominated in the following currencies:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_CashAndCashEquivalentsDisclosureTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfCashCashEquivalentsAndShortTermInvestmentsTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">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="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center">In thousands of USD</td><td style="font-weight: bold">&#160;</td></tr>
  <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="text-align: justify; padding-bottom: 1.5pt">USD</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 contextRef="c108" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsAndShortTermInvestments" scale="3" unitRef="usd">1</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 style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: justify; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c4" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsAndShortTermInvestments" scale="3" unitRef="usd">22,599</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c5" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsAndShortTermInvestments" scale="3" unitRef="usd">16,845</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:nonNumeric></ix:continuation><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="licn_DisclosureOfAccountsReceivableAndUnbilledReceivableTextBlock-c0_cont_1" escape="true" name="licn:DisclosureOfAccountsReceivableAndUnbilledReceivableTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
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</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="licn_DisclosureOfAccountsReceivableAndUnbilledReceivableTextBlock-c0_cont_2" id="licn_DisclosureOfAccountsReceivableAndUnbilledReceivableTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">Accounts receivables consisted of the following
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</div><div>

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</div><div>

</div><ix:continuation id="licn_DisclosureOfAccountsReceivableAndUnbilledReceivableTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There was no allowance for doubtful accounts recognized as of December
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

</div><ix:continuation continuedAt="_OtherCurrentAssetsTextBlock-c0_cont_2" id="_OtherCurrentAssetsTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">Prepaid expenses and other current assets
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white"></p><div>

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</div><div>

</div><ix:continuation id="_OtherCurrentAssetsTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 28, 2022, the Company made a deposit
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><ix:continuation continuedAt="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_2" id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">Property and equipment, net consisted of the
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</div><div>

</div><ix:continuation continuedAt="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_3" id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:PropertyPlantAndEquipmentTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: White">
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</div><div>

</div><ix:continuation continuedAt="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_5" id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company has no pledged
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</div><div>

</div><ix:continuation id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company did not recognize
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p><div>

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assets</b></span></td>
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</div><div>

</div><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_2" id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company&#8217;s intangible
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</div><div>

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</div><div>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></p><div>

</div><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_5" id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company has no pledged
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</div><div>

</div><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_6" id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company did not recognize
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

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</div><div>

</div><ix:continuation id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_7"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleofFiniteLivedIntangibleAssetsFutureAmortizationExpenseTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_1" escape="true" name="us-gaap:LesseeOperatingLeasesTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
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</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_2" id="_LesseeOperatingLeasesTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">Operating lease right -of-use asset, net was
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</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_3" id="_LesseeOperatingLeasesTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" escape="true" name="licn:ScheduleOfOperatingLeaseRightofuseAssetsNetTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_7" id="_LesseeOperatingLeasesTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Analyzed for reporting
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</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_8" id="_LesseeOperatingLeasesTextBlock-c0_cont_7"><ix:nonNumeric contextRef="c0" escape="true" name="licn:ScheduleOfAnalyzedForReportingPurposesTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><div>

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</div><div>

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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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</div><div>

</div><ix:continuation id="_LesseeOperatingLeasesTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The incremental borrowing
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

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<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>9</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Related
party transactions&#160;and balances</b></span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.1pt; background-color: white"><b>&#160;</b></p></ix:nonNumeric><div>


</div><div>

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</div><div>

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    <td style="padding-left: 0.125in; text-indent: -0.125in; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr. Ya Li</span></td>
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</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white"><i>&#160;</i></p></ix:continuation><div>


</div><div>

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</div><div>

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</div><div>

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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></tr>
  <tr style="vertical-align: bottom; background-color: White">
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</div><div>

</div><ix:continuation id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Balances due to Ya Li
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made on behalf such as deferred IPO costs, whereas the balance due to Quanzhou represents amounts received in advance for services to
be performed. The balances were all unsecured, non-interest bearing and payable on demand.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.1pt; background-color: white"><b>&#160;</b></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Accrued
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</div><div>

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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p><div>

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<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>11.</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Unearned
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</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_RevenueFromContractWithCustomerTextBlock-c0_cont_2" id="_RevenueFromContractWithCustomerTextBlock-c0_cont_1"><ix:nonNumeric contextRef="c0" escape="true" name="licn:ScheduleOfUnearnedRevenue"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><div>

</div><ix:continuation id="_RevenueFromContractWithCustomerTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; background-color: white">Unearned revenue refers to the payment received
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:IncomeTaxDisclosureTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>12.</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Taxes</b></span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.1pt; background-color: white">&#160;</p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_2" id="_IncomeTaxDisclosureTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(a)</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Taxes
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</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.1pt; background-color: white">&#160;</p></ix:continuation><div>


</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_3" id="_IncomeTaxDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">Taxes payable consisted of the following:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.1pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_5" id="_IncomeTaxDisclosureTextBlock-c0_cont_4"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(b)</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Corporate
Income Taxes (&#8220;CIT&#8221;)</b></span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.1pt; background-color: white"><b>&#160;</b></p></ix:continuation><div>


</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_6" id="_IncomeTaxDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><i>Cayman Islands</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_7" id="_IncomeTaxDisclosureTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Under the current tax
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a withholding tax on payments of dividends to shareholders.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_8" id="_IncomeTaxDisclosureTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><i>BVI</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

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</div><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_11" id="_IncomeTaxDisclosureTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Under the current Hong
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from operations in Hong Kong. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to the Company are not
subject to any Hong Kong withholding tax. The Company did not make any provision for Hong Kong profit tax as there were no assessable
profits derived from or earned in Hong Kong since inception.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_12" id="_IncomeTaxDisclosureTextBlock-c0_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><i>PRC</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_13" id="_IncomeTaxDisclosureTextBlock-c0_cont_12"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company&#8217;s PRC
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at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect
thereof. Under the Enterprise Income Tax Laws of the PRC (the &#8220;EIT Laws&#8221;), domestic enterprises and Foreign Investment Enterprises
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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_15" id="_IncomeTaxDisclosureTextBlock-c0_cont_14"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfIncomeBeforeIncomeTaxDomesticAndForeignTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_16" id="_IncomeTaxDisclosureTextBlock-c0_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">There are no deferred tax assets due to full valuation allowance for
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_17" id="_IncomeTaxDisclosureTextBlock-c0_cont_16"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>ii)</i></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
following table reconciles PRC statutory rates to the Company&#8217;s effective tax rate:</i></span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 41.25pt; background-color: white"><i>&#160;</i></p></ix:continuation><div>


</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_18" id="_IncomeTaxDisclosureTextBlock-c0_cont_17"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table reconciles the China statutory
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_19" id="_IncomeTaxDisclosureTextBlock-c0_cont_18"><ix:nonNumeric contextRef="c0" continuedAt="_FederalIncomeTaxNoteTextBlock-c0_cont_1" escape="true" name="us-gaap:FederalIncomeTaxNoteTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_20" id="_IncomeTaxDisclosureTextBlock-c0_cont_19"><ix:continuation id="_FederalIncomeTaxNoteTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 0px"></td> <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td> <td style="text-align: justify"><ix:footnote id="ix_0_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Non-deductible expenses represented meal and entertainment fees not-deductible in PRC tax returns.</span></ix:footnote></td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_21" id="_IncomeTaxDisclosureTextBlock-c0_cont_20"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">iii)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Deferred
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</div><div>

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</div><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_23" id="_IncomeTaxDisclosureTextBlock-c0_cont_22"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><i>Movement of valuation allowance is as follows:</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.25pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_25" id="_IncomeTaxDisclosureTextBlock-c0_cont_24"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2022, certain subsidiaries
had accumulated tax loss of approximately <ix:nonFraction contextRef="c4" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsLossReserves" scale="6" unitRef="usd">4.8</ix:nonFraction> million, which can be carried forward to offset future taxable income. The carryforwards
period for net operating losses under the EIT Law is five years. Valuation allowance is provided against deferred tax assets when the
Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_26" id="_IncomeTaxDisclosureTextBlock-c0_cont_25"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December 31, 2022, part of the valuation
allowance related to previous years&#8217; tax losses has expired, which cannot be used to offset future taxable income. The Company recognized
a write-off of approximately $<ix:nonFraction contextRef="c0" decimals="-4" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxExpenseFromStockOptionsExercised" scale="6" unitRef="usd">0.29</ix:nonFraction> million and $<ix:nonFraction contextRef="c8" decimals="-4" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxExpenseFromStockOptionsExercised" scale="6" unitRef="usd">0.02</ix:nonFraction> million for the year ended December 31, 2022 and 2021, respectively.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_27" id="_IncomeTaxDisclosureTextBlock-c0_cont_26"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Uncertain tax positions</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_IncomeTaxDisclosureTextBlock-c0_cont_27"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; 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, 2022 and 2021, the Company did not have any significant unrecognized uncertain tax positions.
The Company did not incur interest and penalties during the years ended December 31, 2022, 2021 and 2020.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; text-align: justify; background-color: white">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_EarningsPerShareTextBlock-c0_cont_1" escape="true" name="us-gaap:EarningsPerShareTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>13.</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Ordinary
shares</b></span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; text-align: justify; background-color: white">&#160;</p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation id="_EarningsPerShareTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company was established as a holding company
under the laws of Cayman Islands. The Company&#8217;s authorized share capital of US$<ix:nonFraction contextRef="c4" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CapitalUnitsNetAmount" scale="3" unitRef="usd">50,000</ix:nonFraction> is divided into (a) <ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesAuthorized" scale="0" unitRef="shares">1,000,000,000</ix:nonFraction> Class A
Ordinary Shares with a nominal or par value of US$<ix:nonFraction contextRef="c2" decimals="5" format="ixt:num-dot-decimal" name="us-gaap:TemporaryEquityParOrStatedValuePerShare" scale="0" unitRef="usdPershares">0.00004</ix:nonFraction> each and (b) <ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesAuthorized" scale="0" unitRef="shares">250,000,000</ix:nonFraction> Class B Ordinary Shares with a nominal or par value
of US$<ix:nonFraction contextRef="c3" decimals="5" format="ixt:num-dot-decimal" name="us-gaap:TemporaryEquityParOrStatedValuePerShare" scale="0" unitRef="usdPershares">0.00004</ix:nonFraction> each. As of December 31, 2022 and 2021, <ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesOutstanding" scale="0" unitRef="shares">13,500,000</ix:nonFraction></ix:nonFraction> Class A Ordinary Shares and <ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares"><ix:nonFraction contextRef="c7" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesOutstanding" scale="0" unitRef="shares">9,000,000</ix:nonFraction></ix:nonFraction> Class B Ordinary shares were issued
and outstanding. &#160;<ix:nonNumeric contextRef="c137" name="us-gaap:CommonStockVotingRights">Each Class A Ordinary Share has one (1) vote</ix:nonNumeric> and <ix:nonNumeric contextRef="c138" name="us-gaap:CommonStockVotingRights">each Class B Ordinary Share has ten (10) votes</ix:nonNumeric>. Each Class B Ordinary
Share is convertible into one Class A Ordinary Share at any time at the option of the holder thereof. Class A Ordinary Shares are not
convertible into Class B Ordinary Shares under any circumstances.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_StatutoryAccountingPracticesDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:StatutoryAccountingPracticesDisclosureTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><b>14.</b></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Statutory
surplus reserves</b></span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation id="_StatutoryAccountingPracticesDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The statutory surplus
reserve as determined pursuant to PRC statutory laws totaled approximately $<ix:nonFraction contextRef="c0" decimals="-4" format="ixt:num-dot-decimal" name="licn:StatutoryLawsTotal" scale="6" unitRef="usd">0.79</ix:nonFraction> million as of December 31, 2022 and 2021. As of December
31, 2021, the statutory reserves fund of the Company has reached <ix:nonFraction contextRef="c8" decimals="2" format="ixt:num-dot-decimal" name="licn:StatutoryReservesFund" scale="-2" unitRef="pure">50</ix:nonFraction>% of the registered capital of the enterprise. No additional statutory
reserve was recognized in the years ended December 31, 2022 and 2021.&#160;</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_RestrictedAssetsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:RestrictedAssetsDisclosureTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>15.</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Restricted
assets</b></span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; text-align: justify; background-color: white">&#160;</p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_RestrictedAssetsDisclosureTextBlock-c0_cont_2" id="_RestrictedAssetsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company&#8217;s ability
to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary. Relevant PRC statutory laws
and regulations permit payments of dividends by the PRC subsidiaries only out of its retained earnings, if any, as determined in accordance
with PRC accounting standards and regulations. The results of operations reflected in the accompanying consolidated financial statements
prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the PRC entities.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; text-align: justify; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_RestrictedAssetsDisclosureTextBlock-c0_cont_3" id="_RestrictedAssetsDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The PRC entities are
required to set aside at least <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="licn:Tax" scale="-2" unitRef="pure">10</ix:nonFraction>% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve
funds reach <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="licn:CapitalTax" scale="-2" unitRef="pure">50</ix:nonFraction>% of its registered capital. In addition, the PRC entities may allocate a portion of its after-tax profits based on PRC
accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. The PRC entities may allocate a
portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve
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 State Administration of Foreign Exchange.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; text-align: justify; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; text-align: justify; background-color: white"></p><div>

</div><!-- Field: Page; Sequence: 135; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->25<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; text-align: justify; background-color: white">&#160;</p><div>

</div><ix:continuation id="_RestrictedAssetsDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">As a result of the foregoing
restrictions, the PRC entities are restricted in their ability to transfer their assets to the Company. Foreign exchange and other regulation
in the PRC may further restrict the PRC entities from transferring funds to the Company in the form of dividends, loans and advances.
As of December 31, 2022 and 2021, amounts restricted are the paid-in-capital and statutory reserve of the PRC entities, which amount to
$<ix:nonFraction contextRef="c4" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:AdditionalPaidInCapitalCommonStock" scale="6" unitRef="usd">2.3</ix:nonFraction> million and $<ix:nonFraction contextRef="c5" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:RestructuringReserve" scale="6" unitRef="usd">2.3</ix:nonFraction> million, respectively. During the fiscal years ended December 31, 2020, Lichen Zixun made dividend payments of RMB<ix:nonFraction contextRef="c27" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:DividendPaymentsRestrictionsScheduleStatutoryCapitalAndSurplus1" scale="6" unitRef="cny">30</ix:nonFraction>
million (approximately $<ix:nonFraction contextRef="c27" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:DividendPaymentsRestrictionsScheduleStatutoryCapitalAndSurplus1" scale="6" unitRef="usd">4.3</ix:nonFraction> million) to the then eventual shareholders of Lichen Zixun, who are PRC individuals.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:ConcentrationRiskDisclosureTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>16.</b></span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risks
and Concentration</b></span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_2" id="_ConcentrationRiskDisclosureTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
rate risk</span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation><div>


</div><div>

</div><ix:continuation continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_3" id="_ConcentrationRiskDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Interest rate risk is
the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Company&#8217;s interest rate risk arises primarily from short-term borrowings. Borrowings issued at variable rates and fixed rates
expose the Company to cash flow interest rate risk and fair value interest rate risk respectively.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_4" id="_ConcentrationRiskDisclosureTextBlock-c0_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">b)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Concentration
of credit risk</span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>


</div><div>

</div><ix:continuation continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_5" id="_ConcentrationRiskDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">Financial instruments
that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of December 31, 2022 and
2021, approximately $<ix:nonFraction contextRef="c4" decimals="-4" format="ixt:num-dot-decimal" name="us-gaap:DepositAssets" scale="6" unitRef="usd">22.60</ix:nonFraction> million and $<ix:nonFraction contextRef="c5" decimals="-4" format="ixt:num-dot-decimal" name="us-gaap:DepositAssets" scale="6" unitRef="usd">16.84</ix:nonFraction> million were deposited with financial institutions located in the PRC, respectively. These
balances are not covered by insurance. While management believes that these financial institutions are of high credit quality, it also
continually monitors their credit worthiness.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_6" id="_ConcentrationRiskDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company is also exposed
to risk from its accounts receivable and other receivables. These assets are subjected to credit evaluations. An allowance has been made
for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_7" id="_ConcentrationRiskDisclosureTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">A majority of the Company&#8217;s
expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries&#8217; assets and liabilities
are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required
by law to be transacted only by authorized financial institutions at exchange rates set by the PBOC. Remittances in currencies other than
RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain
supporting documentation in order to affect the remittance.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_8" id="_ConcentrationRiskDisclosureTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">The Company&#8217;s functional
currency is RMB, and its consolidated financial statements are presented in U.S. dollars. The RMB depreciated by <ix:nonFraction contextRef="c139" decimals="4" format="ixt:num-dot-decimal" name="licn:ConcentrationOfCreditRiskPercentage" scale="-2" unitRef="pure"><ix:nonFraction contextRef="c0" decimals="4" format="ixt:num-dot-decimal" name="licn:ConcentrationOfCreditRiskPercentage" scale="-2" unitRef="pure">9.24</ix:nonFraction></ix:nonFraction>% in fiscal year
2022 from December 31, 2021 to December 31, 2022 and appreciated by <ix:nonFraction contextRef="c9" decimals="4" format="ixt:num-dot-decimal" name="licn:ConcentrationOfCreditRiskPercentage" scale="-2" unitRef="pure"><ix:nonFraction contextRef="c8" decimals="4" format="ixt:num-dot-decimal" name="licn:ConcentrationOfCreditRiskPercentage" scale="-2" unitRef="pure">2.29</ix:nonFraction></ix:nonFraction>% in fiscal year 2021 from December 31, 2020 to December 31, 2021.
It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S.
dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect its financial results reported in the
U.S. dollar terms without giving effect to any underlying changes in its business or results of operations. Currently, the Company&#8217;s
assets, liabilities, revenues and costs are denominated in RMB.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_9" id="_ConcentrationRiskDisclosureTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">To the extent that the
Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation
of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if
the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments
or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to
the Company.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white"></p><div>

</div><!-- Field: Page; Sequence: 136; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->26<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 7.1pt; background-color: white">&#160;</p><div>

</div><ix:continuation continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_10" id="_ConcentrationRiskDisclosureTextBlock-c0_cont_9"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">c)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Concentration
of customers and suppliers</span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>


</div><div>

</div><ix:continuation continuedAt="_ConcentrationRiskDisclosureTextBlock-c0_cont_11" id="_ConcentrationRiskDisclosureTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">All revenue was derived
from customers located in PRC. There are no customers from whom revenues individually represent greater than <ix:nonFraction contextRef="c140" decimals="2" format="ixt:num-dot-decimal" name="licn:ConcentrationOfCreditRiskPercentage" scale="-2" unitRef="pure">10</ix:nonFraction>% of the total revenues
of the Company in any of the periods presented.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p></ix:continuation><div>

</div><div>

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<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><b><i>(a)</i></b></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Commitments</i></b></span></td>
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to legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with
certainty, but the Company does not anticipate that the final outcome arising out of any such matter will have a material adverse effect
on our consolidated financial position, cash flows or results of operations on an individual basis or in the aggregate. As of December&#160;31,
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</div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">F-27</p><div>

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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
,
2022
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐
SHELL COMPANY REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to
Commission file number:
001-41493
Lichen China Limited
(Exact name of Registrant as specified in its charter)
Cayman Islands
(Jurisdiction of incorporation or organization)
B2306
,
Block B
Tower 3
,
Jinjiang Wanda Plaza Commercial Complex
888 Century Avenue
Meiling Street
,
Jinjiang
Fujian Province
People's Republic of
China
362000
+86-59585633335
(Address of principal executive offices)
Ya Li
+86
-
59585633335
Ir@lichenzx.com
B2306
,
Block B
Tower 3
,
Jinjiang Wanda Plaza Commercial Complex
888 Century Avenue
Meiling Street
,
Jinjiang
Fujian Province
People's Republic of
China
362000
(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
Class A Ordinary shares, par value $0.00004 per share
LICN
The Nasdaq Stock Market LLC
(Nasdaq Capital Market)
Securities registered or to be registered pursuant
to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act:
None
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:
13,500,000
Class
A Ordinary Shares and
9,000,000
Class B Ordinary Shares issued and outstanding as of December 31, 2022.
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 on its corporate Web site, if any, 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.
☐
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 Securities Exchange Act of 1934).
☐ 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
PART I
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
40
Item
    4A.
Unresolved Staff Comments
66
Item
    5.
Operating and Financial Review and Prospects
66
Item
    6.
Directors, Senior Management and Employees
79
Item
    7.
Major Shareholders and Related Party Transactions
86
Item
    8.
Financial Information
87
Item
    9.
The Offer and Listing
88
Item
    10.
Additional Information
88
Item
    11.
Quantitative and Qualitative Disclosures About Market Risk
98
Item
    12.
Description of Securities Other than Equity Securities
98
PART II
Item
    13.
Defaults, Dividend Arrearages and Delinquencies
99
Item
    14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
99
Item
    15.
Controls and Procedures
99
Item
    16.
[Reserved]
101
Item
    16A.
Audit Committee Financial Expert
101
Item
    16B.
Code of Ethics
101
Item
    16C.
Principal Accountant Fees and Services
101
Item
    16D.
Exemptions from the Listing Standards for Audit Committees
102
Item
    16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
102
Item
    16F.
Change in Registrant's Certifying Accountant
102
Item
    16G.
Corporate Governance
102
Item
    16H.
Mine Safety Disclosure
102
Item
    16I.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
102
Item
    16J.
Insider Trading Policies
102
PART III
Item
    17.
Financial Statements
103
Item
    18.
Financial Statements
103
Item
    19.
Exhibits
103
i
INTRODUCTION
Throughout this report, unless the context indicates
otherwise, references to "Lichen China", "Lichen China Limited", "we," "us," the "Company,"
"our company," or "LICN" refer to Lichen China Limited, a holding company. References to "Subsidiaries"
or "PRC subsidiaries" refer to the Lichen China Limited's subsidiaries established under the laws of the People's
Republic of China. References to "Group" are to Lichen China Limited and its consolidated subsidiaries collectively. Unless
otherwise indicated, in this annual report, references to:
●
"China"
or the "PRC" are to the People's Republic of China;
●
"Class
A Ordinary Shares" are to a class of shares of Lichen China (as defined below) called the "series A ordinary shares"
with par value $0.00004 per share;
●
"Class
B Ordinary Shares" are to a class of shares of Lichen China (as defined below) called the "series B ordinary shares"
with par value $0.00004 per share;
●
"HKD"
are to the official currency of Hong Kong;
●
"Lichen
China" are to Lichen China Limited, a Cayman Islands exempted company;
●
"Legend
Consulting BVI" are to Legend Consulting Investments Limited, a British Virgin Islands exempted company and a wholly-owned subsidiary
of Lichen China;
●
"Legend
Consulting HK" are to Legend Consulting Limited (HK), a Hong Kong company and a wholly-owned subsidiary of Legend Consulting BVI;
●
"Lichen
WFOE" or "Lichen Zixun" are to Fujian Province Lichen Management and Consulting Company Limited, a wholly foreign-owned
company organized under the laws of the PRC and a wholly-owned subsidiary of Legend Consulting HK;
●
"Lichen
Education" are to Xiamen City Legend Education Services Company Limited, a limited liability company organized under the laws of
the PRC and a wholly-owned subsidiary of Lichen WFOE;
●
"Operating Subsidiaries" are
Lichen Zixun and Lichen Education;
●
"RMB" are to Renminbi, or the legal currency of the PRC;
●
"U.S.
dollars," "$," and "USD" are to the legal currency of the United States; and
●
"WFOE"
are to wholly foreign-owned enterprise.
LICN is a holding company with operations conducted
in the PRC through its operating subsidiaries in the PRC, using RMB. The reporting currency is U.S. dollars. Assets and liabilities denominated
in foreign currencies are translated at year-end exchange rates, income statement accounts are translated at average rates of exchange
for the year and equity is translated at historical exchange rates. Any translation gains or losses are recorded in other comprehensive
income (loss). Gains or losses resulting from foreign currency transactions are included in net income. Unless otherwise noted, all translations
from RMB to U.S. dollars and from U.S. dollars to RMB in this annual report were made at a year-end spot rate of RMB6.9646 to US$1.00
or an average rate of RMB6.7261 to US$1.00 for the fiscal year ended December 31, 2022. On December 31, 2021, the year-end spot rate and
average rate for RMB were, respectively, RMB6.3757 to US$1.00 and RMB6.4515 to US$1.00. On December 31, 2020, the year-end spot rate and
average rate for RMB were, respectively, RMB6.5249 to US$1.00 and RMB6.8976 to US$1.00.
We have relied on statistics provided by a variety
of publicly-available sources regarding China's expectations of growth. We did not directly or indirectly sponsor or participate
in the publication of such materials, and these materials are not incorporated in this report other than to the extent specifically cited
in this report. We have commissioned the industry report from Frost & Sullivan Inc. ("Frost & Sullivan"). We have
sought to provide current information in this report and believe that the statistics provided in this report remain up-to-date and reliable,
and these materials are not incorporated in this report other than to the extent specifically cited in this report.
ii
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements
that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking
statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as "approximates,"
"believes," "hopes," "expects," "anticipates," "estimates," "projects,"
"intends," "plans," "will," "would," "should," "could," "may"
or other similar expressions in this annual report. These statements are likely to address our growth strategy, financial results and
product and development programs. You must carefully consider any such statements and should understand that many factors could cause
actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of
other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and
actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking
statements include, but are not limited to:
●
our
goals and strategies;
●
our
future business development, financial condition and results of operations;
●
introduction
of new product and service offerings;
●
expected
changes in our revenues, costs or expenditures;
●
our
expectations regarding the demand for and market acceptance of our products and services;
●
expected
growth of our customers, including consolidated account customers;
●
competition
in our industry;
●
government policies and regulations relating to our industry;
●
the length and severity of the recent
COVID-19
outbreak and its impact on our business and industry
●
any
recurrence of the
COVID-19
pandemic
and scope of related government orders and restrictions and the extent of the impact of the
COVID-19
pandemic
on the global economy;
●
other
factors that may affect our financial condition, liquidity and results of operations; and
●
other
risk factors discussed under "Item 3. Key
Information
— 3.D.
Risk Factors."
We base our forward-looking statements on our
management's beliefs and assumptions based on information available to our management at the time the statements are made. We caution
you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking
statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities
laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this annual
report, whether as a result of new information, future events, changes in assumptions, or otherwise.
iii
PART I
Item 1. Identity of Directors,
Senior Management and Advisers
Not applicable for annual reports on Form 20-F.
Item 2. Offer Statistics
and Expected Timetable
Not applicable for annual reports on Form 20-F.
Item 3. Key Information
OVERVIEW
Corporate Structure
The following diagram illustrates the corporate
structure of Lichen China Limited and its subsidiaries as of the date of this annual report.
Holding Company Structure
Lichen China Limited was incorporated on April
13, 2016 under the laws of the Cayman Islands. As of the date of this annual report, the authorized share capital of the Company is US$50,000
divided into 1,000,000,000 Class A Ordinary Shares and 250,000,000 Class B Ordinary Shares, of which 17,500,000 Class A Ordinary Shares
and 9,000,000 Class B Ordinary Shares are issued and outstanding. The Company is a holding company and is currently not actively engaging
in any business. Lichen China Limited controls and receives the economic benefits of its PRC subsidiaries' business operation, if
any, through equity ownership.
Legend Consulting BVI was incorporated on December
20, 2013 under the laws of the British Virgin Islands with limited liability. Legend Consulting BVI is a wholly owned subsidiary of the
Company. Legend Consulting BVI is a holding company and is currently not actively engaging in any business.
1
Legend Consulting HK was formed on January 8,
2014 under the laws of Hong Kong. Legend Consulting HK is a wholly owned subsidiary of Legend Consulting BVI. It is a holding company
and is not actively engaging in any business.
Lichen Zixun was established on April 14, 2004
under the laws of the PRC. Lichen Zixun is a wholly owned subsidiary of Legend Consulting HK and is our main operating entity.
Lichen Education was established on July 30, 2014
under the laws of PRC. Lichen Education is a wholly owned subsidiary of Lichen Zixun and is our operating entity.
As a result of our corporate structure, LICN's
ability to pay dividends may depend upon dividends paid by our Operating Subsidiaries. If our existing Operating 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.
Transfers of Cash between Our Company and Our
Subsidiaries
We currently have not
maintained any cash management policies that dictate the purpose, amount and procedure of cash transfers between the Company, our subsidiaries,
or investors. Rather, the funds can be transferred in accordance with the applicable PRC laws and regulations. To the extent cash or assets
in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or
for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us or our subsidiaries by the PRC government to transfer cash or assets.
Under existing PRC foreign
exchange regulations, payment of current account items, such as profit distributions and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange, or the SAFE, by complying
with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior
approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures
under PRC foreign exchange regulations, such as the overseas investment registrations by our shareholders or the ultimate shareholders
of our corporate shareholders who are PRC residents. Approval from, or registration with, appropriate government authorities is, however,
required where the RMB 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. The PRC government may also at its discretion restrict access in the future to foreign currencies
for current account transactions. Current PRC regulations permit our PRC subsidiaries to pay dividends to the Company only out of their
accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. As of the date of this report,
there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong
(including funds from Hong Kong to the PRC), except for transfer of funds involving money laundering and criminal activities. Cayman Islands
law prescribes that a company may only pay dividends out of its profits. Other than that, there is no restrictions on Lichen China Limited's
ability to transfer cash to investors. See "Risk Factors - Risks Related to Doing Business in China - To the extent cash or assets
in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or
for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us or our subsidiaries by the PRC government to transfer cash or assets," "Risk Factors - Risks Related to Doing Business
in China - We 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 adverse effect on
our ability to conduct our business," and "Risk Factors - Risks Related to Doing Business in China - Our PRC subsidiaries
are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability
to conduct our business."
As a holding company,
we may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for our cash and
financing requirements. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt
may restrict their ability to pay dividends to us. Lichen China Limited is permitted under the laws of the Cayman Islands to provide funding
to our subsidiaries incorporated in the British Virgin Islands and Hong Kong through loans or capital contributions without restrictions
on the amount of the funds. Our subsidiaries are permitted under the respective laws of the British Virgin Islands and Hong Kong to provide
funding to Lichen China Limited through dividend distribution without restrictions on the amount of the funds. There are no restrictions
on dividends transfers from HK to BVI and BVI to the Cayman Islands. Current PRC regulations permit our WFOE to pay dividends to
the Company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
2
The PRC has currency
and capital transfer regulations that require us to comply with certain requirements for the movement of capital. The Company is able
to transfer cash (US Dollars) to its PRC subsidiaries through an investment (by increasing the Company's registered capital in a
PRC subsidiary). The Company's subsidiaries within China can transfer funds to each other when necessary through the way of current
lending. The transfer of funds among companies are subject to the Provisions on Private Lending Cases, which was implemented on August
20, 2020 to regulate the financing activities between natural persons, legal persons and unincorporated organizations. As advised by our
PRC counsel, Tianyuan Law Firm, the Provisions on Private Lending Cases does not prohibit using cash generated from one subsidiary to
fund another subsidiary's operations. We have not been notified of any other restriction which could limit our PRC subsidiaries'
ability to transfer cash between PRC subsidiaries. The Company's subsidiaries in the PRC have not transferred any earnings or cash
to the Company to date. As of the date of this report, there has not been any assets or cash transfer between the holding company and
its subsidiaries. As of the date of this report, there has not been any dividends or distributions made to US investors. The Company's
business is primarily conducted through its subsidiaries. The Company is a holding company and its material assets consist solely of the
ownership interests held in its PRC subsidiaries. The Company relies on dividends paid by its subsidiaries for its working capital and
cash needs, including the funds necessary: (i) to pay dividends or cash distributions to its shareholders, (ii) to service any debt obligations
and (iii) to pay operating expenses. As a result of PRC laws and regulations (noted below) that require annual appropriations of 10% of
after-tax income to be set aside in a general reserve fund prior to payment of dividends, the Company's PRC subsidiaries are restricted
in that respect, as well as in other respects noted below, in their ability to transfer a portion of their net assets to the Company as
a dividend.
With respect to transferring
cash from the Company to its subsidiaries, increasing the Company's registered capital in a PRC subsidiary requires the filing of
the local commerce department, while a shareholder loan requires a filing with the State Administration of Foreign Exchange or its local
bureau. Aside from the declaration to the State Administration of Foreign Exchange, there is no restriction or limitations on such cash
transfer or earnings distribution.
With respect to the payment
of dividends, we note the following:
1.
PRC
regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with accounting standards
and PRC regulations (an in-depth description of the PRC regulations is set forth below);
2.
Our
PRC subsidiaries are required to set aside, at a minimum, 10% of their net income after taxes, based on PRC accounting standards, each
year as statutory surplus reserves until the cumulative amount of such reserves reaches 50% of their registered capital;
3.
Such
reserves may not be distributed as cash dividends;
4.
Our
PRC subsidiaries may also allocate a portion of their after-tax profits to fund their staff welfare and bonus funds; except in the event
of a liquidation, these funds may also not be distributed to shareholders; the Company does not participate in a Common Welfare Fund;
and
5.
The
incurrence of debt, specifically the instruments governing such debt, may restrict a subsidiary's ability to pay shareholder dividends
or make other cash distributions.
If, for the reasons
noted above, our subsidiaries are unable to pay shareholder dividends and/or make other cash payments to the Company when needed, the
Company's ability to conduct operations, make investments, engage in acquisitions, or undertake other activities requiring working
capital may be materially and adversely affected. However, our operations and business, including investment and/or acquisitions by our
subsidiaries within China, will not be affected as long as the capital is not transferred in or out of the PRC.
3
During the fiscal years
ended December 31, 2020, Lichen Zixun made dividend payments of RMB30 million (approximately $4.3 million) to the then eventual shareholders
of Lichen Zixun, who are PRC individuals. The Company made no such dividend, distribution or transfer during the fiscal year ended December
31, 2022 and 2021. As of the date of this report, the Company or its subsidiaries have made no other transfers, dividends, or distributions
to investors and no investors have made transfers, dividends, or distributions to the Company or its subsidiaries.
On February 10, 2023,
Lichen China Limited made payments of $6 million to its subsidiary Legend Consulting BVI for investment. As of the date of this report,
no other dividends, distributions or transfers has been made between Lichen China Limited and any of its subsidiaries. For the foreseeable
future, the Company intends to use the earnings for research and development, to develop new products and to expand its production capacity.
As a result, we do not expect to pay any cash dividends in the foreseeable future. Also, as of the date of this report, no cash generated
from one subsidiary is used to fund another subsidiary's operations and we do not anticipate any difficulties or limitations on
our ability to transfer cash between subsidiaries.
See "Item 8. Financial Information –
A. Consolidated Statements and Other Financial Information – Dividend Policy" and "
Item
3. Key
Information — 3.D. Risk Factors — Risks Relating to our Corporate Structure –
We rely on dividends
and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any
limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to
conduct our business
".
Implication of the Holding Foreign Companies
Accountable Act (the "HFCAA")
U.S. laws and regulations, including the Holding
Foreign Companies Accountable Act, or HFCAA, may restrict or eliminate our ability to complete a business combination with certain companies,
particularly those acquisition candidates with substantial operations in China.
On March 24, 2021, the SEC adopted interim final
rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. An identified issuer will be required
to comply with these rules if the SEC identifies it as having a "non-inspection" year under a process to be subsequently established
by the SEC. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022,
legislation entitled "Consolidated Appropriations Act, 2023" (the "Consolidated Appropriations Act") was signed
into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies
Accountable Act and amended the HFCAA 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, thus reducing the time period for triggering
the prohibition on trading. If our auditor cannot be inspected by the Public Company Accounting Oversight Board, or the PCAOB, for two
consecutive years, the trading of our securities on any U.S. national securities exchanges, as well as any over-the-counter trading in
the U.S., will be prohibited. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework
for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely
registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA.
The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public
accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position
taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable
to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because
of positions taken by PRC authorities in those jurisdictions, which determinations were vacated on December 15, 2022.
On August 26, 2022, the PCAOB announced
that it had signed a Statement of Protocol (the "SOP") with the China Securities Regulatory Commission and the Ministry of
Finance of China. The SOP, together with two protocol agreements governing inspections and investigations (together, the "SOP
Agreement"), establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of
audit firms based in mainland China and Hong Kong, as required under U.S. law.
4
On December 15, 2022, the PCAOB announced that
it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China
and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate
completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue
to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong
Kong is subject to uncertainties and depends on a number of factors out of our and our auditor's control. The PCAOB continues to
demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023
and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated
that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.
As of the date of the annual report, TPS Thayer,
our auditor for the fiscal year ended December 31, 2022 and 2021, headquartered in Sugar Land, Texas, is subject to laws in the United
States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. TPS
Thayer's registration with the PCAOB took effect in September 2020 and it is currently subject to PCAOB inspections. As of the date
of the annual report, B&V, our auditor for the fiscal year ended December 31, 2020, withdrew its registration from the PCAOB in January
2022.
However, we cannot assure you whether Nasdaq or
regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's
audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or
experience as it relates to the audit of our financial statements. In the event it is later determined that the PCAOB is unable to inspect
or investigate completely the Company's auditor because of a position taken by an authority in a foreign jurisdiction, then such
lack of inspection could cause trading in the Company's securities to be prohibited under the HFCAA and AHFCAA, and ultimately results
in a determination by a securities exchange to delist the Company's securities. The delisting of our Class A Ordinary Shares, or
the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless. In
addition, under the AHFCAA, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is
not inspected by the PCAOB for two consecutive years instead of three, and this ultimately could result in our Class A Ordinary Shares
being delisted by and exchange. See "
Item 3. Key
Information — 3.D. Risk
Factors — Risks Related to Doing Business in China
–
The recent joint statement by the SEC and PCAOB, proposed rule
changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to
be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not
inspected by the PCAOB. These developments could add uncertainties to our offering" on page 24 and "Trading in our securities
may be prohibited under the HFCAA and as a result an exchange may determine to delist our securities if it is later determined that the
PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction"
on page 25. We cannot assure you whether Nasdaq or other regulatory authorities will apply additional or more stringent criteria to us.
Such uncertainty could cause the market price of our Class A Ordinary Shares to be materially and adversely affected.
Recent Regulatory Development in the PRC
The Regulations on Mergers
and Acquisitions of Domestic Companies by Foreign Investors (the "M&A Rules"), adopted by six PRC regulatory agencies
in 2006 and amended in 2009, include, among other things, provisions that purport to require that an offshore special purpose vehicle,
formed for the purpose of an overseas listing of securities through acquisitions of domestic enterprises in China or assets and controlled
by enterprises or individuals in China, 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. On September 21, 2006, pursuant to the M&A Rules and other PRC laws, the CSRC
published on its official website relevant guidance regarding its approval of the listing and trading of special purpose vehicles'
securities on overseas stock exchanges, including a list of application materials. However, substantial uncertainty remains regarding
the scope and applicability of the M&A Rules to offshore special purpose vehicles.
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. These opinions and any related implementation rules to
be enacted may subject us to additional compliance requirement in the future. As of the date hereof, no official guidance or related implementation
rules have been issued.
5
Pursuant
to Cybersecurity Review Measures which were issued on December 28, 2021 and became effective on February 15, 2022, network platform
operators holding over one million users' personal information must apply with the Cybersecurity Review Office for a cybersecurity
review before any public offering at a foreign stock exchange. However, given the Cybersecurity Review Measures were relatively new, there
are substantial uncertainties as to the interpretation, application and enforcement of the Cybersecurity Review Measures. It remains uncertain
whether we should apply for cybersecurity review prior to any offshore offering and that we would be able to complete the applicable cybersecurity
review procedures in a timely manner, or at all, if we are required to do so. In addition, on November 14, 2021, the Cyberspace Administration
of China (the "CAC") published the Administration Regulations on Network Data Security (Draft for Comments), or the Draft
Measures for Network Data Security, which provides that data processors conducting the following activities shall apply for cybersecurity
review: (i) merger, reorganization or separation 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) overseas listing
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. The CAC solicited comments
on this draft, but there is no timetable as to when it will be enacted.
On
February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies
(the "Overseas Listing Trial Measures") and five relevant guidelines, which became effective on March 31, 2023.
According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either
in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (1) such securities
offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (2) the intended
securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council
in accordance with law; (3) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s)
and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining
the order of the socialist market economy during the latest three years; (4) the domestic company intending to make the securities offering
and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion
has yet been made thereof; or (5) there are material ownership disputes over equity held by the domestic company's controlling shareholder(s)
or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.
The Overseas Listing
Trial Measures also provides that if the issuer meets both the following criteria, the overseas securities offering and listing conducted
by such issuer will be deemed as indirect overseas offering by PRC domestic companies: (1) 50% or more of any of the issuer's operating
revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal
year is accounted for by domestic companies; and (2) the issuer's main business activities are conducted in China, or its main place(s)
of business are located in China, or the majority of senior management staff in charge of its business operations and management are PRC
citizens or have their usual place(s) of residence located in China. Where an issuer submits an application for initial public offering
to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted.
In addition, the Overseas Listing Trial Measures provide that the direct or indirect overseas listings of the assets of domestic companies
through one or more acquisitions, share swaps, transfers or other transaction arrangements shall be subject to filing procedures in accordance
with the Overseas Listing Trial Measures. The Overseas Listing Trial Measures also requires subsequent reports to be filed with the CSRC
on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings
and listings.
At a press conference
held for these new regulations ("Press Conference"), officials from the CSRC clarified that the domestic companies that have
already been listed overseas on or before March 31, 2023 shall be deemed as existing issuers (the "Existing Issuers"). Existing
Issuers are not required to complete the filling procedures immediately, and they shall be required to file with the CSRC upon occurrences
of certain subsequent matters such as follow-on offerings of securities. According to the Overseas Listing Trial Measures and the Press
Conference, the existing domestic companies that have completed overseas offering and listing before March 31, 2023, such as us, shall
not be required to perform filing procedures for the completed overseas securities issuance and listing. However, from the effective date
of the regulation, any of our subsequent securities offering in the same overseas market or subsequent securities offering and listing
in other overseas markets shall be subject to the filing requirement with the CSRC within three working days after the offering is completed
or after the relevant application is submitted to the relevant overseas authorities, respectively. If it is determined that any approval,
filing or other administrative procedures from other PRC governmental authorities is required for any future offering or listing, we cannot
assure you that we can obtain the required approval or accomplish the required filings or other regulatory procedures in a timely manner,
or at all. If we fail to fulfill filing procedure as stipulated by the Trial Measures or offer and list securities in an overseas market
in violation of the Trial Measures, the CSRC may order rectification, issue warnings to us, and impose a fine of between RMB1,000,000
and RMB10,000,000. Persons-in-charge and other persons that are directly liable for such failure shall be warned and each imposed a fine
from RMB500,000 to RMB5,000,000. Controlling shareholders and actual controlling persons of us that organize or instruct such violations
shall be imposed a fine from RMB1,000,000 and RMB10,000,000.
6
On February 24,
2023, the CSRC published the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities
Offering and Listing by Domestic Enterprises (the "Provisions on Confidentiality and Archives Administration"), which came
into effect on March 31, 2023. The Provisions on Confidentiality and Archives Administration requires that, in the process of overseas
issuance and listing of securities by domestic entities, the domestic entities, and securities companies and securities service institutions
that provide relevant securities service shall strictly implement the provisions of relevant laws and regulations and the requirements
of these provisions, establish and improve rules on confidentiality and archives administration. Where the domestic entities provide
with or publicly disclose documents, materials or other items related to the state secrets and government work secrets to the relevant
securities companies, securities service institutions, overseas regulatory authorities, or other entities or individuals, the companies
shall apply for approval of competent departments with the authority of examination and approval in accordance with law and report the
matter to the secrecy administrative departments at the same level for record filing. Where there is unclear or controversial whether
or not the concerned materials are related to state secrets, the materials shall be reported to the relevant secrecy administrative departments
for determination. However, there remain uncertainties regarding the further interpretation and implementation of the Provisions on Confidentiality
and Archives Administration.
As of the date of this annual report,
we
and our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the
business operations of our PRC subsidiaries. In addition,
as of the date of this annual report,
we
and our PRC subsidiaries are not required to obtain approval or permission from the CSRC or the CAC or any other entity that is required
to approve our PRC subsidiaries' operations or required for us to offer securities to foreign investors under any currently effective
PRC laws, regulations, and regulatory rules.
If it is determined that we are subject to filing requirements imposed by the CSRC
under the Overseas Listing Regulations or approvals from other PRC regulatory authorities or other procedures, including the cybersecurity
review under the revised
Cybersecurity Review Measures
, for our future offshore offerings,
it would be uncertain whether we can or how long it will take us to complete such procedures or obtain such approval and any such approval
could be rescinded. Any failure to obtain or delay in completing such procedures or obtaining such approval for our offshore offerings,
or a rescission of any such approval if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities
for failure to file with the CSRC or failure to seek approval from other government authorization for our offshore 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 our offshore 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 Class A Ordinary Shares. The CSRC or other PRC regulatory authorities also may take actions requiring us, or
making it advisable for us, to halt our offshore offerings before settlement and delivery of the securities 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 their approvals or accomplish the required filing or other regulatory procedures for our prior offshore 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 Class A Ordinary Shares.
If the CSRC, CAC or other regulatory agencies
later promulgate new rules or explanations requiring that we obtain their approvals for this offering and any follow-on offering, we may
be unable to obtain such approvals and we may face sanctions by the CSRC, CAC or other PRC regulatory agencies for failure to seek their
approval which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors and
the securities currently being offered may substantially decline in value and be worthless. For more details, see "
Item
3. Key
Information — 3.D. Risk Factors – Risks Related to Doing Business in China."
3.A. [Reserved]
3.B. Capitalization and Indebtedness
Not applicable for annual reports on Form 20-F.
3.C. Reasons for the Offer and Use of Proceeds
Not applicable for annual reports on Form 20-F.
7
3.D. Risk Factors
Risk Factor Summary
You should carefully
consider all of the information in this annual report before making an investment in our Class A Ordinary Shares. Below please find a
summary of the principal risks and uncertainties we face, organized under relevant headings. In particular, as we are a PRC-based company
incorporated in the Cayman Islands, you should pay special attention to subsections headed "Item 3. Key Information—3.D. Risk
Factors—Risks Related to Our Corporate Structure." and "Item 3. Key Information—3.D. Risk Factors—Risks
Related to Doing Business in China."
Our business is subject
to a number of risks, 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 Relating to Our Corporate Structure
●
We
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 adverse effect on our ability
to conduct our business. See "
Risk Factors – Risks Relating to our Corporate Structure – We 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 adverse effect on our ability to conduct our business
"
on page 12.
Risks Relating to Doing Business in China
●
Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and results of operations. See "
Risk Factors – Risks Relating to Doing Business in China – Changes in China's economic, political or social conditions or government policies could have a material adverse effect on our business and results of operations
" on page 13.
●
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 the initial public offering to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 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 the initial public offering to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business
" on page 14.
●
Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in laws and regulations in China with little advance notice could adversely affect us and limit the legal protections available to you and us. See "
Risk Factors – Risks Relating to Doing Business in China – Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in laws and regulations in China with little advance notice could adversely affect us and limit the legal protections available to you and us
" on page 13.
●
Chinese regulatory authorities could change the rules and regulations regarding foreign ownership in the industry in which the company operates, which would likely result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that it could cause the value of such securities to significantly decline or become worthless.  See "
Risk Factors – Risks Relating to Doing Business in China – The filing, approval or other administration requirements of the CSRC or other PRC government authorities may be required in connection with our future offshore offering under PRC law, and, if required, we cannot predict whether or for how long we will be able to complete the filing procedure with the CSRC and obtain such approval or complete such filing, as applicable
" on page 15.
8
●
We are not currently required to obtain any approval from the CAC. However,
it is unclear whether we will be subject to the oversight of the CAC and how such oversight may impact us. Our business could be interrupted
or we could be subject to liabilities which may materially and adversely affect the results of our operation and the value of your investment.
See "
Risk Factors – Risks Relating to Doing Business in China – We are not currently required to obtain any approval
from the CAC. However, it is unclear whether we will be subject to the oversight of the CAC and how such oversight may impact us. Our
business could be interrupted or we could be subject to liabilities which may materially and adversely affect the results of our operation
and the value of your investment
" on page 26.
●
Uncertainties exist with respect to the interpretation and implementation of the enacted Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations. See "
Risk Factors – Risks Relating to Doing Business in China – Uncertainties exist with respect to the interpretation and implementation of the enacted Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations
" on page 18.
●
We 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 adverse effect on our ability to conduct our business. See "
Risk Factors – Risks Relating to Doing Business in China – We 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 adverse effect on our ability to conduct our business
" on page 12.
●
To the extent cash or assets in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC government to transfer cash or assets. See "
Risk Factors – Risks Relating to Doing Business in China – To the extent cash or assets in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our subsidiaries by the PRC government to transfer cash or assets
" on page 18.
●
Fluctuations in exchange rates could have a material adverse effect on our results of operations and the price of our Class A Ordinary Shares. See "
Risk Factors – Risks Relating to Doing Business in China – Fluctuations in exchange rates could have a material adverse effect on our results of operations and the price of our Class A Ordinary Shares
" on page 19.
●
Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment. See "
Risk Factors – Risks Relating to Doing Business in China – Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment
" on page 20.
●
We must remit the offering proceeds to PRC before they may be used to benefit our business in the PRC, and this process may take a number of months. See "
Risk Factors – Risks Relating to Doing Business in China – We must remit the offering proceeds to PRC before they may be used to benefit our business in the PRC, and this process may take a number of months
" on page 20.
9
●
Our Class A Ordinary Shares may be delisted under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our Class A Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years. On December 16, 2021, the PCAOB issued its determination that the PCAOB is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, which determinations were vacated on December 15, 2022. Our auditors, B&V for the fiscal year ended December 31, 2020 and TPS Thayer for the fiscal year ended December 31, 2021, are both based in the U.S. B&V withdrew its registration from the PCAOB in January 2022. TPS Thayer are registered with PCAOB and subject to PCAOB inspections. However, in the event it is later determined that the PCAOB is unable to inspect or investigate completely the Company's auditor because of a position taken by an authority in a foreign jurisdiction, then such lack of inspection could cause our securities to be delisted from the stock exchange. See "
Risk Factors — Risks Related to Doing Business in China — The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering
" on page 24.
Risks Relating to our Class A Ordinary Shares
●
We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A Ordinary Shares less attractive to investors. See "
Risk Factors – Risks Relating to Our Class A Ordinary Shares – We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A Ordinary Shares less attractive to investors
" on page 28.
●
Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer. See "
Risk Factors – Risks Relating to Our Class A Ordinary Shares – Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer
" on page 28.
●
The market price of our Class A Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the public offering price. See "
Risk Factors – Risks Relating to Our Class A Ordinary Shares – The market price of our Class A Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the public offering price
" on page 30.
●
The trading of our Class A Ordinary Shares could experience extreme stock price run-ups followed by rapid price declines and strong stock price volatility as experienced in recent initial public offerings. See "
Risk Factors – Risks Relating to Our Class A Ordinary Shares – The price of our Class A Ordinary Shares could be subject to rapid and substantial volatility."
on page 31.
●
There can be no assurance that we will not
    be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could
    subject United States investors in our Class A Ordinary Shares to significant adverse United States income tax consequences. See
    "
Risk Factors – Risks Relating to Our Class A Ordinary Shares – There can be no assurance that we will not be a
    passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject
    United States investors in our Class A Ordinary Shares to significant adverse United States income tax consequences."
on
    page 32.
10
Risks Relating to Our Business
●
Our business, financial condition and results of operations may be affected due to the COVID-19 pandemic and other diseases or epidemic. See "
Risk Factors – Risks Relating to Our Business and Operations – Our business, financial condition and results of operations may be affected due to the COVID-19 pandemic and other diseases or epidemic
" on page 33.
●
We may incur impairment losses for intangible assets, which may adversely affect our results of operations. See "
Risk Factors – Risks Relating to Our Business and Operations – We may incur impairment losses for intangible assets, which may adversely affect our results of operations
" on page 34.
●
Our results of operations
    may be adversely affected by credit risk associated with our financial assets through profit and loss. See
"Risk Factors
    – Risks Relating to Our Business and Operations – Our results of operations may be adversely affected by credit risk
    associated with our financial assets through profit and loss
" on page 34.
●
Our business depends on the market recognition of our "Lichen" brand name. See "
Risk Factors – Risks Relating to Our Business and Operations – Our business depends on the market recognition of our "Lichen" brand name
" on page 34.
●
Our revenue was mainly derived from financial and taxation solution services projects, which are not recurring in nature and there is no assurance that our customers will provide us with new business. See "
Risk Factors – Risks Relating to Our Business and Operations – Our revenue was mainly derived from financial and taxation solution services projects, which are not recurring in nature and there is no assurance that our customers will provide us with new business
" on page 34.
●
Failure to maintain our relationship with our external experts could materially and adversely affect our business, financial condition and results of operations. See "
Risk Factors – Risks Relating to Our Business and Operations – Failure to maintain our relationship with our external experts could materially and adversely affect our business, financial condition and results of operations
" on page 35.
●
Our financial and taxation solution services may attract liability. See "
Risk Factors – Risks Relating to Our Business and Operations – Our financial and taxation solution services may attract liability
" on page 37.
●
We may not be able to successfully implement our strategies, or achieve our business objectives and our business, operating results and financial position may be materially and adversely affected. See "
Risk Factors – Risks Relating to Our Business and Operations – We may not be able to successfully implement our strategies, or achieve our business objectives and our business, operating results and financial position may be materially and adversely affected
" on page 37.
●
We have limited insurance coverage to protect us against all risks associated with our business operations. See "
Risk Factors – Risks Relating to Our Business and Operations – We have limited insurance coverage to protect us against all risks associated with our business operations
" on page 38.
●
Protection of intellectual property rights may not prevent third parties and/or our competitors' infringement on our teaching and learning materials or self-developed software, which could weaken our competitive position and harm our business and results of operations. See "
Risk Factors – Risks Relating to Our Business and Operations – Protection of intellectual property rights may not prevent third parties and/or our competitors' infringement on our teaching and learning materials or self-developed software, which could weaken our competitive position and harm our business and results of operations
" on page 38.
11
Risks Relating to Our Industry
●
The financial and taxation solution service, education support service and software and maintenance service industries rely on manpower and the increase in our staff costs may materially and adversely affect our operations, profitability and financial condition. See "
Risk Factors – Risks Relating to Our Industry – The financial and taxation solution service, education support service and software and maintenance service industries rely on manpower and the increase in our staff costs may materially and adversely affect our operations, profitability and financial condition
" on page 39.
●
Our customer base is primarily concentrated on business enterprises and Partnered Institutions in the PRC. Any slowdown of the enterprises' growth and development in the PRC or demands for financial and taxation solution services, education support services or software and maintenance services could have a material adverse effect on our business, financial condition and results of operations. See "
Risk Factors – Risks Relating to Our Industry – Our customer base is primarily concentrated on business enterprises and Partnered Institutions in the PRC. Any slowdown of the enterprises' growth and development in the PRC or demands for financial and taxation solution services, education support services or software and maintenance services could have a material adverse effect on our business, financial condition and results of operations
" on page 39.
●
We face significant competition in various geographical locations where we offer our financial and taxation solution services, and if we fail to compete effectively, we may lose market share and our profitability could be adversely affected. See "
Risk Factors – Risks Relating to Our Industry – We face significant competition in various geographical locations where we offer our financial and taxation solution services, and if we fail to compete effectively, we may lose market share and our profitability could be adversely affected
" on page 39.
Risks Relating to
our Corporate Structure
We 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 adverse effect on our ability to conduct our business
We are a holding company,
and we rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including
the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If our PRC subsidiaries
incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other
distributions to us. In addition, the PRC tax authorities may require our PRC subsidiaries to adjust its taxable income, in a manner that
would materially and adversely affect their ability to pay dividends and other distributions to us.
Under PRC laws and regulations,
our PRC subsidiaries, as wholly foreign-owned enterprises in China, may pay dividends only out of their respective accumulated after-tax
profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required
to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate
amount of such funds reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion
of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and
bonus funds are not distributable as cash dividends.
In response to the persistent
capital outflow and the Renminbi's depreciation against the U.S. dollar in the fourth quarter of 2016, the People's Bank of
China ("PBOC") and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures,
including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments
and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries' dividends
and other distributions may be subjected to tighter scrutiny in the future. Any limitation on the ability of our PRC subsidiaries to pay
dividends or make other distributions 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.
12
Risks Relating to Doing Business in China
Changes in China's economic, political
or social conditions or government policies could have a material adverse effect on our business and results of operations
Substantially all of our operations
are located in China. Accordingly, our business, prospects, financial condition and results of operations may be influenced to a significant
degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole. The Chinese
economy differs from the economies of most developed countries in many respects, including 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, and has reduced state ownership of productive assets, 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.
While the Chinese economy
has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the
economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of 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. In addition,
in the past, the Chinese government has implemented certain measures, including interest rate increases, to control the pace of economic
growth. These measures may cause decreased economic activity in China, and since 2012, China's economic growth has slowed down.
Any prolonged slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect
our business and results of operations.
Uncertainties with respect to the PRC legal
system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in laws and regulations in China with
little advance notice could adversely affect us and limit the legal protections available to you and us
There are substantial uncertainties
regarding the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing
our business and the enforcement and performance of our arrangements with customers in certain circumstances. The laws and regulations
are sometimes vague and may be subject to future changes, and their official interpretation and enforcement could be unpredictable, with
little advance notice. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws
and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or
interpreted in a manner different from our current understanding of these laws and regulations. New laws and regulations that affect existing
and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new
PRC laws or regulations may have on our business.
The PRC legal system is a
civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited
for reference but have limited precedential value. In addition, any new or changes in PRC laws and regulations related to foreign investment
in China could affect the business environment and our ability to operate our business in China.
13
From time to time, we may
have to resort to administrative and court proceedings to enforce our legal rights. Any administrative and court proceedings in China
may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court
authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be more difficult
to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal
systems. These uncertainties may impede our ability to enforce the contracts we have entered into and could materially and adversely affect
our business and results of operations.
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 may
have 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 unpredictability towards our contractual, property and procedural rights could adversely affect our business and impede
our ability to continue our operations.
The financial and taxation
solution services industry in China is subject to extensive regulation. Related laws and regulations are relatively new and evolving.
The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating
to the financial and taxation solution services industry have created substantial uncertainties regarding the legality of existing and
future foreign investments in, and the businesses and activities of, financial and taxation solution services businesses in China, including
our business. We cannot assure you that we will be able to maintain our existing licenses or obtain new ones. If our operations do not
comply with these new regulations at the time they become effective, or if we fail to obtain any licenses required under these new laws
and regulations, we could be subject to penalties.
The
PRC government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations
as the government deems appropriate to further regulatory, political and societal goals. The PRC government has recently published new
policies that significantly affected certain industries, such as the education and internet industries, and 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 and results of operations. Furthermore, the PRC government has recently indicated 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. Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer
or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become
worthless.
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 the initial public offering to make loans or additional capital contributions to our PRC subsidiary, 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 decide to finance our PRC subsidiaries by means of loans
or capital contributions.
Any loans to Lichen WFOE,
which is treated as a Foreign Investment Enterprise, or FIE, under PRC law, is subject to PRC regulations and foreign exchange loan registrations.
For example, loans by us to Lichen WFOE to finance its activities cannot exceed statutory limits and must be registered with the local
counterpart of the SAFE, or filed with SAFE in its information system. According to the Notice of the People's Bank of China ("PBOC")
and the State Administration of Foreign Exchange on Adjustments to Comprehensive Macro-prudential Regulation Parameters for Cross-border
Financing issued by the People's Bank of China and the State Administration of Foreign Exchange in January 2021, the limit for the
total amount of foreign debt is 2 times of their respective net assets. Moreover, any medium or long-term loan to be provided by us to
our PRC subsidiaries must also be filed and registered with the National Development and Reform Commission, or the NDRC. We may also decide
to finance our PRC subsidiaries by means of capital contributions. These capital contributions must be reported to the Ministry of Commerce,
or MOFCOM, or its local counterpart.
We believe the offering proceeds
would be available for investments in our PRC operation after completing the registration. For example, if we decide to make loans to
our PRC subsidiaries, the loan can be in an amount of up to 2 times of the net assets in the consolidated financial statement. However,
we cannot assure you that we will be able to obtain relevant government registrations or approvals on a timely basis, or at all.
14
These capital contributions
must be approved by the Ministry of Commerce ("MOC") or its local counterpart. On March 30, 2015, the State Administration
of Foreign Exchange ("SAFE") promulgated Circular of the State Administration of Foreign Exchange on Reforming the Management
Approach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or Circular 19, which expands a pilot reform
of the administration of the settlement of the foreign exchange capital of foreign-invested enterprises nationwide. Circular 19 came into
force and replaced both previous Circular 142 and Circular 36 on June 1, 2015. On June 9, 2016, SAFE promulgated Circular of the State
Administration of Foreign Exchange on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts,
or Circular 16, to further expand and strengthen such reform. Under Circular 19 and Circular 16, foreign-invested enterprises in the PRC
are allowed to use their foreign exchange funds under capital accounts and RMB funds from exchange settlement for expenditure under current
accounts within their business scope or expenditure under capital accounts permitted by laws and regulations, except that such funds shall
not be used for (i) expenditure beyond the enterprise's business scope or expenditure prohibited by laws and regulations; (ii) investments
in securities or other investments than principal-secured products issued by banks; (iii) granting loans to non-affiliated enterprises,
except where it is expressly permitted in the business license; and (iv) construction or purchase of real estate for purposes other than
self-use (except for real estate enterprises). In addition, SAFE strengthened its oversight of the flow and use of the RMB capital converted
from foreign currency registered capital of a foreign-invested company. The use of such RMB capital may not be altered without SAFE's
approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. Violations
of these circulars could result in severe monetary or other penalties. These circulars may significantly limit our ability to use RMB
converted from the cash provided by our offshore financing activities to fund the establishment of new entities in China by our PRC subsidiaries,
to invest in or acquire any other PRC companies through our PRC subsidiaries.
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 to our PRC subsidiaries or future capital contributions by us to our PRC subsidiaries. If we fail
to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from our initial public
offering 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.
The
filing,
approval or other administration requirements of the CSRC or other PRC government authorities
may be required in connection
with our future offshore offering under PRC law, and,
if required,
we cannot predict whether
or for how long we will be able to complete the filing procedure with the CSRC and obtain such approval or complete such filing, as applicable
The M&A Rules requires
an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies
or individuals to obtain the approval of the China Securities Regulatory Commission ("CSRC") prior to the listing and trading
of such special purpose vehicle's securities on an overseas stock exchange. However, the application of the M&A Rules remains
unclear. While the application of the M&A Rules remains unclear, we believe, based on the advice of our PRC counsel, Tianyuan Law
Firm, that the CSRC approval is not required for the listing and trading of our Class A Ordinary Shares on the Nasdaq Capital Market in
the context of the initial public offering, given that the CSRC currently has not issued any definitive rule or interpretation concerning
whether offerings like ours are subject to this regulation and the acquisitions of the 100% equity interests in Lichen Zixun by Legend
Consulting HK is not subject to the M&A Rules. However, our PRC legal counsel has further advised us that there remains some uncertainty
as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering and its opinions summarized above
are subject to any new laws, regulations and rules or detailed implementations and interpretations in any form relating to the M&A
Rules. If CSRC approval is required in the future, it is uncertain whether it would be possible for us to obtain the approval, and any
failure to obtain or delay in obtaining CSRC approval for the initial public offering would subject us to sanctions imposed by the CSRC
and other PRC regulatory agencies. There remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the
context of an overseas offering and the above summary is subject to any new laws, regulations, and rules or detailed implementations and
interpretations in any form relating to the M&A Rules.
The
Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors (the "M&A Rules"), adopted by six PRC
regulatory agencies in 2006 and amended in 2009, include, among other things, provisions that purport to require that an offshore special
purpose vehicle, formed for the purpose of an overseas listing of securities through acquisitions of domestic enterprises in China or
assets and controlled by enterprises or individuals in China, 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. On September 21, 2006, pursuant to the M&A Rules and
other PRC laws, the CSRC published on its official website relevant guidance regarding its approval of the listing and trading of special
purpose vehicles' securities on overseas stock exchanges, including a list of application materials. However, substantial uncertainty
remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles.
15
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. These opinions and
any related implementation rules to be enacted may subject us to additional compliance requirement in the future.
Pursuant
to Cybersecurity Review Measures which were issued on December 28, 2021 and became effective on February 15, 2022, network platform
operators holding over one million users' personal information must apply with the Cybersecurity Review Office for a cybersecurity
review before any public offering at a foreign stock exchange. However, given the Cybersecurity Review Measures were relatively new, there
are substantial uncertainties as to the interpretation, application and enforcement of the Cybersecurity Review Measures. It remains uncertain
whether we should apply for cybersecurity review prior to any offshore offering and that we would be able to complete the applicable cybersecurity
review procedures in a timely manner, or at all, if we are required to do so. In addition, on November 14, 2021, the Cyberspace Administration
of China (the "CAC") published the Administration Regulations on Network Data Security (Draft for Comments), or the Draft
Measures for Network Data Security, which provides that data processors conducting the following activities shall apply for cybersecurity
review: (i) merger, reorganization or separation 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) overseas listing
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. The CAC solicited comments
on this draft, but there is no timetable as to when it will be enacted.
On
February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies
(the "Overseas Listing Trial Measures") and five relevant guidelines, which became effective on March 31, 2023.
According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either
in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (1) such securities
offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (2) the intended
securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council
in accordance with law; (3) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s)
and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining
the order of the socialist market economy during the latest three years; (4) the domestic company intending to make the securities offering
and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion
has yet been made thereof; or (5) there are material ownership disputes over equity held by the domestic company's controlling shareholder(s)
or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.
The
Overseas Listing Trial Measures also provides that if the issuer meets both the following criteria, the overseas securities offering and
listing conducted by such issuer will be deemed as indirect overseas offering by PRC domestic companies: (1) 50% or more of any of the
issuer's operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements
for the most recent fiscal year is accounted for by domestic companies; and (2) the issuer's main business activities are conducted
in China, or its main place(s) of business are located in China, or the majority of senior management staff in charge of its business
operations and management are PRC citizens or have their usual place(s) of residence located in China. Where an issuer submits an application
for initial public offering to competent overseas regulators, such issuer must file with the CSRC within three business days after such
application is submitted. In addition, the Overseas Listing Trial Measures provide that the direct or indirect overseas listings of the
assets of domestic companies through one or more acquisitions, share swaps, transfers or other transaction arrangements shall be subject
to filing procedures in accordance with the Overseas Listing Trial Measures. The Overseas Listing Trial Measures also requires subsequent
reports to be filed with the CSRC on material events, such as change of control or voluntary or forced delisting of the issuer(s) who
have completed overseas offerings and listings.
16
At
a press conference held for these new regulations ("Press Conference"), officials from the CSRC clarified that the domestic
companies that have already been listed overseas on or before March 31, 2023 shall be deemed as existing issuers (the "Existing
Issuers"). Existing Issuers are not required to complete the filling procedures immediately, and they shall be required to file
with the CSRC upon occurrences of certain subsequent matters such as follow-on offerings of securities. According to the Overseas Listing
Trial Measures and the Press Conference, the existing domestic companies that have completed overseas offering and listing before March
31, 2023, such as us, shall not be required to perform filing procedures for the completed overseas securities issuance and listing. However,
from the effective date of the regulation, any of our subsequent securities offering in the same overseas market or subsequent securities
offering and listing in other overseas markets shall be subject to the filing requirement with the CSRC within three working days after
the offering is completed or after the relevant application is submitted to the relevant overseas authorities, respectively. If it is
determined that any approval, filing or other administrative procedures from other PRC governmental authorities is required for any future
offering or listing, we cannot assure you that we can obtain the required approval or accomplish the required filings or other regulatory
procedures in a timely manner, or at all. If we fail to fulfill filing procedure as stipulated by the Trial Measures or offer and list
securities in an overseas market in violation of the Trial Measures, the CSRC may order rectification, issue warnings to us, and impose
a fine of between RMB1,000,000 and RMB10,000,000. Persons-in-charge and other persons that are directly liable for such failure shall
be warned and each imposed a fine from RMB500,000 to RMB5,000,000. Controlling shareholders and actual controlling persons of us that
organize or instruct such violations shall be imposed a fine from RMB1,000,000 and RMB10,000,000.
On
February 24, 2023, the CSRC published the Provisions on Strengthening the Confidentiality and Archives Administration Related to
the Overseas Securities Offering and Listing by Domestic Enterprises (the "Provisions on Confidentiality and Archives Administration"),
which came into effect on March 31, 2023. The Provisions on Confidentiality and Archives Administration requires that, in the process
of overseas issuance and listing of securities by domestic entities, the domestic entities, and securities companies and securities service
institutions that provide relevant securities service shall strictly implement the provisions of relevant laws and regulations and the
requirements of these provisions, establish and improve rules on confidentiality and archives administration. Where the domestic
entities provide with or publicly disclose documents, materials or other items related to the state secrets and government work secrets
to the relevant securities companies, securities service institutions, overseas regulatory authorities, or other entities or individuals,
the companies shall apply for approval of competent departments with the authority of examination and approval in accordance with law
and report the matter to the secrecy administrative departments at the same level for record filing. Where there is unclear or controversial
whether or not the concerned materials are related to state secrets, the materials shall be reported to the relevant secrecy administrative
departments for determination. However, there remain uncertainties regarding the further interpretation and implementation of the Provisions
on Confidentiality and Archives Administration.
As of the date of this annual
report,
we and our PRC subsidiaries have obtained the requisite licenses and permits from the PRC
government authorities that are material for the business operations of our PRC subsidiaries. In addition,
as of the date of this
annual report,
we and our PRC subsidiaries are not required to obtain approval or permission from
the CSRC or the CAC or any other entity that is required to approve our PRC subsidiaries' operations or required for us to offer
securities to foreign investors under any currently effective PRC laws, regulations, and regulatory rules.
If it is determined
that we are subject to filing requirements imposed by the CSRC under the Overseas Listing Regulations or approvals from other PRC regulatory
authorities or other procedures, including the cybersecurity review under the revised
Cybersecurity
Review Measures
, for our future offshore offerings, it would be uncertain whether we can or how long it will take us to complete
such procedures or obtain such approval and any such approval could be rescinded. Any failure to obtain or delay in completing such procedures
or obtaining such approval for our offshore offerings, or a rescission of any such approval if obtained by us, would subject us to sanctions
by the CSRC or other PRC regulatory authorities for failure to file with the CSRC or failure to seek approval from other government authorization
for our offshore 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 our
offshore 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 Class A Ordinary Shares. The CSRC or other PRC regulatory authorities
also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the
securities 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 their approvals or accomplish the required filing or other regulatory
procedures for our prior offshore 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 Class A Ordinary Shares.
17
Uncertainties exist with respect to the
interpretation and implementation of the enacted Foreign Investment Law and how it may impact the viability of our current corporate structure,
corporate governance and business operations
On March 15, 2019, the PRC
National People's Congress approved the Foreign Investment Law, which came into effect on January 1, 2020 and replaces the trio
of existing laws regulating foreign investment in the PRC, 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 and become the legal foundation for foreign investment in the PRC. Meanwhile, the Implementation Regulation of the
Foreign Investment Law and the Measures for Reporting of Information on Foreign Investment came into effect as of January 1, 2020, which
clarified and elaborated the relevant provisions of the Foreign Investment Law.
The Foreign Investment Law
sets out the basic regulatory framework for foreign investments and proposes to implement a system of pre-entry national treatment with
a negative list for foreign investments, pursuant to which (i) foreign entities and individuals are prohibited from investing in the areas
that are not open to foreign investments, (ii) foreign investments in the restricted industries must satisfy certain requirements under
the law, and (iii) foreign investments in business sectors outside of the negative list will be treated equally with domestic investments.
The Foreign Investment Law also sets forth necessary mechanisms to facilitate, protect and manage foreign investments and proposes to
establish a foreign investment information reporting system, through which foreign investors or foreign-invested enterprises are required
to submit initial report, report of changes, report of deregistration and annual report relating to their investments to the Ministry
of Commerce, or MOFCOM, or its local branches.
To the extent cash or assets in the business
is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or for other use
outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of us or our
subsidiaries by the PRC government to transfer cash or assets
The transfer of funds and
assets among Lichen China Limited, its Hong Kong and PRC subsidiaries are subject to restrictions. The PRC government imposes controls
on the conversion of the RMB into foreign currencies and the remittance of currencies out of the PRC. See "Risk Factors –
Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your
investment." In addition, the PRC Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate
of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises, unless reduced under treaties or
arrangements between the PRC central government and the governments of other countries or regions where the non-PRC resident enterprises
are tax resident. See "Risk Factors - Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments
to us, which may have a material adverse effect on our ability to conduct our business."
As of the date of this annual
report, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of
Hong Kong (including funds from Hong Kong to the PRC), except for the transfer of funds involving money laundering and criminal activities.
However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions
in the future.
As a result of the above,
to the extent cash or assets in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available
to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations
on the ability of us or our subsidiaries by the PRC government to transfer cash or assets.
Our PRC subsidiaries are subject to restrictions
on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business
We are a holding company incorporated
in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements,
including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. If
our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay
dividends or make other distributions to us.
Current PRC regulations permit
our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting
standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits
each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital.
Our PRC subsidiaries may also allocate a portion of their respective after-tax profits based on PRC accounting standards to employee welfare
and bonus funds at their discretion. These reserves are not distributable as cash dividends. These limitation on the ability of our PRC
subsidiaries to pay dividends or make other distributions 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.
18
Fluctuations in exchange rates could have
a material adverse effect on our results of operations and the price of our Class A Ordinary Shares
Substantially all of our revenues
and expenditures are denominated in RMB, whereas our reporting currency is the U.S. dollar. As a result, fluctuations in the exchange
rate between the U.S. dollar and RMB will affect the relative purchasing power in RMB terms of our U.S. dollar assets and the proceeds
from our initial public offering. Our reporting currency is the U.S. dollar while the functional currency for our PRC subsidiaries is
RMB. Gains and losses from the re-measurement of assets and liabilities that are receivable or payable in RMB are included in our consolidated
statements of operations. The re-measurement has caused the U.S. dollar value of our results of operations to vary with exchange rate
fluctuations, and the U.S. dollar value of our results of operations will continue to vary with exchange rate fluctuations. A fluctuation
in the value of RMB relative to the U.S. dollar could reduce our profits from operations and the translated value of our net assets when
reported in U.S. dollars in our consolidated financial statements. This could have a negative impact on our business, financial condition
or results of operations as reported in U.S. dollars. If we decide to convert our RMB into U.S. dollars for the purpose of making payments
for dividends on our Class A Ordinary Shares or for other business purposes, appreciation of the U.S. dollar against the RMB would have
a negative effect on the U.S. dollar amount available to us. In addition, fluctuations in currencies relative to the periods in which
the earnings are generated may make it more difficult to perform period-to-period comparisons of our reported results of operations.
The value of the RMB against
the U.S. dollar and other currencies is affected by, among other things, changes in China's political and economic conditions and
China's foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the
RMB to the U.S. dollar, and the RMB appreciated more than 20% against the U.S. dollar over the following three years. However, the PBOC
regularly intervenes in the foreign exchange market to limit fluctuations in RMB exchange rates and achieve policy goals. During the period
between July 2008 and June 2010, the exchange rate between the RMB and the U.S. dollar had been stable and traded within a narrow range.
Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. Since October 1, 2016, Renminbi
has joined the International Monetary Fund (IMF)'s basket of currencies that make up the Special Drawing Right (SDR), along with
the U.S. dollar, the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the RMB depreciated significantly in
the backdrop of a surging U.S. dollar and persistent capital outflows of China. With the development of the foreign exchange market and
progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further
changes to the exchange rate system and we cannot assure you that the 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 the Renminbi and the U.S. dollar in the future.
There remains significant
international pressure on the PRC government to adopt a flexible currency policy. Any significant appreciation or depreciation of the
RMB may materially and adversely affect our revenues, earnings and financial position, and the value of, and any dividends payable on,
our Class A Ordinary Shares in U.S. dollars. For example, to the extent that we need to convert U.S. dollars we receive from our initial
public offering into RMB to pay our operating expenses, appreciation of the RMB against the U.S. dollar would have an adverse effect on
the RMB amount we would receive from the conversion. Conversely, a significant depreciation of the RMB against the U.S. dollar may significantly
reduce the U.S. dollar equivalent of our earnings, which in turn could adversely affect the price of our Class A Ordinary Shares.
Very limited hedging options
are available in China to reduce our exposure to exchange rate fluctuations. As of the date of this annual report, 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 adequately
hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict
our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on the
price of our Class A Ordinary Shares.
19
Governmental control of currency conversion
may limit our ability to utilize our net revenues effectively and affect the value of your investment
The PRC government imposes
controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive
substantially all of our net revenues in RMB. Under our current corporate structure, our company in the Cayman Islands relies on dividend
payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations,
payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made
in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our PRC subsidiaries
are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject to the condition that the remittance of
such dividends outside of the PRC complies with certain procedures under PRC foreign exchange regulation, such as the overseas investment
registrations by the beneficial owners of our company who are PRC residents. But approval from, or registration with, appropriate government
authorities is required where RMB 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.
In light of the flood of capital
outflows of China in 2016 due to the weakening RMB, the PRC government has imposed more restrictive foreign exchange policies and stepped
up scrutiny of major outbound capital movement. More restrictions and substantial vetting processes have been put in place by SAFE to
regulate cross-border transactions falling under the capital account. The PRC government may also at its discretion restrict access in
the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient
foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.
We must remit the offering proceeds to PRC
before they may be used to benefit our business in the PRC, and this process may take a number of months
The proceeds of the initial
public offering must be sent back to the PRC, and the process for sending such proceeds back to the PRC may take several months after
the closing of the initial public offering. We may be unable to use these proceeds to grow our business until we receive such proceeds
in the PRC. In order to remit the offering proceeds to the PRC, we will have to take the following actions:
First
, we will open
a special foreign exchange account for capital account transactions. To open this account, we must submit to SAFE certain application
forms, identity documents, transaction documents, form of foreign exchange registration of overseas investments by domestic residents,
and foreign exchange registration certificate of the invested company.
Second
, we will remit the offering proceeds into this special
foreign exchange account.
Third
, we will apply for settlement of the foreign exchange. In order to do so, we must submit to SAFE
certain application forms, identity documents, payment order to a designated person, and a tax certificate.
The timing of the process
is difficult to estimate because the efficiencies of different SAFE branches can vary materially. Ordinarily, the process takes several
months to complete but is required by law to be accomplished within 180 days of application. The proceeds of the initial public offering
will be maintained in an interest-bearing account maintained by us in the United States, until the abovementioned approvals have been
provided.
Failure to make adequate contributions to
various employee benefit plans as required by PRC regulations may subject us to penalties
We are required under PRC
laws and regulations 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. If the local governments deem our contribution to
be not sufficient, we may be subject to late contribution fees or fines in relation to any underpaid employee benefits, our financial
condition and results of operations may be adversely affected.
Currently, we are making contributions
to the plans based on the minimum standards, although the PRC laws required such contributions to be based on the actual employee salaries
up to a maximum amount specified by the local government. If we are required to make increased contributions or are subject to late contribution
fees or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected.
20
The M&A Rules and certain other PRC
regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult
for us to pursue growth through acquisitions in China
The Regulations on Mergers
and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in August 2006
and amended in 2009, and some other regulations and rules concerning mergers and acquisitions, established additional procedures and requirements
that could make merger and acquisition activities by foreign investors more time consuming and complex, including requirements in some
instances that the MOC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC
domestic enterprise. Moreover, the Anti-Monopoly Law requires that the MOC shall be notified in advance of any concentration of undertaking
if certain thresholds are triggered. In addition, the security review rules issued by the MOC that 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 MOC, 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 grow our business by acquiring
complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such
transactions could be time consuming, and any required approval processes, including obtaining approval from the MOC or its local counterparts,
may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our
market share.
PRC regulations relating to offshore investment
activities by PRC residents may limit our PRC subsidiaries' ability to increase their registered capital or distribute profits to
us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC law
SAFE promulgated the Circular
on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles,
or SAFE Circular 37, in July 2014, which requires PRC residents or entities to register with SAFE or its local branch in connection with
their establishment or control of an offshore entity established for the purpose of overseas investment or financing. In addition, such
PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle undergoes material events relating
to any change of basic information (including change of such PRC citizens or residents, name and operation term), increases or decreases
in investment amount, transfers or exchanges of shares, or mergers or divisions. SAFE Circular 37 was issued to replace the Notice on
Relevant Issues Concerning Foreign Exchange Administration for PRC Residents Engaging in Financing and Roundtrip Investments via Overseas
Special Purpose Vehicles, or SAFE Circular 75. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of
the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular
37, requiring PRC residents or entities to register with qualified banks, rather than SAFE or its local branch, in connection with their
establishment or control of an offshore entity established for the purpose of overseas investment or financing.
If our shareholders who are
PRC residents or entities do not complete their registration as required, our PRC subsidiaries may be prohibited from distributing their
profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute
additional capital to our PRC subsidiaries. Moreover, failure to comply with the SAFE registration described above could result in liability
under PRC laws for evasion of applicable foreign exchange restrictions.
All of our shareholders who
directly or indirectly hold shares in Lichen China Limited and who are known to us as being PRC residents have completed the foreign exchange
registrations required in connection with our recent corporate restructuring. However, we may not be informed of the identities of all
the PRC residents or entities holding direct or indirect interest in our company, nor can we compel our beneficial owners to comply with
SAFE registration requirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents
or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations.
Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations
of our PRC subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit
our PRC subsidiaries' ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely
affect our business and prospects.
21
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 a "de facto management body" within
the PRC 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
over and overall management of the business, productions, personnel, accounts and properties of an enterprise. In April 2009, the State
Administration of Taxation issued a circular, known as Circular 82, 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. Although this
circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals
or foreigners like us, the criteria set forth in the circular may reflect the State Administration of Taxation's general position
on how the "de facto management body" test 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. See "Material Tax Consequences Applicable to U.S. Holders of
Our Ordinary Shares – People's Republic of China Taxation." 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." As substantially all of our management members are based in China, it remains unclear how the tax residency rule will apply
to our case. If the PRC tax authorities determine that Lichen China Limited or any of our subsidiaries outside of China is a PRC resident
enterprise for PRC enterprise income tax purposes, then Lichen China Limited or such subsidiary could be subject to PRC tax at a rate
of 25% on its world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise
income tax reporting obligations. Furthermore, if the PRC tax authorities determine that we are a PRC resident enterprise for enterprise
income tax purposes, gains realized on the sale or other disposition of our Class A Ordinary Shares may be subject to PRC tax, at a rate
of 10%, in the case of non-PRC enterprises, or 20%, in the case of non-PRC individuals (in each case, subject to the provisions of any
applicable tax treaty), if such gains are deemed to be from PRC sources. It is unclear whether non-PRC shareholders of our company would
be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated
as a PRC resident enterprise. Any such tax imposed may reduce the returns on the investment in our Class A Ordinary Shares.
We may not be able to obtain certain benefits
under relevant tax treaties on dividends paid by our PRC subsidiaries to us through our Hong Kong subsidiary
We are an exempted company
incorporated under the laws of the Cayman Islands and as such rely on dividends and other distributions on equity from our PRC subsidiaries
to satisfy part of our liquidity requirements. Pursuant to the PRC Enterprise Income Tax Law, a withholding tax rate of 10% currently
applies to dividends paid by a PRC "resident enterprise" to a foreign enterprise investor, unless any such foreign investor's
jurisdiction of incorporation has a tax treaty with China that provides for preferential tax treatment. Pursuant to the Arrangement between
the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or
the Double Tax Avoidance Arrangement, such withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than
25% of a PRC enterprise. Furthermore, the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties,
which became effective in August 2015, require non-resident enterprises to determine whether they are qualified to enjoy the preferential
tax treatment under the tax treaties and file the relevant report and materials with the tax authorities. There are also other conditions
for enjoying the reduced withholding tax rate, according to other relevant tax rules and regulations. As of the date of the annual report,
we did not record any withholding tax on the retained earnings of our subsidiaries in the PRC, as we intended to re-invest all earnings
generated from our PRC subsidiaries for the operation and expansion of our business in China, and we intend to continue this practice
in the foreseeable future. Should our tax policy change to allow for offshore distribution of our earnings, we would be subject to a significant
withholding tax. We cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will
not be challenged by the relevant tax authority or if we will be able to complete the necessary filings with the relevant tax authority
and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our
PRC subsidiaries to HK Beach, our Hong Kong subsidiary.
22
Enhanced scrutiny over acquisition transactions
by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future
The PRC tax authorities have
enhanced their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular, equity interests in
a PRC resident enterprise, by a non-resident enterprise by promulgating and implementing Notice of the Ministry of Finance and the State
Administration of Taxation on Several Issues Concerning the Enterprise Income Tax Treatment on Enterprise Reorganization (Circular 59)
and Announcement No. 7 [2015] of the State Administration of Taxation—Announcement on Several Issues concerning the Enterprise Income
Tax on Income from the Indirect Transfer of Assets by Non-Resident Enterprises (Circular 7) which became effective in February 2015. Under
Circular 7, where a non-resident enterprise conducts an "indirect transfer" by transferring the equity interests of a PRC
"resident enterprise" indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise,
being the transferor, may be subject to PRC enterprise income tax, if the indirect transfer is considered to be an abusive use of company
structure without reasonable commercial purposes. Circular 7 also provides that, where a non-PRC resident enterprise transfers its equity
interests in a PRC resident enterprise to its related parties at a price lower than the fair market value, the relevant tax authority
has the power to make a reasonable adjustment to the taxable income of the transaction.
Circular 7 extends its tax
jurisdiction to not only indirect transfers but also transactions involving transfer of other taxable assets, through the offshore transfer
of a foreign intermediate holding company. In addition, Circular 7 provides clear criteria on how to assess reasonable commercial purposes
and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market.
Circular 7 also brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer)
of the taxable assets. Where a non-resident enterprise conducts an "indirect transfer" by transferring the taxable assets
indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the
transferee, or the PRC entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer.
Using a "substance over form" principle, the PRC tax authority may disregard the existence of the overseas holding company
if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax.
According to the "Enterprise
Income Tax Law of the People's Republic of China" (adopted on March 16, 2007, first amended on February 24, 2017, and further
amended on December 29, 2018), if the business dealings between an enterprise and its affiliated parties do not conform to the principle
of independent transactions and thus reduce the taxable income or income of the enterprise or its affiliated parties, the tax authorities
have the right to adjust in accordance with reasonable methods. The cost incurred by an enterprise and its related parties in developing
and accepting intangible assets or providing and receiving labor services together shall be apportioned according to the principle of
independent transaction when calculating taxable income.
Where enterprises that are
controlled by resident enterprises or resident enterprises and Chinese residents in the country (region) where the actual tax burden is
obviously lower than the tax rate level of China's enterprise income tax, and profits are not distributed or are distributed at
a reduced rate due to reasons other than reasonable business needs, the portion of the above profits attributable to such resident enterprises
shall be included in the income of such resident enterprises for the reported period. Interest expenses incurred when the ratio of creditor's
rights investment to equity investment accepted by an enterprise from its affiliated parties exceeds the prescribed standard shall not
be deducted in the calculation of taxable income. If an enterprise reduces its taxable income or income by implementing other arrangements
without reasonable commercial purposes, tax authorities have the right to adjust them in accordance with reasonable methods.
We face uncertainties on the
reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer
of shares in our company by investors that are non-PRC resident enterprises. 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 Circular 59 and Circular 7, and may be required to expend valuable resources to comply with Circular 59 and Circular
7 or to establish that we and our non-resident enterprises should not be taxed under these circulars, which may have a material adverse
effect on our financial condition and results of operations.
The PRC tax authorities have
the discretion under Circular 59 and Circular 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. Although we currently have no plans to pursue any acquisitions in
China or elsewhere in the world, we may pursue acquisitions in the future that may involve complex corporate structures. If we are considered
a non-resident enterprise under the PRC Enterprise Income Tax Law and if the PRC tax authorities make adjustments to the taxable income
of the transactions under Circular 59 and Circular 7, our income tax costs associated with such potential acquisitions will be increased,
which may have an adverse effect on our financial condition and results of operations.
23
The recent joint statement by the SEC and
PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent
criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors
who are not inspected by the PCAOB. These developments could add uncertainties to our offering
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 a minimum offering size requirement for companies primarily operating in a "Restrictive
Market", (ii) adopt a new requirement relating to the qualification of management or board of directors 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 Holding Foreign Companies Accountable Act ("HFCAA"), 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 securities exchange or in the over-the-counter trading market in the U.S. On December
2, 2020, the U.S. House of Representatives approved the HFCAA. On December 18, 2020, the HFCAA was signed into law.
On March 24, 2021, the SEC
announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of
the HFCAA. The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms
10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction
and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that
jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified registrant will be required to
submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction,
and will also require disclosure in the registrant's annual report regarding the audit arrangements of, and governmental influence
on, such a registrant.
On June 22, 2021, the U.S.
Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the
HFCAA and requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchange if its auditor is not subject
to PCAOB inspections for two consecutive years instead of three consecutive years.
On September 22, 2021, the
PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under
the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction
because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC
issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA. The rules apply to registrants
that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located
in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in
foreign jurisdictions.
On December 16, 2021, the
PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting
firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions, which determinations
were vacated on December 15, 2022.
On August 26, 2022, the PCAOB announced
that it had signed a Statement of Protocol (the "SOP") with the China Securities Regulatory Commission and the Ministry of
Finance of China. The SOP, together with two protocol agreements governing inspections and investigations (together, the "SOP
Agreement"), establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of
audit firms based in mainland China and Hong Kong, as required under U.S. law.
24
On December 15, 2022, the
PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered
in mainland China and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable
to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether
the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in
mainland China and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor's control.
The PCAOB continues to demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections
in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB
has also indicated that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.
Our auditors, B&V for
the fiscal year ended December 31, 2020 and TPS Thayer for the fiscal year ended December 31, 2021, are both based in the U.S. B&V
withdrew its registration from the PCAOB in January 2022. TPS Thayer is headquartered in Sugar Land, Texas, and its registration with
the PCAOB took effect in September 2020 and it is currently subject to PCAOB inspections.
However, we cannot assure
you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness
of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources,
geographic reach or experience as it relates to the audit of our financial statements. In the event it is later determined that the PCAOB
is unable to inspect or investigate completely the Company's auditor because of a position taken by an authority in a foreign jurisdiction,
then such lack of inspection could cause trading in the Company's securities to be prohibited under the HFCAA and the AHFCAA, and
ultimately result in a determination by a securities exchange to delist the Company's securities. The delisting of our Class A Ordinary
Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless.
It remains unclear what the SEC's implementation process related to the above rules and amendments will entail or what further actions
the SEC, the PCAOB or Nasdaq will take to address these issues and what impact those actions will have on U.S. companies that have significant
operations in the PRC and have securities listed on a U.S. stock exchange. In addition, the above rules and amendments and any additional
actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create some
uncertainty for investors, the market price of our Class A Ordinary Shares could be adversely affected, and we could be delisted if we
and our auditor are unable to meet the PCAOB inspection requirement or being required to engage a new audit firm, which would require
significant expense and management time.
Trading in our securities may be prohibited
under the HFCAA and as a result an exchange may determine to delist our securities if it is later determined that the PCAOB is unable
to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction
The HFCAA, was enacted on
December 18, 2020. The HFCAA states if the SEC determines that a company has filed audit reports issued by a registered public accounting
firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit such shares
from being traded on a national securities exchange or in the over-the-counter trading market in the U.S.
On March 24, 2021, the SEC
adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. A company
will be required to comply with these rules if the SEC identifies it as having a "non-inspection" year under a process to
be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and
trading prohibition requirements described above.
On June 22, 2021, United States
Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the
HFCAA and requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchange if its auditor is not subject
to PCAOB inspections for two consecutive years instead of three consecutive years.
Despite that we have a U.S.-based
auditor that is registered with the PCAOB and subject to PCAOB inspection, there are still risks to the company and investors if it is
later determined that the PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority
in a foreign jurisdiction. Such risks include, but are not limited to that trading in our securities may be prohibited under the HFCAA
and as a result an exchange may determine to delist our securities.
25
We are not currently required to obtain any approval from the
CAC. However, it is unclear whether we will be subject to the oversight of the CAC and how such oversight may impact us. Our business
could be interrupted or we could be subject to liabilities which may materially and adversely affect the results of our operation and
the value of your investment
Pursuant to the PRC Cybersecurity
Law and the Measures for Cybersecurity Censorship (the "Cybersecurity Review Measures") promulgated on April 13, 2020, if
a critical information infrastructure operator purchases internet products and services that affect or may affect national security, it
should be subject to cybersecurity review by the CAC. Any internet product or service that affect or may affect national security as deemed
by the cybersecurity review authorities may be subject to cybersecurity review. According to the Cybersecurity Review Measures, a critical
information infrastructure operator refers to any operator identified by an authority for the protection of critical information infrastructures.
As of the date hereof, we have not received any notice from such authorities identifying us as a critical information infrastructure operator
or requiring us to going through cybersecurity review by the CAC.
On December 28, 2021, the
CAC and other relevant PRC governmental authorities jointly promulgated the Cybersecurity Review Measures (the "new Cybersecurity
Review Measures") which took effect on February 15, 2022, and replaced the original Cybersecurity Review Measures. Pursuant to the
new Cybersecurity Review Measures, if critical information infrastructure operators purchase network products and services, or network
platform operators conduct data processing activities that affect or may affect national security, they will be subject to cybersecurity
review. A network platform operator holding more than one million users/users' individual information also shall be subject to cybersecurity
review before listing abroad. The cybersecurity review will evaluate, among others, the risk of critical information infrastructure, core
data, important data, or a large amount of personal information being influenced, controlled or maliciously used by foreign governments
and risk of network data security after going public overseas.
As the new Cybersecurity Review
Measures took effect on February 15, 2022, we believe we are not subject to the cybersecurity review by the CAC for the initial public
offering, given that: (i) we are not a network platform operator holding more than one million users' individual information; and
(ii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data
by the authorities and we will not be required to obtain any permission from the CAC. However, there remains uncertainty as to how the
new Cybersecurity Review Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt
new laws, regulations, rules, or detailed implementation and interpretation related to the new Cybersecurity Review Measures. If any such
new laws, regulations, rules, or implementation and interpretation comes into effect, we expect to take all reasonable measures and actions
to comply and to minimize the adverse effect of such laws on us.
We
cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we
can fully or timely comply with such laws. In the event that we are subject to any mandatory cybersecurity review and other specific actions
required by the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given
such uncertainty, we may be further required to suspend our relevant business, shut down our website, or face other penalties, which could
materially and adversely affect our business, financial condition, and results of operations.
26
Risks Relating to
our Class A Ordinary Shares
Our CEO has control
over key decision making as a result of his control of a majority of our voting shares
Our authorized and issued
ordinary shares are divided into Class A Ordinary Shares and Class B Ordinary Shares. Holders of Class A Ordinary Shares are entitled
to one vote per share, while holders of Class B Ordinary Shares are entitled to ten votes per share. Lichen China Limited issued Class
A Ordinary Shares in the initial public offering. Each Class B Ordinary Share is convertible into one Class A Ordinary Share at any time
by the holders thereof, while Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances.
Our Founder, CEO, and our
Chairman of the Board of Directors of the Company, or the Board, Mr. Ya Li, has voting rights with respect to an aggregate of 9,000,000
Class B Ordinary Shares, representing 83.72% of the voting power of our issued and outstanding Ordinary Shares as of the date of this
annual report. As a result, Mr. Li has the ability to control the outcome of matters submitted to our shareholders for approval, including
the election of directors and any merger, consolidation, or sale of all or substantially all of our assets. In addition, Mr. Li has the
ability to control the management and affairs of our Company, as a result of his position as our CEO and his ability to control the election
of our directors. Additionally, in the event that Mr. Li controls our Company at the time of his death, control may be transferred to
a person or entity that he designates as his successor. As a board member and officer, Mr. Li owes a fiduciary duty to our Company and
must act in good faith in a manner he reasonably believes to be in the best interests of our Company. As a beneficial shareholder, even
a controlling beneficial shareholder, Mr. Li is entitled to vote his shares, and shares over which he has voting control as a result of
voting agreements, in his own interests, which may not always be in the interests of our shareholders generally.
Future issuances of our Class B Ordinary
Shares may be dilutive to the voting power of our Class A Ordinary Shareholders
Future issuances of our Class
B Ordinary Shares, which can be approved by our Board of Directors, could result in dilution to existing holders of our Class A Ordinary
Shares. Such issuances, or the perception that such issuances may occur, could depress the market price of the Class A Ordinary Shares.
In addition, there might be
impact of the conversion of Class B Ordinary Shares on holders of Class A Ordinary Shares, including dilution and the reduction in aggregate
voting power, as well as the potential increase in the relative voting power if any Class B holder retains their shares.
The dual-class structure of our ordinary shares may adversely
affect the trading market for the Class A Ordinary Shares
Certain shareholder advisory
firms have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the
S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total
voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the
use of multiple class structures. As a result, the dual class structure of our ordinary shares may prevent the inclusion of the Class
A Ordinary Shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance
practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active
trading market for our Class A Ordinary Shares. Any actions or publications by shareholder advisory firms critical of our corporate governance
practices or capital structure could also adversely affect the value of the Class A Ordinary Shares.
As a "controlled
company" under the rules of the Nasdaq Capital Market, we may choose to exempt our Company from certain corporate governance requirements
that could have an adverse effect on our public shareholders
Our directors and officers
beneficially own a majority of the voting power of our issued and outstanding Ordinary Shares. Under the Rule 4350(c) of the Nasdaq Capital
Market, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled
company" and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of
our directors be independent, as defined in the Nasdaq Capital Market Rules, and the requirement that our compensation and nominating
and corporate governance committees consist entirely of independent directors. Although we do not intend to rely on the "controlled
company" exemption under the Nasdaq listing rules, we could elect to rely on this exemption in the future. If we elect to rely on
the "controlled company" exemption, a majority of the members of our Board of Directors might not be independent directors
and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly,
during any time while we remain a controlled company relying on the exemption and during any transition period following a time when we
are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to
all of the Nasdaq Capital Market corporate governance requirements. Our status as a controlled company could cause our Class A Ordinary
Share to look less attractive to certain investors or otherwise harm our trading price.
27
We are an "emerging growth company,"
and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Class A Ordinary
Shares less attractive to investors
We are an "emerging
growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be
an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of
Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval
of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could
lose that status sooner if our revenues exceed $1.235 billion, if we issue more than $1 billion in non-convertible debt in a three-year
period, or if the market value of our Class A Ordinary Shares held by non-affiliates exceeds $700 million before that time, in which case
we would no longer be an emerging growth company as of the following December 31. We cannot predict if investors will find our Class A
Ordinary Shares less attractive because we may rely on these exemptions. If some investors find our Class A Ordinary Shares less attractive
as a result, there may be a less active trading market for our Class A Ordinary Shares and our stock price may be more volatile.
Under the JOBS Act, emerging growth companies can
also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected
to avail our company of this exemption from new or revised accounting standards and, therefore, will be subject to accounting standards
that are available to emerging growth companies.
We are a "foreign private issuer,"
and our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information
as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate
our performance and prospects
Lichen China Limited is a
foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act,
we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting
companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed
individual executive compensation information. Furthermore, our directors and executive officers will not be required to report equity
holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime.
As a foreign private issuer, we will also be exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant
to ensure that select groups of investors are not privy to specific information about an issuer before other investors. However, we will
still be subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the
disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should
not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies.
Because we are a foreign private issuer
and are exempt from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would
have if we were a domestic issuer
Nasdaq Listing Rule requires
listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we
are permitted to, and we may follow home country practice in lieu of the above requirements, or we may choose to comply with the above
requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a
majority of our board to consist of independent directors. Thus, although a director must act in the best interests of the Company, it
is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our
company may decrease as a result. In addition, the Nasdaq Listing Rules also require U.S. domestic issuers to have a compensation committee,
a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three
members. We, as a foreign private issuer, are not subject to these requirements. The Nasdaq Listing Rules may require shareholder approval
for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and
material revisions to those plans, certain ordinary share issuances. We comply with the requirements of Nasdaq Listing Rules in determining
whether shareholder approval is required on such matters and to appoint a nominating and corporate governance committee. However, we may
consider following home country practice in lieu of the requirements under Nasdaq Listing Rules with respect to certain corporate governance
standards which may afford less protection to investors.
28
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 may not be 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 standing to initiate a shareholder derivative action in a federal court of
the United States.
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. In addition, a majority of our current directors
and officers are nationals and/or residents of countries other than the United States. All or a substantial portion 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 the
PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding
the relevant laws of the Cayman Islands and the PRC, see "Enforceability of Civil Liabilities."
Shareholder claims, including
securities law class actions and fraud claims, are common in the United States and are generally difficult to pursue as a matter of law
or practicability in China. For example, in China, there are significant legal and other barriers to obtaining information needed for
shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local 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 regulatory cooperation with the securities regulatory authorities in the United States
have not been efficient in the absence of a mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities
Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection
activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators or other relevant
authorities, no entity or individual may provide any documents and materials relating to securities business activities to foreign entities
or government agencies.
Nasdaq may apply additional and more stringent
criteria for our initial and continued listing because we plan to have a small public offering and insiders will hold a large portion
of the company's listed securities
Nasdaq Listing Rule 5101 provides
Nasdaq with broad discretionary authority over the initial and continued listing of securities in Nasdaq and Nasdaq may use such discretion
to deny initial listing, apply additional or more stringent criteria for the initial or continued listing of particular securities, or
suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes initial or continued
listing of the securities on Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though the securities meet all enumerated
criteria for initial or continued listing on Nasdaq. In addition, Nasdaq has used its discretion to deny initial or continued listing
or to apply additional and more stringent criteria in the instances, including but not limited to: (i) where the company engaged an auditor
that has not been subject to an inspection by the PCAOB, an auditor that PCAOB cannot inspect, or an auditor that has not demonstrated
sufficient resources, geographic reach, or experience to adequately perform the company's audit; (ii) where the company planned
a small public offering, which would result in insiders holding a large portion of the company's listed securities. Nasdaq was concerned
that the offering size was insufficient to establish the company's initial valuation, and there would not be sufficient liquidity
to support a public market for the company; and (iii) where the company did not demonstrate sufficient nexus to the U.S. capital market,
including having no U.S. shareholders, operations, or members of the Board of Directors or management. Our public offering will be relatively
small and the insiders of our Company will hold a large portion of the company's listed securities. Nasdaq might apply the additional
and more stringent criteria for our initial and continued listing, which might cause delay or even denial of our listing application.
29
If we cannot satisfy, or continue to satisfy,
the continued listing requirements and other rules of Nasdaq Capital Market, although we exempt from certain corporate governance standards
applicable to US issuers as a Foreign Private Issuer, our securities may not be listed or may be delisted, which could negatively impact
the price of our securities and your ability to sell them
We are listed on the Nasdaq
Capital Market. We cannot assure you that we will be able to meet those continued listing requirements in the future. Even if our securities
are listed on the Nasdaq Capital Market, we cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market.
In addition, in order to maintain our listing on the Nasdaq Capital Market, we will be required to comply with certain rules of Nasdaq
Capital Market, including those regarding minimum stockholders' equity, minimum share price and certain corporate governance requirements.
Even if we initially meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue
to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our
listing, our securities could be subject to delisting.
If the Nasdaq Capital Market
does not list our securities, or subsequently delists our securities from trading, we could face significant consequences, including:
●
a
limited availability for market quotations for our securities;
●
reduced
liquidity with respect to our securities;
●
a
determination that our Class A Ordinary Share is a "penny stock," which will require brokers trading in our Class A Ordinary
Share to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for
our Class A Ordinary Share;
●
limited
amount of news and analyst coverage; and
●
a
decreased ability to issue additional securities or obtain additional financing in the future.
The market price of our Class A Ordinary
Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above
the public offering price
The market price of our Class
A Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:
●
actual
or anticipated fluctuations in our revenue and other operating results;
●
the
financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;
●
actions
of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow
our company, or our failure to meet these estimates or the expectations of investors;
●
announcements
by us or our competitors of significant services or features, technical innovations, acquisitions, strategic partnerships, joint ventures,
or capital commitments;
●
price
and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;
●
lawsuits
threatened or filed against us; and
●
other
events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
30
In addition, the stock markets
have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities
of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance
of those companies. In the past, shareholders have filed securities class action litigation following periods of market volatility. If
we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management
from our business, and adversely affect our business.
The price of our Class A Ordinary Shares
could be subject to rapid and substantial volatility and there may not be an active, liquid trading market for our Class A Ordinary Shares.
There have been instances
of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with recent initial public offerings,
especially among those with relatively smaller public floats. As a relatively small-capitalization company with relatively small public
float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization
companies. In particular, our Class A Ordinary Shares may be subject to rapid and substantial price volatility, low volumes
of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected
operating performance and financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing
value of our Class A Ordinary Shares.
In addition, if the trading
volumes of our Class A Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence prices of
our Class A Ordinary Shares. This low volume of trades could also cause the price of our Class A Ordinary Shares to fluctuate greatly,
with large percentage changes in price occurring in any trading day session. Holders of our Class A Ordinary Shares may also not be able
to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations
and general economic and political conditions may also adversely affect the market price of our Class A Ordinary Shares. As a result of
this volatility, investors may experience losses on their investment in our Class A Ordinary Shares. A decline in the market price of
our Class A Ordinary Shares also could adversely affect our ability to issue additional shares of Class A Ordinary Shares or other of
our securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our
Class A Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Class A Ordinary Shares may
be unable to readily sell the shares they hold or may not be able to sell their shares at all.
If we fail to establish and maintain proper
internal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could
be impaired
Prior to our initial public
offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls
and procedures. We will be in a continuing process of developing, establishing, and maintaining internal controls and procedures that
will allow our management to report on, and our independent registered public accounting firm to attest to, our internal controls over
financial reporting if and when required to do so under Section 404 of the Sarbanes-Oxley Act of 2002. Although our independent registered
public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section
404(b) of the Sarbanes-Oxley Act until the date we are no longer an emerging growth company, our management will be required to report
on our internal controls over financial reporting under Section 404.
As of the date of this annual
report, our management has assessed the effectiveness of our internal control over financial reporting. The material weaknesses relate
to that the Company does not have in-house accounting personnel with sufficient knowledge of US GAAP and SEC reporting experiences. Management
concluded that as of the date of this annual report, our internal control over financial reporting was ineffective.
In order to address and resolve
the foregoing material weakness, we have implemented measures designed to improve our internal control over financial reporting to remediate
this material weakness, including hiring consultants who have requisite training and experience in the preparation of financial statements
in compliance with applicable SEC requirements. In addition to hiring outside consultant, we also plan to take remedial measures including
(i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the
financial reporting function and to set up a financial and system control framework; (ii) implementing regular and continuous U.S. GAAP
accounting and financial reporting training programs for our accounting and financial reporting personnel; (iii) setting up an internal
audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements
and improvement of overall internal control; and (iv) appointing independent directors, establishing an audit committee, and strengthening
corporate governance.
31
The implementation of these
measures may not fully address the material weaknesses in our internal control over financial reporting, and we cannot conclude that they
have been fully remedied. Our failure to correct theses material weaknesses or our failure to discover and address any other material
weaknesses could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial
reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations
and prospects, as well as the trading price of our Class A Ordinary Shares, may be materially and adversely affected. Moreover, ineffective
internal control over financial reporting significantly hinders our ability to prevent fraud. We are a public company in the United States
subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, will require that we include
a report from management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual
report for the fiscal year ending December 31, 2022. In addition, once we cease to be an "emerging growth company" as such
term is defined in 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, after we become 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.
We do not intend to pay dividends for the
foreseeable future
We currently intend to retain
any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the
foreseeable future. As a result, you may only receive a return on your investment in our Class A Ordinary Shares if the market price of
our Class A Ordinary Shares increases.
We will incur additional costs as a result
of becoming a public company, which could negatively impact our net income and liquidity
After our initial public offering,
we become a public company in the United States. As a public company, we will incur significant legal, accounting and other expenses that
we did not incur as a private company. In addition, Sarbanes-Oxley and rules and regulations implemented by the SEC and the Nasdaq Capital
Market require significantly heightened corporate governance practices for public companies. We expect that these rules and regulations
will increase our legal, accounting and financial compliance costs and will make many corporate activities more time-consuming and costly.
We do not expect to incur materially greater costs as a result of becoming a public company than those incurred by similarly sized U.S.
public companies. If we fail to comply with these rules and regulations, we could become the subject of a governmental enforcement action,
investors may lose confidence in us and the market price of our Class A Ordinary Shares could decline.
The obligation to disclose information publicly
may put us at a disadvantage to competitors that are private companies
Upon completion of our initial
public offering, we become a publicly listed company in the United States. As a publicly listed company, we will be required to file annual
reports with the Securities and Exchange Commission. In some cases, we will need to disclose material agreements or results of financial
operations that we would not be required to disclose if we were a private company. Our competitors may have access to this information,
which would otherwise be confidential. This may give them advantages in competing with our company. Similarly, as a U.S.-listed public
company, we will be governed by U.S. laws that our competitors, which are mostly private Chinese companies, are not required to follow.
To the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public listing
could affect our results of operations.
There can be no
assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable
year, which could subject United States investors in our Class A Ordinary Shares to significant adverse United States income tax consequences
We
will be classified as a passive foreign investment company, or PFIC, for any taxable year if either (i) 75% or more of our gross income
for such year consists of certain types of "passive" income, or (ii) 50% or more of the value of our assets (determined on
the basis of a quarterly average) during such year produce or are held for the production of passive income (the "asset test").
Based upon our current and expected income and assets, as well as projections as to the market price of our Class A Ordinary Shares, we
do not presently expect to be classified as a PFIC for the current taxable year or the foreseeable future.
32
While
we do not expect to be a PFIC, because the value of our assets, for purposes of the asset test, may be determined by reference to the
market price of our Class A Ordinary Shares, fluctuations in the market price of our Class A Ordinary Shares may cause us to become a
PFIC classification for the current or subsequent taxable years. The determination of whether we will be or become a PFIC will also depend,
in part, on the composition and classification of our income, including the relative amounts of income generated by and the value of assets
of our potential strategic investment business as compared to our other businesses. Because there are uncertainties in the application
of the relevant rules, it is possible that the U.S. Internal Revenue Service, or IRS, may challenge our classification of certain income
and assets as non-passive which may result in our being or becoming a PFIC in the current or subsequent years. In addition, the composition
of our income and assets will also be affected by how, and how quickly, we use our liquid assets and the cash raised in the initial public
offering. If we determine not to deploy significant amounts of cash for active purposes, our risk of being a PFIC may substantially increase.
Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after
the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable
year.
If we are a PFIC in any taxable
year, a U.S. Holder (as defined in "Taxation—United States Federal Income Tax Considerations") may incur significantly
increased United States income tax on gain recognized on the sale or other disposition of our Class A Ordinary Shares and on the receipt
of distributions on our Class A Ordinary Shares to the extent such gain or distribution is treated as an "excess distribution"
under the United States federal income tax rules, and such holder may be subject to burdensome reporting requirements. Further, if we
are a PFIC for any year during which a U.S. Holder holds our Class A Ordinary Shares, we will generally continue to be treated as a PFIC
for all succeeding years during which such U.S. Holder holds our Class A Ordinary Shares. For more information see "Item 10. Additional
Information—10.E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules."
Risks Relating to our Business
Our business, financial condition and results
of operations may be affected due to the COVID-19 pandemic and other diseases or epidemic
Any occurrence of disease
or epidemic may cause material disruptions to our business operations. In particular, during the occurrence of a disease or epidemic,
we may not be able to deliver our services as efficiently and effectively as before such occurrence. In such event, we may not be able
to conduct physical meetings with our customers or our customers may be less inclined to meet with us, and the Partnered Institutions
may temporarily close their education premises or postpone or cancel scheduled talks and seminars, or our external experts may encounter
difficulties hosting seminars or talks at the Partnered Institutions' premises due to travel restrictions. As a result, we may experience
disruption in our on-site expert support services provided to the Partnered Institutions. The outbreak of COVID-19 in early 2020 had temporarily
disrupted our business operations, which temporarily suspended our business operations after the Chinese New Year. We resumed full operation
as of February 10, 2020. Our Partnered Institutions also temporarily suspended provision of in-person trainings, seminars or talks and
gradually resumed these trainings, seminars and talks in late May 2020. The overall confidence and interest of the customers or investors
in the general economy in China was affected due to COVID-19, which in turn directly affected the growth and development of business companies
in the market and the demand for financial and taxation solution services. Since the outbreak of COVID-19, the impact to our business
was mainly on the on-site consultation services. Due to travel restrictions, our external experts could not provide on-site consultation
services to our customers, we therefore modified our business model by providing remote services first and postponed or reduced part of
our on-site procedures. The areas where our Partnered Institutions located were not greatly affected by the pandemic and the total number
of Partnered Institutions remained stable. Our business of software and maintenance services accounts approximately for 10% of our total
sales, and the impact on suppliers such as textbook and software service providers is negligible. After taking corresponding measures,
most of our customers' business and operations have returned to pre-pandemic level since the second quarter of 2020. Our total revenue
for the year ended December 31, 2021 has increased by 11.83% to approximately $34.30 million compared to the total revenue of $30.67 million
for the year ended December 31, 2020. Our total revenue for the six months ended June 30, 2022 has decreased by 4.93% to approximately
$16.15 million compared to the total revenue of $16.99 million for the six months ended June 30,2021. We do not believe that the pandemic
had overall material adverse effect on our business, financial condition and results of operations. However, there is no assurance that
there will be no recurrence of any outbreak of diseases such as COVID-19, Severe Acute Respiratory Syndrome (SARS), Middle East Respiratory
Syndrome Coronavirus (MERS-CoV) or any other contagious disease or epidemic in major cities or provinces in China in which we conduct
business. Any occurrence of disease or epidemic in the future could have a material and adverse effect on our business, financial condition
and results of operations.
33
We may incur impairment losses for intangible
assets, which may adversely affect our results of operations
As reported in our consolidated
financial statements for the years ended December 31, 2022 and 2021, our intangible assets amounted to approximately $4.52 million and
$3.87 million as of December 31, 2022 and 2021, respectively. Intangible assets are tested for impairment whenever there is indication
that their carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount of our
intangible assets exceeds their recoverable amount. The process of assessment is uncertain and complex and requires judgments in relation
to such events or changes in circumstances. If our intangible assets are determined to be impaired in the future, we would be required
to write down the carrying value by recognized impairment loss for our intangible assets in our consolidated financial statements during
the period in which the relevant intangible assets are determined to be impaired, which may in turn adversely affect our results of operations.
Our results of operations may be adversely
affected by credit risk associated with our financial assets through profit and loss
Our financial assets primarily
consist of trade and other receivables and bank balances and cash. We recognize loss allowances for expected credit allowances ("ECL")
on financial assets measured at amortized costs. We measure loss allowances at an amount equal to lifetime ECL. When determining whether
the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, we consider reasonable
and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative
information and analysis, based on our historical experience and informed credit assessment and including forward-looking information.
Any decrease in value of a financial asset is recorded as other losses, and therefore will directly affect our results of operations.
Our business depends on the market recognition of our "Lichen"
brand name
We believe that the market
awareness and reputation of our "Lichen" brand name has contributed significantly to the success and growth of our business.
We also believe that maintaining and enhancing the "Lichen" brand name is critical to maintaining our competitive advantage.
Our ability to maintain our brand reputation depends on a number of factors, some of which are beyond our control. As we continue to grow
in size, expand our services and extend our geographical coverage through our own growth and expansion, and through our education support
services provided to the Partnered Institutions, it may become difficult to maintain quality and consistency in the services we provide,
which may lead to diminishing confidence in our "Lichen" brand name as well as our financial and taxation solution services,
education support services and software and maintenance services. Numerous factors can potentially impact the reputation of our "Lichen"
brand name, including but not limited to customers' satisfaction with our financial and taxation solution services, education support
services and software and maintenance services, performance of the external experts, negative press, and unaffiliated parties using our
brand name. If our brand is tarnished, customers' interest in us may decrease and our business could be materially and adversely
affected. If we are unable to maintain or sustain our brand reputation and recognition, we may also be unable to maintain or increase
customers' patronage, which may cause material adverse effects on our business, financial condition and results of operations.
Our revenue was mainly derived from financial
and taxation solution services projects, which are not recurring in nature and there is no assurance that our customers will provide us
with new business
Our revenue was mainly derived
from financial and taxation solution services projects which are non-recurring in nature. For the years ended December 31, 2022, 2021,
and 2020, revenue generated from our financial and taxation solution services amounted to approximately $26.28 million, $26.49 million,
and $23.34 million, representing approximately 77.73%, 77.24%, and 76.10% of our total revenue, respectively. Our customers are not obliged
to renew such agreements with us should their business no longer requires our services. Further, the fees for our financial and taxation
solution services are primarily based on, amongst others, the nature and estimated scope of services. However, there can be no assurance
that we will be able to maintain or raise the level of our fees we charge our customers in the future, or even if we are able to maintain
or raise such fees, we cannot assure you that we will be able to attract prospective customers to engage us for the relevant financial
and taxation solution services at such increased fee rates. There is no guarantee that with our continued efforts, we will be able to
secure new businesses from recurring customers effectively or at all at the same level of fees we charged. Accordingly, the number and
scale of agreements and the amount of revenue we are able to secure may vary significantly from year to year, and it may be difficult
to accurately forecast the volume and size and scale of future business.
34
In the event that we are unable
to maintain our business with our recurring customers or to expand and diversify our customer base by sourcing new customers at desired
levels or at all, or to develop and expand our service diversity, or to meet the requirements of our customers regarding service quality
and delivery or any other requirements of our customers at reasonable or affordable costs, our relationship with our customers, our business,
financial condition and results of operations could be materially and adversely affected.
We may not be able to sufficiently guarantee
the legal compliance and service quality standards of the Partnered Institutions under the Partnership Agreements and failure of the Partnered
Institutions to meet requisite standard of service quality and compliance could materially and adversely affect our reputation, business,
financial condition and results of operations
Our customers, being the Partnered
Institutions under the partnership agreements (the "Partnership Agreements," each a "Partnership Agreement"),
are required to meet basic standards of service quality and compliance as stipulated in the Partnership Agreements when operating their
business under our "Lichen" brand name. However, there is no assurance that Partnered Institutions will be able to continuously
maintain such basic standards and our brand name will suffer as a result of their non-fulfillment by delivering subpar services. There
is also no assurance that the Partnered Institutions will be in continuous compliance with the relevant PRC laws and regulations in obtaining
the necessary approvals, licenses and permits and making all necessary registrations and filings for their education business in the PRC.
As a consequence, our reputation and our "Lichen" brand name may be tarnished. Lichen Zixun has terminated two Partnership
Agreements with two Partnered Institutions which did not or could not obtain relevant licenses or permits for conducting education and
training activities. In the event any of the Partnered Institutions fail to be in compliance with the PRC laws and regulations resulting
in penalty or closure orders from the relevant authorities in the PRC, our reputation and marketing activities may be hampered and our
reputation and business, financial condition and results of operations may be materially and adversely affected.
Failure to maintain our relationship with
our external experts could materially and adversely affect our business, financial condition and results of operations
As of the date of this annual
report, we have a team of 47 external experts. These external experts primarily conduct courses for the Partnered Institutions, participate
in our promotional activities and events and occasionally provide financial and taxation solution services to our customers on an "as
needed" basis. The external experts are one of the key components of our education support services and financial and taxation solution
services, which we believe distinguishes us from our competitors. We believe that the knowledge and know-how of the external experts,
enables us to stay at the forefront as a service provider in financial and taxation solution and education support services in the PRC
and to continue to develop financial and taxation related course contents and innovative solutions. However, our current and future competitors
may compete with us for the external experts. There is no assurance that the external experts will continue to partner and cooperate with
us or will not cooperate with our competitors after the expiry of the terms under the Expert Cooperation Agreements (defined below). If
we are unable to maintain our relationship with the external experts, our business and results of operations could be materially and adversely
affected.
We may not be successful in developing and
enhancing our teaching and learning materials provided to the Partnered Institutions or our self-developed software to keep abreast with
the latest developments in the relevant laws and regulations in the PRC and technological changes
The laws and regulations in
relation to the financial and taxation sectors are constantly evolving in the PRC. For example, since January 2012, China has begun the
pilot program to replace the business tax with value-added tax in several provinces and the reform was officially implemented nationwide
in May 2016. In 2016, the new tax management system of "Golden Tax System Phase III" was established in China. In 2018, the
National People's Congress and Chinese People's Political Consultative Conference launch the institutional reform of the state
council, which points out that the reform of the tax collection and management system, and the combination of provincial and provincial
level and local taxation institutions. In addition, with the issuance of the Accounting Standard for Small Enterprises in 2011 and the
Opinions of the State Council on Supporting the Sound Development of Micro and Small Enterprises in 2014, the PRC government established
a standard to regulate the accounting measurement and now encourages micro and small enterprises to seek professional financial and taxation
solution advice and services. We currently rely on our R&D department to improve our teaching and learning materials provided to the
Partnered Institutions. We are responsible for conducting studies into the trending topics in relation to the financial and taxation solution
sector. With respect to our self-developed software, the introduction of new technology and emergence of new industry standards may render
our self-developed software obsolete and uncompetitive. For the years ended December 31, 2022, 2021, and 2020, we incurred R&D expenses
of approximately $1.06 million, $1.08 million, and $0.93 million, respectively. We expect to continue to invest in our human and capital
resources to ensure our teaching and learning materials, as well as our self-developed software, reflect the latest developments and changing
customer needs. If we fail to develop and enhance our teaching and learning materials provided to the Partnered Institutions so as to
keep up with and reflect the latest financial and taxation developments in the PRC, or to introduce updated versions of our existing self-developed
software or introduce new software, our brand reputation and relationship among our customers and with the Partnered Institutions may
be materially affected, thus our results of operations, financial condition and prospects may be materially and adversely affected.
35
We may not be able to enforce the restrictive
covenants of the employment contracts against our employees, confidentiality and non-compete agreements against our senior management,
and Expert Cooperation Agreements against the external experts, to prevent them from directly competing with us within the restraint period
Generally, our employees and
our senior management enter into employment contracts and separate confidentiality and non-compete agreements with us, respectively. The
external experts enter into expert cooperation agreements with us (the "Expert Cooperation Agreements," each an "Expert
Cooperation Agreement"). All of the aforesaid contracts and agreements are subject to restrictive covenants governed by PRC law.
If any dispute arises between
our employees, senior management or external experts and us, we may not necessarily be able to enforce these employment contracts or confidentiality
and non-compete agreements against our employees or senior management or Expert Cooperation Agreements against the external experts, and
the enforceability of restrictive covenants may only be determined by the courts on a case-by-case basis. It is thus difficult to predict
the outcome of the proceedings or gauge the level of legal protection that such proceedings may provide. If we cannot enforce the restrictive
covenants of the employment contracts, confidentiality and non-compete agreements or Expert Cooperation Agreements, the relevant person
may leave us upon or before the expiry of their engagement and join a competitor or form a competing company immediately after leaving
us, which may disrupt our business and materially and adversely affect our financial condition and results of operations.
We may not be able to retain members of our management
team and other key personnel
We depend on the continued
efforts of our senior management team and other key employees for our success. Our executive officers have an average of 21 years of experience
in the PRC's financial and taxation industry, of which an average of 14 years has been spent with us. They possess in-depth understanding
of our target industries, our customers and competitors and the laws regulating our business. In addition, our executive officers also
deliver talks and participate in seminars hosted by our Partnered Institutions. Therefore, they play an important role in formulating
and implementing appropriate strategies for achieving business success. However, we may not be able to retain the services of our key
management. The loss of service of any of our key management, in particular our executive officers, could impair our ability to operate
and make it difficult to implement our business and growth strategies. We may not be able to replace such persons within a reasonable
period of time or with another person of equivalent expertise and experience in a timely manner, or at all, which may severely disrupt
our business operations.
Further, our R&D team
is responsible for maintaining high-quality teaching and learning materials provided to the Partnered Institutions and our software technicians
are responsible for designing and developing our self-developed software. However, we cannot assure you that any of the core R&D team
or software technicians will continue his/her employment with us or won't leave their position due to other reasons beyond our control.
The loss of service of any member of our core R&D team or software technicians could impair our ability to or delay the development
of our teaching and learning materials and self-developed software which contributes an important part of our education support services
and software and maintenance services. As a result, our business, financial condition and results of operations may be materially and
adversely affected.
Our business, financial condition and results
of operations may be affected if our customers do not pay the progress payments in full or on schedule or if we fail to bill
Under our financial and taxation
solution services, we normally receive progress payments from our customers at various stages of our services rendered, as stipulated
in the agreements.
For the years ended December
31, 2022 and 2021, our average trade receivables turnover days were approximately 40.4 days and 33.8 days, respectively, which were largely
in line with our general credit period of 30 days. There can be no assurance that progress payments will be timely paid to us and in full
in accordance with the progress payment schedules. Should we fail to receive progress payments from our customers for our work performed
under the financial and taxation solution projects, our business, financial condition and results of operations may be materially and
adversely affected.
36
Our financial and taxation solution services
may attract liability
Our financial and taxation
solution services normally involve providing advice to our customers. A customer who relies on our advice may suffer loss if we are negligent
in providing such advice and the customer may have legal cause to claim compensation against us. In this regard, we are exposed to possible
claims or lawsuits arising from such complaints. Should we experience any incident, such as claims or lawsuits, our "Lichen"
brand name and our financial position may be adversely affected.
Our self-developed software products are
exposed to product liability risk
Our financial and taxation
training software and financial and taxation analysis software are designed to be used by our customers for learning and teaching purposes
and practical business purposes, respectively, and may be critical to our customers' business operations. Any bugs, defects or errors
in our software may cause damage to our customers' system and hardware, and adversely affect the performance of such software or
our customers' operations. There is no assurance that we have discovered and corrected all bugs, defects or errors in our self-developed
software in our testing process. As such, we may incur additional costs in rectifying the defects or defending any potential claims or
lawsuits against us. We do not maintain any product liability insurance for our self-developed software at present. If any of our customers
initiates a claim or lawsuit with regard to our self-developed software against us, we may be liable to monetary damages or other liabilities
and our reputation, business, financial condition and results of operations may be adversely affected.
We are exposed to software source code storage
risk
Our source codes and master
copies of self-developed software are stored at our premises. We have implemented various measures, such as a restrictive access system,
to safeguard these source codes and master copies of software. We also back up the source codes of our self-developed software from time
to time. Nevertheless, there is no guarantee that such measures are sufficient or effective for the protection of the source codes and
master copies of our self-developed software. Any damage to or loss of our source codes and master copies of self-developed software could
adversely affect our business, financial condition and results of operations.
Any loss or deterioration of our relationship
with external software developers may affect our business, financial condition and results of operations
We engage external software
developers to design and develop our software prototype. Any failure on our part to properly optimize, operate, safeguard the intellectual
properties including the source code of the software prototype, or perform our contractual obligations under agreements with them may
cause substantial harm to our business relationship with software developers. Our external software developers may fail to provide satisfactory
software prototype or perform their obligations under the relevant agreements. They may also terminate agreements with us or demand commercial
terms that are less favorable to us than under our existing agreements in the future. They may choose to partner with our competitors,
allowing our competitors to enhance their software products and better compete against us. Any loss or deterioration of our relationship
with external software developers may affect our business, financial condition and results of operations.
We may not be able to successfully implement
our strategies, or achieve our business objectives and our business, operating results and financial position may be materially and adversely
affected
Our business strategies are
intended to be accomplished by implementing various future business plans. We intend to allocate our net proceeds from the initial public
offering to establish representative offices in Beijing City and Chengdu City, recruit additional staff to support our business expansion,
acquire other companies engaging in provision of financial and taxation solution services in the PRC, strengthen our R&D capabilities
and expand the self-developed software offered by our Subsidiaries, and further improve our "Lichen" brand recognition through
multi-channel marketing. There is no assurance that our business plans will materialize in accordance with the plan as set out in "Use
of Proceeds" in this annual report, or at all, or that our business strategies will be fully or partially accomplished. In the event
that we fail to accomplish our business plans or to do so in a timely manner, we may not be able to achieve our planned future business
growth and our results of operations may be materially and adversely affected.
In addition, our future business
plans may result in significant capital expenditures, selling expenses, and administrative and other operating costs incurred by us, which
may or may not be recoverable, or may or may not bring in a positive result to our revenue. There is no assurance that we will successfully
implement our strategies or that our strategies, even if implemented, will result in us achieving our objectives. Our business, financial
condition and results of operations may be materially and adversely affected if our business objectives are not achieved.
37
Protection of intellectual property rights
may not prevent third parties and/or our competitors' infringement on our teaching and learning materials or self-developed software,
which could weaken our competitive position and harm our business and results of operations
Our success depends upon,
among other things, the protection of copyrights of our teaching and learning materials or self-developed software and other intellectual
property rights. We rely on a combination of copyrights, trademarks, contractual restrictions and other software security technologies
to protect, and restrict unauthorized access to, our intellectual property rights in teaching and learning materials or self-developed
software. As of the date of the annual report, Lichen Zixun has registered
four trademarks in Hong
Kong and the PRC and Lichen Education has registered eight copyrights for our financia
l and taxation training software and financial
and taxation analysis software in the PRC.
For our software developed
by external software developers, we also own all the rights with respect to the software and are entitled to request the software developers
to provide all source codes of the software pursuant to the agreements for software upgrade or development between our Subsidiaries and
the software developers. The efforts that we take to protect our intellectual property rights may not always be sufficient or effective.
Protecting our intellectual property rights can become costly and time consuming and may not always be successful. Our customers, being
the Partnered Institutions under the Partnership Agreements, may disseminate our teaching and learning materials through the internet
or other media without our consent. In addition, our self-developed software products are subject to the risks of piracy, such as reverse
engineering, secondary development, unauthorized copying or other misappropriation by our customers or other third parties. If we fail
to prevent the infringement of our intellectual property rights, the rights could be diminished and our competitive position could suffer,
which could harm our business and results of operations.
The validity, enforceability
and scope of protection available under the relevant intellectual property laws in China are uncertain and still evolving. Implementation
and enforcement of Chinese intellectual property-related laws have historically been deficient and ineffective. Accordingly, intellectual
property and confidentiality legal regimes in China may not afford protection to the same extent as in the United States or other countries.
The experience and capabilities of Chinese courts in handling intellectual property litigation varies, and outcomes are unpredictable.
Further, such litigation may require a significant expenditure of cash and may divert management's attention from our operations,
which could harm our business, financial condition and results of operations. An adverse determination in any such litigation could materially
impair our intellectual property rights and may harm our business, prospects and reputation.
We may face disputes from time to time relating
to the intellectual property rights of third parties. We cannot assure you that our teaching and learning materials supplied to the Partnered
Institutions under the Partnership Agreements or our self-developed software do not or will not infringe intellectual property rights
of third parties
We have and may continue to
be involved in legal and other disputes in the ordinary course of our business, including allegations against us for potential infringement
of third-party copyrights or other intellectual property rights. Participation in such litigation and legal proceedings may also cause
us to incur substantial expenses and divert the time and attention of our management. We may be required to pay damages or incur settlement
expenses. Any similar claim against us, even without any merit, could also hurt our reputation and brand image. Any such event could have
a material and adverse effect on our business, financial condition and results of operations.
We have limited insurance coverage to protect
us against all risks associated with our business operations
Currently, we only maintain
motor vehicle insurance policies and social insurance policies for our employees in the PRC. We believe our insurance coverage is consistent
with the industry practice in the PRC and we have not experienced any material insurance claims in relation to our business as of the
date of the annual report. We do not maintain insurance to cover all our assets or properties or any business interruption insurance.
Any damage to our assets or properties due to natural disasters or accidents and any business disruption could result in our incurring
substantial costs and diversion of resources, which would have an adverse effect on our business and results of operations.
38
Risks Relating to Our Industry
The financial and taxation solution service,
education support service and software and maintenance service industries rely on manpower and the increase in our staff costs may materially
and adversely affect our operations, profitability and financial condition
The operations of our Subsidiaries
are labor-intensive and our Subsidiaries relies on a stable supply of financial and taxation personnel and practitioners and R&D personnel
in the PRC, in particular, our internal consultants and software R&D staff. As of the date of this annual report, we have not experienced
any shortage of staff in the PRC. For the years ended December 31, 2022, 2021, and 2020, the staff costs under cost of revenues were approximately
$10.52 million, $11.08 million, and $9.10 million, respectively. The average annual wage of employees in the financial and software industry
in the PRC has been increasing in recent years and may continue to increase in future. If we are unable to identify and employ other appropriate
means to reduce our staff costs, or pass such increase in our staff costs to our customers, the results of our operations, profitability
and financial condition may be adversely affected.
Our customer base is primarily concentrated
on business enterprises and Partnered Institutions in the PRC. Any slowdown of the enterprises' growth and development in the PRC
or demands for financial and taxation solution services, education support services or software and maintenance services could have a
material adverse effect on our business, financial condition and results of operations
All of our revenue during
the years ended December 31, 20212 and 2021 was generated in the PRC. According to Frost & Sullivan, the growing number of enterprises
and rapid development of small and medium-sized enterprises in the PRC lead to the demand for quality financial and taxation solution
services. In addition, amongst other factors, the increased awareness of business enterprises in the PRC to compliance requirements with
respect to financial and taxation laws and accounting standards, the inclination to improve their financial taxation or internal control
systems to improve their cost efficiency, financial management model and productivity in an increasingly competitive business environment,
the increasingly common use of artificial intelligence and big data to devise efficient financial and taxation management models and solutions,
and the difficulties for small and medium-sized enterprises to attract or recruit experienced financial and taxation personnel, as such
enterprises may not be able to offer competitive remuneration package, have also driven demands for financial and taxation solution services.
With respect to education
support services, according to Frost & Sullivan, high-end comprehensive accountants are highly welcomed by modern enterprises, which
in turn creates demand and opportunities for education support services. In addition, the continuous development of internet technologies
and increasingly complex financial and taxation system have also driven business enterprises to adopt financial and taxation software
in their operation processes to improve their efficiency. However, we cannot assure you that there will be continuous development of business
enterprises in the PRC or growth in demand of our services or products in the future. If there is any slowdown of business growth or development
in the PRC or demand for our services or products due to policy changes or change in business practices or operating environment, our
business, financial condition and results of our operations will be materially and adversely affected.
We face significant competition in various
geographical locations where we offer our financial and taxation solution services, and if we fail to compete effectively, we may lose
market share and our profitability could be adversely affected
According to Frost & Sullivan,
the financial and taxation solution services market in the PRC is rapidly evolving, highly fragmented and competitive. There is no enterprise
that currently dominates this industry or that occupies the leading position in this industry. According to Frost & Sullivan, the
top 10 "Solution Service Specialists" in the PRC, defined as service providers that focus on the market of financial and taxation
solution service, only accounted for approximately 2.6% of the total market share in terms of revenue in 2019. Competition is expected
to persist and intensify in the near future. We, in particular, face intense competition in our financial and taxation solution services
in the geographical locations where we offer such services from many different smaller sized organizations that focus on providing similar
services. As a result of such intense competition, the number of our customers may decrease. We may be required to reduce our financial
and taxation solution services fees in response to competition in order to retain or attract customers. As a result, our revenue and profitability
may be adversely affected. We cannot assure you that we will be able to compete successfully against current or potential competitors.
If we are unable to maintain our competitive position or otherwise respond to market competition effectively, we may lose our market share
and our profitability could be adversely affected.
39
Item
4. Information on the Company
4.A. History and Development of the Company
Corporate History
Lichen China Limited was incorporated on April
13, 2016 under the laws of the Cayman Islands. As of the date of this annual report, the authorized share capital of the Company is US$50,000
divided into 1,000,000,000 Class A Ordinary Shares and 250,000,000 Class B Ordinary Shares, of which 17,500,000 Class A Ordinary Shares
and 9,000,000 Class B Ordinary Shares are issued and outstanding. The Company is a holding company and is currently not actively engaging
in any business. Lichen China Limited controls and receives the economic benefits of its PRC subsidiaries' business operation, if
any, through equity ownership.
Legend Consulting BVI was incorporated on December
20, 2013 under the laws of the British Virgin Islands with limited liability. Legend Consulting BVI is a wholly owned subsidiary of the
Company. Legend Consulting BVI is a holding company and is currently not actively engaging in any business.
Legend Consulting HK was formed on January 8,
2014 under the laws of Hong Kong. Legend Consulting HK is a wholly owned subsidiary of Legend Consulting BVI. It is a holding company
and is not actively engaging in any business.
Lichen Zixun was established on April 14, 2004
under the laws of the PRC. Lichen Zixun is a wholly owned subsidiary of Legend Consulting HK and is our main operating entity.
Lichen Education was established on July 30, 2014
under the laws of PRC. Lichen Education is a wholly owned subsidiary of Lichen Zixun and is our operating entity.
Transfers of Cash between Our Company and Our
Subsidiaries
We currently have not
maintained any cash management policies that dictate the purpose, amount and procedure of cash transfers between the Company, our subsidiaries,
or investors. Rather, the funds can be transferred in accordance with the applicable PRC laws and regulations. To the extent cash or assets
in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or
for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us or our subsidiaries by the PRC government to transfer cash or assets.
Under existing PRC foreign
exchange regulations, payment of current account items, such as profit distributions and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange, or the SAFE, by complying
with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign currencies to us without prior
approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC complies with certain procedures
under PRC foreign exchange regulations, such as the overseas investment registrations by our shareholders or the ultimate shareholders
of our corporate shareholders who are PRC residents. Approval from, or registration with, appropriate government authorities is, however,
required where the RMB 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. The PRC government may also at its discretion restrict access in the future to foreign currencies
for current account transactions. Current PRC regulations permit our PRC subsidiaries to pay dividends to the Company only out of their
accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. As of the date of this report,
there are no restrictions or limitations imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong
(including funds from Hong Kong to the PRC), except for transfer of funds involving money laundering and criminal activities. Cayman Islands
law prescribes that a company may only pay dividends out of its profits. Other than that, there is no restrictions on Lichen China Limited's
ability to transfer cash to investors. See "Risk Factors - Risks Related to Doing Business in China - To the extent cash or assets
in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available to fund operations or
for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability
of us or our subsidiaries by the PRC government to transfer cash or assets," "Risk Factors - Risks Related to Doing Business
in China - We 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 adverse effect on
our ability to conduct our business," and "Risk Factors - Risks Related to Doing Business in China - Our PRC subsidiaries
are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability
to conduct our business."
40
As a holding company,
we may rely on dividends and other distributions on equity paid by our subsidiaries, including those based in the PRC, for our cash and
financing requirements. If any of our PRC subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt
may restrict their ability to pay dividends to us. Lichen China Limited is permitted under the laws of the Cayman Islands to provide funding
to our subsidiaries incorporated in the British Virgin Islands and Hong Kong through loans or capital contributions without restrictions
on the amount of the funds. Our subsidiaries are permitted under the respective laws of the British Virgin Islands and Hong Kong to provide
funding to Lichen China Limited through dividend distribution without restrictions on the amount of the funds. There are no restrictions
on dividends transfers from HK to BVI and BVI to the Cayman Islands. Current PRC regulations permit our WFOE to pay dividends to
the Company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
The PRC has currency
and capital transfer regulations that require us to comply with certain requirements for the movement of capital. The Company is able
to transfer cash (US Dollars) to its PRC subsidiaries through an investment (by increasing the Company's registered capital in a
PRC subsidiary). The Company's subsidiaries within China can transfer funds to each other when necessary through the way of current
lending. The transfer of funds among companies are subject to the Provisions on Private Lending Cases, which was implemented on August
20, 2020 to regulate the financing activities between natural persons, legal persons and unincorporated organizations. As advised by our
PRC counsel, Tianyuan Law Firm, the Provisions on Private Lending Cases does not prohibit using cash generated from one subsidiary to
fund another subsidiary's operations. We have not been notified of any other restriction which could limit our PRC subsidiaries'
ability to transfer cash between PRC subsidiaries. The Company's subsidiaries in the PRC have not transferred any earnings or cash
to the Company to date. As of the date of this report, there has not been any assets or cash transfer between the holding company and
its subsidiaries. As of the date of this report, there has not been any dividends or distributions made to US investors. The Company's
business is primarily conducted through its subsidiaries. The Company is a holding company and its material assets consist solely of the
ownership interests held in its PRC subsidiaries. The Company relies on dividends paid by its subsidiaries for its working capital and
cash needs, including the funds necessary: (i) to pay dividends or cash distributions to its shareholders, (ii) to service any debt obligations
and (iii) to pay operating expenses. As a result of PRC laws and regulations (noted below) that require annual appropriations of 10% of
after-tax income to be set aside in a general reserve fund prior to payment of dividends, the Company's PRC subsidiaries are restricted
in that respect, as well as in other respects noted below, in their ability to transfer a portion of their net assets to the Company as
a dividend.
With respect to transferring
cash from the Company to its subsidiaries, increasing the Company's registered capital in a PRC subsidiary requires the filing of
the local commerce department, while a shareholder loan requires a filing with the State Administration of Foreign Exchange or its local
bureau. Aside from the declaration to the State Administration of Foreign Exchange, there is no restriction or limitations on such cash
transfer or earnings distribution.
With respect to the payment
of dividends, we note the following:
1.
PRC
regulations currently permit the payment of dividends only out of accumulated profits, as determined in accordance with accounting standards
and PRC regulations (an in-depth description of the PRC regulations is set forth below);
2.
Our
PRC subsidiaries are required to set aside, at a minimum, 10% of their net income after taxes, based on PRC accounting standards, each
year as statutory surplus reserves until the cumulative amount of such reserves reaches 50% of their registered capital;
3.
Such
reserves may not be distributed as cash dividends;
4.
Our
PRC subsidiaries may also allocate a portion of their after-tax profits to fund their staff welfare and bonus funds; except in the event
of a liquidation, these funds may also not be distributed to shareholders; the Company does not participate in a Common Welfare Fund;
and
5.
The
incurrence of debt, specifically the instruments governing such debt, may restrict a subsidiary's ability to pay shareholder dividends
or make other cash distributions.
41
If, for the reasons
noted above, our subsidiaries are unable to pay shareholder dividends and/or make other cash payments to the Company when needed, the
Company's ability to conduct operations, make investments, engage in acquisitions, or undertake other activities requiring working
capital may be materially and adversely affected. However, our operations and business, including investment and/or acquisitions by our
subsidiaries within China, will not be affected as long as the capital is not transferred in or out of the PRC.
During the fiscal years
ended December 31, 2020, Lichen Zixun made dividend payments of RMB30 million (approximately $4.3 million) to the then eventual shareholders
of Lichen Zixun, who are PRC individuals. The Company made no such dividend, distribution or transfer during the fiscal year ended December
31, 2022 and 2021. As of the date of this report, the Company or its subsidiaries have made no other transfers, dividends, or distributions
to investors and no investors have made transfers, dividends, or distributions to the Company or its subsidiaries.
On February 10, 2023,
Lichen China Limited made payments of $6 million to its subsidiary Legend Consulting BVI for investment. As of the date of this report,
no other dividends, distributions or transfers has been made between Lichen China Limited and any of its subsidiaries. For the foreseeable
future, the Company intends to use the earnings for research and development, to develop new products and to expand its production capacity.
As a result, we do not expect to pay any cash dividends in the foreseeable future. Also, as of the date of this report, no cash generated
from one subsidiary is used to fund another subsidiary's operations and we do not anticipate any difficulties or limitations on
our ability to transfer cash between subsidiaries.
See "Item 8. Financial Information –
A. Consolidated Statements and Other Financial Information – Dividend Policy" and "
Item
3. Key
Information — 3.D. Risk Factors — Risks Relating to our Corporate Structure –
We rely on dividends
and other distributions on equity paid by the Operating Subsidiaries to fund any cash and financing requirements we may have, and any
limitation on the ability of the Operating Subsidiaries to make payments to us could have a material adverse effect on our ability to
conduct our business
".
Implication of the Holding Foreign Companies
Accountable Act (the "HFCAA")
U.S. laws and regulations, including the Holding
Foreign Companies Accountable Act, or HFCAA, may restrict or eliminate our ability to complete a business combination with certain companies,
particularly those acquisition candidates with substantial operations in China.
On March 24, 2021, the SEC adopted interim final
rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. An identified issuer will be required
to comply with these rules if the SEC identifies it as having a "non-inspection" year under a process to be subsequently established
by the SEC. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022,
legislation entitled "Consolidated Appropriations Act, 2023" (the "Consolidated Appropriations Act") was signed
into law by President Biden, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies
Accountable Act and amended the HFCAA 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, thus reducing the time period for triggering
the prohibition on trading. If our auditor cannot be inspected by the Public Company Accounting Oversight Board, or the PCAOB, for two
consecutive years, the trading of our securities on any U.S. national securities exchanges, as well as any over-the-counter trading in
the U.S., will be prohibited. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework
for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely
registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA.
The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public
accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position
taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued a report on its determinations that it is unable
to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because
of positions taken by PRC authorities in those jurisdictions, which determinations were vacated on December 15, 2022.
42
On August 26, 2022, the PCAOB announced
that it had signed a Statement of Protocol (the "SOP") with the China Securities Regulatory Commission and the Ministry of
Finance of China. The SOP, together with two protocol agreements governing inspections and investigations (together, the "SOP
Agreement"), establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of
audit firms based in mainland China and Hong Kong, as required under U.S. law.
On December 15, 2022, the PCAOB announced that
it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China
and Hong Kong completely in 2022. The PCAOB Board vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate
completely registered public accounting firms headquartered in mainland China and Hong Kong. However, whether the PCAOB will continue
to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong
Kong is subject to uncertainties and depends on a number of factors out of our and our auditor's control. The PCAOB continues to
demand complete access in mainland China and Hong Kong moving forward and is making plans to resume regular inspections in early 2023
and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. The PCAOB has also indicated
that it will act immediately to consider the need to issue new determinations with the HFCAA if needed.
As of the date of the annual report, TPS Thayer,
our auditor for the fiscal year ended December 31, 2022 and 2021, headquartered in Sugar Land, Texas, is subject to laws in the United
States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. TPS
Thayer's registration with the PCAOB took effect in September 2020 and it is currently subject to PCAOB inspections. As of the date
of the annual report, B&V, our auditor for the fiscal year ended December 31, 2020, withdrew its registration from the PCAOB in January
2022.
However, we cannot assure you whether Nasdaq or
regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's
audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or
experience as it relates to the audit of our financial statements. In the event it is later determined that the PCAOB is unable to inspect
or investigate completely the Company's auditor because of a position taken by an authority in a foreign jurisdiction, then such
lack of inspection could cause trading in the Company's securities to be prohibited under the HFCAA and AHFCAA, and ultimately results
in a determination by a securities exchange to delist the Company's securities. The delisting of our Class A Ordinary Shares, or
the threat of their being delisted, may materially and adversely affect the value of your investment, even making it worthless. In
addition, under the AHFCAA, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is
not inspected by the PCAOB for two consecutive years instead of three, and this ultimately could result in our Class A Ordinary Shares
being delisted by and exchange. See "
Item 3. Key
Information — 3.D. Risk
Factors — Risks Related to Doing Business in China
–
The recent joint statement by the SEC and PCAOB, proposed rule
changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to
be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not
inspected by the PCAOB. These developments could add uncertainties to our offering" on page 24 and "Trading in our securities
may be prohibited under the HFCAA and as a result an exchange may determine to delist our securities if it is later determined that the
PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction"
on page 25. We cannot assure you whether Nasdaq or other regulatory authorities will apply additional or more stringent criteria to us.
Such uncertainty could cause the market price of our Class A Ordinary Shares to be materially and adversely affected.
Recent Regulatory Development in the PRC
The Regulations on Mergers
and Acquisitions of Domestic Companies by Foreign Investors (the "M&A Rules"), adopted by six PRC regulatory agencies
in 2006 and amended in 2009, include, among other things, provisions that purport to require that an offshore special purpose vehicle,
formed for the purpose of an overseas listing of securities through acquisitions of domestic enterprises in China or assets and controlled
by enterprises or individuals in China, 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. On September 21, 2006, pursuant to the M&A Rules and other PRC laws, the CSRC
published on its official website relevant guidance regarding its approval of the listing and trading of special purpose vehicles'
securities on overseas stock exchanges, including a list of application materials. However, substantial uncertainty remains regarding
the scope and applicability of the M&A Rules to offshore special purpose vehicles.
43
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. These opinions and any related implementation rules to
be enacted may subject us to additional compliance requirement in the future.
Pursuant
to Cybersecurity Review Measures which were issued on December 28, 2021 and became effective on February 15, 2022, network platform
operators holding over one million users' personal information must apply with the Cybersecurity Review Office for a cybersecurity
review before any public offering at a foreign stock exchange. However, given the Cybersecurity Review Measures were relatively new, there
are substantial uncertainties as to the interpretation, application and enforcement of the Cybersecurity Review Measures. It remains uncertain
whether we should apply for cybersecurity review prior to any offshore offering and that we would be able to complete the applicable cybersecurity
review procedures in a timely manner, or at all, if we are required to do so. In addition, on November 14, 2021, the Cyberspace Administration
of China (the "CAC") published the Administration Regulations on Network Data Security (Draft for Comments), or the Draft
Measures for Network Data Security, which provides that data processors conducting the following activities shall apply for cybersecurity
review: (i) merger, reorganization or separation 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) overseas listing
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. The CAC solicited comments
on this draft, but there is no timetable as to when it will be enacted.
On
February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies
(the "Overseas Listing Trial Measures") and five relevant guidelines, which became effective on March 31, 2023.
According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either
in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that an overseas listing or offering is explicitly prohibited, if any of the following: (1) such securities
offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (2) the intended
securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council
in accordance with law; (3) the domestic company intending to make the securities offering and listing, or its controlling shareholder(s)
and the actual controller, have committed relevant crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining
the order of the socialist market economy during the latest three years; (4) the domestic company intending to make the securities offering
and listing is currently under investigations for suspicion of criminal offenses or major violations of laws and regulations, and no conclusion
has yet been made thereof; or (5) there are material ownership disputes over equity held by the domestic company's controlling shareholder(s)
or by other shareholder(s) that are controlled by the controlling shareholder(s) and/or actual controller.
The Overseas Listing
Trial Measures also provides that if the issuer meets both the following criteria, the overseas securities offering and listing conducted
by such issuer will be deemed as indirect overseas offering by PRC domestic companies: (1) 50% or more of any of the issuer's operating
revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent fiscal
year is accounted for by domestic companies; and (2) the issuer's main business activities are conducted in China, or its main place(s)
of business are located in China, or the majority of senior management staff in charge of its business operations and management are PRC
citizens or have their usual place(s) of residence located in China. Where an issuer submits an application for initial public offering
to competent overseas regulators, such issuer must file with the CSRC within three business days after such application is submitted.
In addition, the Overseas Listing Trial Measures provide that the direct or indirect overseas listings of the assets of domestic companies
through one or more acquisitions, share swaps, transfers or other transaction arrangements shall be subject to filing procedures in accordance
with the Overseas Listing Trial Measures. The Overseas Listing Trial Measures also requires subsequent reports to be filed with the CSRC
on material events, such as change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings
and listings.
44
At a press conference
held for these new regulations ("Press Conference"), officials from the CSRC clarified that the domestic companies that have
already been listed overseas on or before March 31, 2023 shall be deemed as existing issuers (the "Existing Issuers"). Existing
Issuers are not required to complete the filling procedures immediately, and they shall be required to file with the CSRC upon occurrences
of certain subsequent matters such as follow-on offerings of securities. According to the Overseas Listing Trial Measures and the Press
Conference, the existing domestic companies that have completed overseas offering and listing before March 31, 2023, such as us, shall
not be required to perform filing procedures for the completed overseas securities issuance and listing. However, from the effective date
of the regulation, any of our subsequent securities offering in the same overseas market or subsequent securities offering and listing
in other overseas markets shall be subject to the filing requirement with the CSRC within three working days after the offering is completed
or after the relevant application is submitted to the relevant overseas authorities, respectively. If it is determined that any approval,
filing or other administrative procedures from other PRC governmental authorities is required for any future offering or listing, we cannot
assure you that we can obtain the required approval or accomplish the required filings or other regulatory procedures in a timely manner,
or at all. If we fail to fulfill filing procedure as stipulated by the Trial Measures or offer and list securities in an overseas market
in violation of the Trial Measures, the CSRC may order rectification, issue warnings to us, and impose a fine of between RMB1,000,000
and RMB10,000,000. Persons-in-charge and other persons that are directly liable for such failure shall be warned and each imposed a fine
from RMB500,000 to RMB5,000,000. Controlling shareholders and actual controlling persons of us that organize or instruct such violations
shall be imposed a fine from RMB1,000,000 and RMB10,000,000.
On February 24,
2023, the CSRC published the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities
Offering and Listing by Domestic Enterprises (the "Provisions on Confidentiality and Archives Administration"), which came
into effect on March 31, 2023. The Provisions on Confidentiality and Archives Administration requires that, in the process of overseas
issuance and listing of securities by domestic entities, the domestic entities, and securities companies and securities service institutions
that provide relevant securities service shall strictly implement the provisions of relevant laws and regulations and the requirements
of these provisions, establish and improve rules on confidentiality and archives administration. Where the domestic entities provide
with or publicly disclose documents, materials or other items related to the state secrets and government work secrets to the relevant
securities companies, securities service institutions, overseas regulatory authorities, or other entities or individuals, the companies
shall apply for approval of competent departments with the authority of examination and approval in accordance with law and report the
matter to the secrecy administrative departments at the same level for record filing. Where there is unclear or controversial whether
or not the concerned materials are related to state secrets, the materials shall be reported to the relevant secrecy administrative departments
for determination. However, there remain uncertainties regarding the further interpretation and implementation of the Provisions on Confidentiality
and Archives Administration.
As of the date of this annual report,
we
and our PRC subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the
business operations of our PRC subsidiaries. In addition,
as of the date of this annual report,
we
and our PRC subsidiaries are not required to obtain approval or permission from the CSRC or the CAC or any other entity that is required
to approve our PRC subsidiaries' operations or required for us to offer securities to foreign investors under any currently effective
PRC laws, regulations, and regulatory rules.
If it is determined that we are subject to filing requirements imposed by the CSRC
under the Overseas Listing Regulations or approvals from other PRC regulatory authorities or other procedures, including the cybersecurity
review under the revised
Cybersecurity Review Measures
, for our future offshore offerings,
it would be uncertain whether we can or how long it will take us to complete such procedures or obtain such approval and any such approval
could be rescinded. Any failure to obtain or delay in completing such procedures or obtaining such approval for our offshore offerings,
or a rescission of any such approval if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities
for failure to file with the CSRC or failure to seek approval from other government authorization for our offshore 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 our offshore 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 Class A Ordinary Shares. The CSRC or other PRC regulatory authorities also may take actions requiring us, or
making it advisable for us, to halt our offshore offerings before settlement and delivery of the securities 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 their approvals or accomplish the required filing or other regulatory procedures for our prior offshore 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 Class A Ordinary Shares.
If the CSRC, CAC or other regulatory agencies
later promulgate new rules or explanations requiring that we obtain their approvals for this offering and any follow-on offering, we may
be unable to obtain such approvals and we may face sanctions by the CSRC, CAC or other PRC regulatory agencies for failure to seek their
approval which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors and
the securities currently being offered may substantially decline in value and be worthless. For more details, see "
Item
3. Key
Information — 3.D. Risk Factors – Risks Related to Doing Business in China."
45
Corporate Information
Our principal executive office is located B2306,
Block B Tower 3, Jinjiang Wanda Plaza Commercial Complex 888 Century Avenue Meiling Street, Jinjiang City Fujian, PRC. The telephone number
of our principal executive offices is +86-595-85633335. Our registered office provider in Cayman Islands is Ocorian Trust (Cayman) Limited.
Our registered office in Cayman Islands is at Windward 3, Regatta Office Park, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands. Our
registered agent in the United States is Cogency Global Inc., 122 E 42nd St 18th Fl, New York, NY 10168.   We maintain a corporate
website at http://www.lichenzx.com. We do not incorporate the information on our website into this report and you should not consider
any information on, or that can be accessed through, our website as part of this report.
B. Business Overview
Overview
We are a leading financial
and taxation service provider in China, in terms of revenue, as cited in the industry report of Frost & Sullivan. We have operated
as a dedicated financial and taxation solution service specialist of professional services in China for over 18 years. We focus on providing
(i) financial and taxation solution services; (ii) education support services; and (iii) software and maintenance services in the PRC
under our "Lichen" brand. With over 18 years of operation history, we have gained substantial experience and established a
solid reputation with our proven track record in the PRC.
Leveraging our business relationships
with our Partnered Institutions, our expertise and experience obtained in the financial and taxation solution services market, and our
experience in developing financial and taxation training software and financial and taxation analysis software by our R&D department,
we launched a new business line of software and maintenance services in 2019 to expand our software product offerings to enterprise customers,
universities, colleges and educational institutes and have started to generate revenue from provision of such services since then.
In recognition of our expertise
and experience earned from over 18 years in the financial and taxation solution services industry, we have built up our reputation as
a financial and taxation solution services provider of professional services in the PRC. From 2012 to 2021, we were recognized as one
of the Top 50 Providers of Management Consulting Services in China for ten consecutive years by the China Enterprise Confederation Management
Advisory Committee.
Our Partnered Institutions,
located in 10 provinces or municipalities and 20 cities in the PRC, are education services providers which mainly engage in the organization
of various seminars, talks and training courses to entrepreneurs, senior executives, as well as financial and taxation executives. Through
our business relationships with these Partnered Institutions, we are able to, on the one hand, provide our education support services
to them and, on the other hand, by leveraging their business networks and their geographical coverage, promote our brand name and services
to the participants of these seminars, talks and courses organized by them.
Recent Developments
On February 8, 2023, the Company
completed its initial public offering on the Nasdaq Capital Market. In this offering, 4,000,000 Class A Ordinary Shares were issued at
a price of $4.00 per share. The gross proceeds received from the initial public offering totaled $16 million. The Offering closed on February
8, 2023 and the Class A Ordinary Shares began trading on February 6, 2023 on the Nasdaq Capital Market under the ticker symbol "LICN."
46
Our Revenues Model and Core Services
We primarily provide (i) financial
and taxation solution services; (ii) education support services; and (iii) software and maintenance services in the PRC. The connections
and synergies amongst our services are illustrated in the diagram below:
The financial and taxation
solution services provided to our enterprise customers mainly comprise financial and taxation related management consultation, internal
control management consultation, annual or regular consultation, and internal training and general consultation.
The education support services
provided to our Partnered Institutions mainly comprise the provision of marketing, operational and technical support and the sales of
teaching and learning materials.
The software and maintenance
services provided to our enterprise customers mainly comprise the sales of financial and taxation analysis software and sales of financial
and taxation training software.
Financial and Taxation Services
We focus on our financial
and taxation solution services to business enterprises in the PRC. We believe that every enterprise, regardless of its size, should adopt
a sound financial and taxation management system for growth and sustainable development. Our financial and taxation solution services
are customized based on the specific needs and requirements of our customers.
When we accept an engagement
for financial or taxation solution services, we will first assess the customer's needs and background so that we can have a general
picture of the problem they face and the potential solution suitable for the case. Thus, we can quote a service fee based on our preliminary
analysis on the total hours and experts to be used on this case according to its nature and the scope of service. The service fee is calculated
on a case-by-case basis. We negotiate and fix the fee before the engagement start and collected in each phase of the engagement.
Our team consists of internal
consultants and external experts with extensive experience and knowledge in the financial and taxation solution services industry. As
of the date of this annual report, our team is comprised of 47 external experts and 254 internal consultants of our company that are responsible
for providing financial and taxation solutions to our customers. In particular, all of our internal consultants possess professional qualifications
in accounting and the majority of our project managers or directors were intermediate accountants, senior accountants or certified public
accountants, as of June 30, 2022. In addition, as of June, 2022, over 80.0% of our external experts were registered certified public accountants
or registered certified tax agents, and over 85.0% of our external experts possessed a master's degree or doctoral degree, with
a number of them recognized as leading individuals in the financial and taxation field, who have served as lecturers in major universities
in the PRC, published teaching materials, books and case studies on a wide range of taxation, risk management and corporate governance
related subjects and have been granted awards or subsidies from the governmental bodies, including the State Council of the PRC.
47
We have established and implemented
stringent policy for selection of our external experts and recruitment of our internal consultants. When selecting a suitable candidate,
we will take into account a number of factors, including their academic background, professional qualifications, working experience, reputation
and influence in the financial and taxation industry. With our consultants and experts under the supervision and guidance of our management
team, we believe that we are capable of providing customized and practical solutions to cater to our customers' diversified financial
and taxation needs in an effective manner. The experience and expertise of our team is designed to also help enhance the quality and standard,
and ensure consistency, of our services.
We generally enter into Expert
Cooperation Agreements with the external experts. Set out below is a summary of the principal terms of the Expert Cooperation Agreement:
Validity period
Fixed term of five years from the date of the Expert Cooperation Agreement.
Payment terms
We typically apportion 50% of the amount received under the financial and taxation solution projects to the external expert by way of progress payment if we require their assistance in these projects.
Intellectual property rights
Any intellectual property rights arising from the implementation of the Expert Cooperation Agreement belong to our Subsidiaries.
Confidentiality
Any technology secrets and trade secrets are to be kept confidential by the external expert and this obligation survives the expiration of the Expert Cooperation Agreement for a period of five years.
Exclusivity
The external expert will not provide results of the collaborations with our Subsidiaries on education courses and financial and taxation solution projects or related services to any third parties during the term of the Expert Cooperation Agreement.
Restrictive covenant
The external experts are prohibited from dealing with our customers directly during the term of the Expert Cooperation Agreement and three years after its expiration.
Termination
The Expert Cooperation Agreement may be terminated by mutual agreement reached by both parties.
Workflow of our financial and taxation solution
projects
Once customers inform us of
their needs, we undertake a preliminary assessment and proposal to analyze the feasibility of the customer projects and to set out the
timeline of the projects. We then enter into agreements with customers. Thereafter, we conduct an on-site inspection and on-site training,
provide diagnosis reports, and have ongoing discussions with customers until they are satisfied with our recommendations.
We endeavor to utilize stringent
quality control over the services we provide to our customers, with the goal of providing customized solutions based on the actual business
and financial condition of each customer. We have devised a number of tools and measures to ensure that consistent, professional and high-quality
services can be rendered by our consultants and experts to our customers. Further, we keep abreast of the relevant financial and taxation
laws and regulations in the PRC and economic development, such that our advice to our customers corresponds with the latest trends and
development in the financial and taxation regulations and policies of the PRC and is practical to our customers in light of the then existing
business environment.
With the experience of our
internal consultants, we are able to tailor solutions to our customers' needs. Our internal consultants, apart from possessing professional
qualifications in accounting, are also experienced personnel in the financial and/or taxation sectors, as our internal recruitment policies
require our internal consultants and project managers to possess at least three and seven years of relevant working and/or consultancy
experience, respectively. As such, we believe that our internal consultants have ample experience in the financial and/or taxation sectors
to execute our financial and taxation solution projects.
48
Our work cycle typically spans
a period of 10 to 16 weeks, with approximately two to four weeks allocated to planning and designing the diagnosis report, seven to nine
weeks allocated to implementing the consultation plan and providing guidance to our customers and one to three weeks allocated to assessment.
We typically assign three internal consultants to form a working team. Our internal consultants are also required to provide their services
on an as-requested basis for our annual and regular consultation services.
Our internal consultants will,
depending on the complexity of the project, work on-site from time to time. During on-site inspections, our internal consultants will
strive to understand the business operations and goals of our customers by:
(i)
conducting
interviews with directors, senior management and employees of the enterprise;
(ii)
reviewing
corporate and financial documents, including those relating to history and corporate structure, organization structure, human resources
management, internal control measures and sales invoice;
(iii)
reviewing
business plans of the enterprise; and
(iv)
observing
the day-to-day operations of the enterprise, etc.
Such on-site inspections can
assist our internal consultants in devising the project diagnosis report. The project diagnosis report aims to point out the shortcoming,
if any, of the current system of the enterprise and enables the enterprise to achieve its goals. The diagnosis report is then submitted
to our quality control department for its approval before we submit the final version to our customers to implement. The implementation
of the approved diagnosis report relies on our internal consultants to provide training to the employees of the customers and on-site
guidance, to ensure the implementation process can adhere to the actual needs and problems of the enterprise, and to provide timely advice
to the enterprise whenever the enterprise encounters any issues or difficulties during implementation.
By implementing the recommended
measures set out in the project diagnosis report, we believe our customers are empowered to mitigate or lower their operational and financial
risks, strengthen their management capabilities and increase their financial, taxation and/or internal control awareness, thereby improving
their results of operations and maintaining their sustainability.
Scope of our financial and taxation solution services
1. Financial and taxation related management consultation
We provide financial and taxation
related management consultation services covering four aspects, namely, (a) cost management; (b) financial risk management; (c) computerized
financial information systems; and (d) financial management system optimization. We identify weaknesses in our customers' financial
and taxation related management and provide advice and internal trainings to enhance the enterprise's overall financial and taxation
related management capabilities.
49
The areas, contents and intended
benefits of our financial and taxation related management consultation services are set out below:
Area of Services
Contents of Services
Intended benefits for customers
Cost management
●
—
—
—
—
Formulation of:
Procurement
    policy (including procurement procedures, suppliers management and contract management)
Payment
    policy (including credit assessment and credit policy)
Inventory
    management policy (including inventory accounting and optimal inventory management)
Production
    management (including control on raw materials, direct labor cost management and manufacturing expense management)
Assist our customers in improving workflow and systems to provide practical cost control solutions to achieve cost savings and improve profits
Financial risks management
●
●
●
Formulation of financial risk
    management procedures (including risk identification, risk measurement and risk control)
Assist customers in setting
    out a financial budget and formulating a capital plan
Setting up financial risk warning
    system and crisis management system
Assist our customers in identifying financial risks involved in business operation, provide practical solutions to rationalize customers' financial conditions to analyze current financial risks and avoid future financial risks
Computerized financial information system
●
●
●
●
●
Selection of financial management
    software and servers
Design of integration of business
    and financial processes
Formulation of system standardization
    and financial accounting standardization
Initial design of computerization
    works
Operational tracking and improvement
    of computerization
Assist our customers in transforming their manual financial information management system to a computerized system, to reduce human resource costs, increase data timeliness and accuracy and improve financial management efficiency and effectiveness
Financial management system optimization
●
●
●
●
●
Formulation of cash budgets and
    plans
Establishment of comprehensive
    budget management
Improvement of internal control
    system
Development of finance team
Formulation of financial analysis
    and financial evaluation system
Assist clients in strengthening financial management concepts and financial management methods, developing financial analysis tools and evaluation systems to standardize financial management objectives, thereby improving corporate management efficiency and supporting corporate development strategies
50
2. Internal control management consultation
We provide internal control
management consultation services covering three aspects, namely, establishment of an (a) internal control management system; (b) internal
audit system; and (c) accounting system to enhance internal control and accounting capabilities. We identify weaknesses in our customers'
internal control, internal audit and accounting systems and recommend remedial measures to enhance the enterprise's overall internal
control and accounting capabilities.
The areas, contents and intended
benefits of our internal control management consultation services are set forth below:
Area of Services
Contents of Services
Intended benefits for customers
Establishment of an internal control management system
●
●
●
●
Improvement of internal control environment
Establishment of internal control system and process
Optimization and improvement of control procedures
Formulation of internal control manual
Assist our customers in establishing or enhancing internal control management systems to monitor procedures, improve business efficiency, increase financial reliability and integrity and ensure compliance with relevant rules and regulations
Establishment of an internal audit system
●
●
●
●
●
Adjustment of the organizational
structure and enhancement of the authority of the internal audit unit
Improvement of the independence of internal
audit unit and internal auditors
Building up of the internal audit unit and team
Improvement of internal audit system
through information technology tools
Establishment of internal audit system
Assist our customers in establishing or enhancing an internal audit system to identify and rectify operational or financial weaknesses and improve overall business efficiency and performance, in order to achieve effective control of risks through internal audit
Establishment of accounting system
●
●
●
Establishment of organizational structure and division
    of work responsibilities
Standardization of business process
Standardization of accounting process
Assist our customers in establishing or enhancing the accounting systems to sort out and systemize accounting policies and procedures, strengthening the effectiveness and accuracy of accounting and practicality of financial reports and analysis
51
3. Annual or regular consultation
We provide annual or regular
consultation services in (a) finance; (b) taxation; and (c) post financial and management or internal control project implementation.
Our annual consultation services are generally provided immediately after our financial and taxation related management consultation projects
or internal control management consultation projects, to ensure the continuous implementation of our suggestions under the respective
projects, and to provide continuous advice and guidance on day-to-day internal operation matters for our customers. In particular, our
annual consultation services include (i) tracking and enhancing the implementation of our recommendations provided under our financial
and taxation related management consultation projects or internal control management consultation projects; and (ii) providing new suggestions
and guidance where new circumstances arise in our customers' day-to-day operations which render our previous recommendations invalid
or inapplicable.
We also provide regular consultation
services on financial and taxation matters to our customers on a stand-alone basis. Our regular financial consultation services include
(i) financial consultation, which refers to providing guidance on accounting, auditing, financial analysis and financial risk management
and control, establishment of financial management systems and daily financial consultations; (ii) compliance consultation, which refers
to providing our customers with information about the latest laws and regulations on financial management and assisting them to correctly
understand and adopt appropriate financial tools; and (iii) professional training, which refers to providing training on latest financial
and taxation policies of the PRC, financial management, disclosure requirements of financial reports and any other specific areas for
which our customers require training. Our regular taxation consultation services include (i) taxation consultation, which refers to assisting
our customers to identify the relevant types of taxes and preferential tax treatments applicable to them; (ii) professional training,
which refers to providing training on latest taxation policies of the PRC and their implementation; and (iii) tax inspection assistance,
which refers to assisting our customers to prepare for tax inspection conducted by the relevant tax authorities.
As part of our annual or regular
consultation services, our internal consultants, at the request of our customers, will also meet at our customers' premises once
a month to provide on-site consultation services.
4. Internal training and general consultation
Apart from financial and taxation
related management consultation, internal control management consultation and annual or regular consultation services, we have commenced
providing on-site internal training services to our customers, as of January 2019.
In addition, we also provide
general consultation to our customers on an ad-hoc basis at customers' requests on relatively simple matters, as compared to our
other types of consultation services which generally involve more complicated, tailor-made and in-depth analysis and practical solution
proposals.
Education Support Services
Our education support services
are mainly provided to our Partnered Institutions. As of the date of this annual report, we collaborate with 22 Partnered Institutions
in 10 provinces or municipalities and 20 cities in the PRC. The Partnered Institutions are education services providers which mainly engage
in organization of various seminars, talks and training courses to entrepreneurs, senior executives, and financial and taxation executives,
etc. From the personal and business networks of our management, as well as our marketing initiatives (being our talks, seminars hosted
by the Partnered Institutions and the website shared by the Partnered Institutions), potential customers who wish to set up education
institutions may approach us and initiate discussions with us, with an aim to becoming our Partnered Institutions.
52
Scope of our education support services
1. Marketing, operational and technical support
Lichen Zixun enters into Partnership
Agreements with the Partnered Institutions to provide marketing, operational, technical and other support as part of our educational support
business for the Partnered Institutions. We allow the Partnered Institutions to use our "Lichen" brand name to operate their
education business and we provide our internal consultants to conduct high-end courses aimed at financial and taxation practitioners,
other support services such as marketing and operational support and information technology services to the Partnered Institutions.
2. Sales of teaching and learning materials
We also generate revenue from
the sales of teaching and learning materials to the Partnered Institutions. The financial and taxation related teaching and learning materials
are sold to the Partnered Institutions for their education business. We developed courses in relation to (i) accounting licensing, (ii)
accounting practice, (iii) financial management, (iv) financial tools, (v) non-financial management and (vi) taxation practice courses.
Cooperation with our Partnered Institutions
We believe that by leveraging
the business relationships with our Partnered Institutions in the past six years, as well as the expertise and experience that we have
established in the financial and taxation solution services market over the years, we have built a unique business model and have generated
synergies amongst the services that we provide as evidenced by the growth of our business.
For
the years ended December 31, 2022, 2021, and 2020, the total revenue from our education support services was approximately $4.41 million,
$4.64 million, and $4.56 million, representing approximately 13.04%, 13.52%, and 14.86%, respectively, of our total revenues for the same
periods.
It is a key and crucial element
of our Subsidiaries' business model and marketing strategy to cooperate with the Partnered Institutions, which has created an important
source of referrals for our Subsidiaries' financial and taxation solution services. For the years ended December 31, 2022, 2021,
and 2020, 154, 155, and 176 financial and taxation solution projects, respectively, were obtained from the referrals made by our Partnered
Institutions, representing approximately 38.79%, 38.60%, and 41.22%, respectively, of the total number of financial and taxation solution
projects and approximately 50.67%, 48.60% and 58.41%, respectively, of the revenue of financial and taxation solution services during
the same periods.
As to collaboration with these
education institution operators, we carry out internal assessments to evaluate the potential and capability of such customers. Our internal
assessments take into account the economic status, personal and business connections and the business belief of the intended education
institution operators. They are typically required to have good standing and strong financial backgrounds, and their intended business
location is expected to be in line with our Subsidiaries' strategic development plan, such that they may assist our Subsidiaries
to tap into those areas as we have planned. Should they reach our internal assessment standards, we require them to have an assessment
interview with our personnel. Our operations department will also conduct a feasibility study and consult with the institution in order
to choose a strategic location for the Partnered Institution. Upon passing the assessment interview, we will enter into a Partnership
Agreement with the intended education institution operator, after the terms of the agreement are agreed upon. Upon expiration of the Partnership
Agreement, we will conduct another internal assessment of the performance and future prospects of the Partnered Institution, to determine
whether the Partnership Agreement should be renewed.
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As of the date of this annual
report, we have agreements with 22 Partnered Institutions, including Jinjiang Xingminqi Accounting Vocational Training School and Quanzhou
City Lichen Accounting Vocational Training School, which are controlled by Ya Li, our CEO, and the rest of them are unrelated third parties.
Set out below are the principal terms of the Partnership Agreement:
Validity period
Fixed term of five years from the date of the Partnership Agreement.
Payment terms
A fixed fee is payable annually by way of bank transfer and no progress payments are resulted from the Partnership Agreement. The annual fees payable under the first year are to be settled within seven days after signing the Partnership Agreement, and the annual fees for the remaining years are to be paid in a specified month as agreed between our Subsidiaries and the Partnered Institution. For details relating to the pricing of the annual fees we charge Partnered Institutions, please refer to "Pricing" in this section. As for online courses, we charge a fixed fee ranging from RMB200 to RMB500 for each audience recruited by the Partnered Institution depending on the topics of the online courses.
Exclusivity
Our Partnered Institution is prohibited from dealing
    with any third parties where the scope of cooperation is similar to the Partnership Agreement, failing which, we have the right to terminate
    the Partnership Agreement and request our Partnered Institution to pay damages.
We will not enter into similar partnership
agreements with third parties who intend to conduct business in the Specified District without the consent of our Partnered Institution.
Termination
Our Subsidiaries may elect to terminate the Partnership
    Agreement if:
(i)           our
    Partnered Institution breaches the terms and conditions of the Partnership Agreement; or
(ii)          the
    shareholding of our Partnered Institution has undergone changes without our prior written consent.
Our Partnered Institution may elect to terminate
the Partnership Agreement if our Subsidiaries is unable to deliver our services under the Partnership Agreement within a reasonable time
after being urged by our Partnered Institution.
Remedial measures
Where our Partnered Institution is in breach of
    the terms and conditions of the Partnership Agreement, our Subsidiaries will not return any fees already paid by the Partnered Institution
    and the Partnered Institution has to pay us a sum equivalent to two years of service fees as a penalty.
Where our Subsidiaries is in breach of the
terms and conditions of the Partnership Agreement, our Subsidiaries will return the remaining portion of the fees paid which is proportionate
to the remaining contract period under the Partnership Agreement to the Partnered Institutions.
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Software and Maintenance Services
Lichen Zixun has been providing
a financial and taxation training software and academic affairs management system to our Partnered Institutions as part of our services
under the Partnership Agreements. Leveraging our understanding of corporate needs on financial and taxation management and analysis tools
in daily operation of our enterprise customers, we began in 2017 to invest and develop our first financial and taxation analysis software,
namely, Enterprise Financial Intelligence Analysis System V1.0, and have commercialized it for sale to our enterprise customers since
2019.
With respect to our Lichen
Education Accounting Practice System V1.0, a financial and taxation training system that was developed in 2014, it is focused on students'
or users' practice experience by resembling, illustrating and providing practices on various accounting tasks, such as bookkeeping,
tax computation, filing tax returns and issuing valued-added tax invoices in actual business practices. Thereafter, we updated and developed
some new training systems based on Lichen Education Accounting Practice System V1.0.
Lichen Education has eight
copyrights for financial and taxation training software, to date. As of the date of this annual report, we have not experienced any product
recalls, liability claims or material complaints on our software products. For details, please see "Research and Development"
under the "Business" section.
After Sales Services
Our customers who engage us
for our financial and taxation related or internal control related management consultation services may attend courses provided by the
Partnered Institutions. Continuous trainings can enhance the financial and taxation concepts of our customers and ensure the continuous
implementation of the financial and taxation solutions we provided to them. We also provide general customer care by responding to customer
queries from time to time, in order to timely resolve their problems.
From time to time, the Partnered
Institutions will also host talks and seminars conducted by our experienced senior management personnel, internal consultants or external
experts and invite our customers to attend. As for our Partnered Institutions, we provide continuous support to them, including operational
and technical support in school management and operation and trainings to Partnered Institutions' staff and employees. With respect
to our software products, we offer software installation, training and after sales technical and maintenance, such as telephone, instant
communication and remote support services within one year of purchase for our financial and taxation training software and financial and
taxation analysis software.
Sales and Marketing
We believe brand recognition
to "Lichen" is critical to our ability to attract new customers and retain business collaboration and maintain our relationships
with our existing clientele, and our promotion and marketing efforts are designed to enhance our brand awareness and reputations among
them. Generally, we attract new customers with referrals from our Partnered Institutions and personal and business networks of our executives
and directors.
In addition, we organize marketing
activities, such as seminars, talks and consultation events with our Partnered Institutions, business federations and business associations,
leveraging our accumulated resources and connections. Through the business relationships with our Partnered Institutions, we strive to
provide our education support services to them, and by leveraging their business networks and their geographical coverage, we endeavor
to promote our brand name and services to the participants of these seminars, talks and courses organized by them. We have deployed external
experts and internal consultants to participate in and deliver more than 1,000 talks, courses and seminars organized for their target
audience.
To highlight our efforts,
we have co-hosted the 2018 China Management Consulting Innovation Forum with the China Enterprise Confederation Management Advisory Committee
and hosted the 2019 Excellent Financial Manager Summit Forum in Xiamen, both of which were well attended by business leaders, senior government
officials, university professors and financial and taxation executives.
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We also promote our brand
to a wide audience nationwide by multi-marketing strategies, which comprise (i) production and broadcasting of financial and taxation
videos and programs, (ii) internet and conventional advertisement placing, and (iii) organizing and sponsoring marketing events and activities.
(i) Production and broadcasting of financial
and taxation videos and programs
We believe that broadcasting
our financial and taxation videos and programs on television and the internet can promote our brand image to a wider group of targeted
audiences, by matching the content of the programs with the relevant television programs and/or internet websites and domains. Our external
experts, internal consultants and senior management have participated in our promotional activities, such as appearing on television broadcasts
and popular online video websites that feature our practical financial and taxation videos and programs. The television programs, which
include the participation of our external experts, have been broadcasted on various selected television channels, while our videos, featuring
our external experts, internal consultants and senior management, have been shown on popular and selected third-party online video platforms,
such as iQIYI, Tencent Video, TouTiao, Sohu Video, Bilibili, etc.
(ii) Internet and conventional advertisement
placing
We plan to place advertisements
on the internet and through social media platforms, all of which could be conveniently accessed by our targeted customers. We also intend
to publish advertisements in selected financial magazines and newspapers. In addition, we plan to lease billboard advertising space and
light box displays situated on highways and floor spaces, pillars and ceiling spaces in airports and metro stations, as well as the interiors
and exteriors of trains, in order to attract potential new customers. According to Frost & Sullivan, it is a common advertising method
for financial and taxation solution service providers to promote their services and brand awareness through placing advertisements on
billboard and/or light box displays as well as other internet and conventional advertisement placing. We believe that strategic locations
and high visibility of our billboards may give us an opportunity to engage in high-profile brand building. We will mainly place our advertisements
in Beijing, Shanghai, Xiamen and Chengdu. We will also enhance the advertising spaces by integrating newer technologies, applications
and techniques. We plan to include QR codes printed on our advertisements providing convenient access to the website of our Company and
our online financial and taxation videos and programs.
(iii) Organizing and sponsoring marketing
events and activities
We plan to further promote
our brand by organizing national financial competitions and sponsoring different types of events and activities tailored for participation
by high-end entrepreneurs. We encourage our Partnered Institutions and enterprise customers to participate in the national financial competitions.
We also plan to sponsor high-end entrepreneurs' events and activities, such as golf tournaments, to expand and strengthen our client
base. We have already organized and sponsored four golf tournaments. After each golf tournament, our players are invited to attend awards
ceremonies and banquets, which provide them with opportunities to exchange business contacts and allow our sales and marketing personnel
to approach our targeted and potential customers.
Customers
Our customers primarily consist
of business enterprises in respect of our financial and taxation solution services, Partnered Institutions in respect of our education
support services, and business enterprises and universities, colleges or other educational institutes for our software and maintenance
services.
We have a diverse customer
base consisting of listed companies, state-owned enterprises, government authorities and other business enterprises, especially small
and medium-sized enterprises, in the PRC, spanning across more than 20 industries, such as manufacturing, wholesale or retail, food processing,
information technology, software and related technical services, construction, property development, commercial and financial services,
agriculture and fishery, catering, hotel and accommodation, transportation, postal services and warehousing, telecommunication, broadcasting
and media services, research and development, oil refinery, gas or electricity supply, environment management, public facilities management,
culture, sports and entertainment, water supply, repairs and public administration. Besides spreading across different industry sectors,
we also enjoy a customer base with broad geographical locations in the PRC.
For the years ended December
31, 2022, 2021, and 2020, sales to our five largest customers amounted to approximately $2.05 million, $2.03 million, and $1.3 million,
representing approximately 6.07%, 5.90%, and 4.22%, respectively, of our total revenue. As of the date of this annual report, we have
no customer that accounts for more than 10% of our revenue.
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Suppliers
Our suppliers primarily consist
of the external experts, education and office materials providers, including education materials and textbooks, software developers and
technology vendors, and a media company in the PRC. For the years ended December 31, 2022, 2021, and 2020, purchases from our five largest
suppliers amounted to approximately $1.92 million, $2.07 million, and $1.84 million, which accounted for approximately 76.59%, 84.30%
and 68.39%, respectively, of our total purchases.
Research and Development
We place strong emphasis on
the R&D of our services. In order to maintain our market position and to further expand market share in our services, it is paramount
to continuously keep ourselves up-to-date with the latest market demand and trends and develop services, in our efforts to surpass the
services offered by our competitors in terms of quality and practicality. For the years ended December 31, 2022, 2021, and 2020, we incurred
R&D expenses of approximately $1.06 million, $1.08 million, and $0.93 million, respectively. Our R&D department is responsible
for the development of teaching and learning materials on new topics for our Partnered Institutions, financial and taxation training software,
and financial and taxation analysis software. As of the date of this annual report, all of the staff of our R&D department possess
a tertiary education diploma or undergraduate degree.
Our R&D department is
responsible for developing, updating and improving our software products for educational purposes and business and commercial use. As
of the date of this annual report, we had 15 software technicians, with an average working experience of more than 15 years. All of them
possessed a bachelor's degree or master's degree. The software R&D team identifies the needs of the market by obtaining
feedback from our Partnered Institutions, receiving first-hand information on market needs, industry trends and practical experiences
from our internal consultants and external experts through their interaction and exchanges with enterprise clients during their provision
of financial and taxation solution services, observing offerings by our competitors and through internal discussion. Once a market need
is identified, the software R&D team will conduct feasibility studies to assess the market demand and design detailed specifications
on functions and performance.
Our financial and taxation
analysis software, namely, Enterprise Financial Intelligence Analysis System V1.0, is designed for our enterprise customers in the industrial
and manufacturing industries to conduct business management analysis on the CRM system, inventory sharing, product lifecycle management
and supply chain management, which enables them to improve their operation and financial process and business efficacy. Our financial
and taxation training software, mainly including virtual accounting practice software designed to simulate different tasks of an accountant
such as preparation of general ledgers, cost management, taxation and budgeting etc. in real daily practice, assists our Partnered Institutions
to illustrate the actual roles and work of an accountant in business practices to their participants.
With our dedicated efforts
and investments in various R&D initiatives and projects, we have developed (i) 16 sets of teaching and learning materials covering
various financial and taxation related topics, (ii) eight financial and taxation training software, and (iii) one financial and taxation
analysis software to support and complement various types of services offered by our Subsidiaries. In addition, Lichen Education has registered
eight copyrights for software developed by our Subsidiaries, as of the date of this annual report.
Seasonality
Our services historically
have not been subject to seasonal variations.
Insurance
We do not have any business
liability, interruption or litigation insurance coverage for our operations in China. Insurance companies in China offer limited business
insurance products. While business interruption insurance is available to a limited extent in China, we have determined that the risks
of interruption, cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms
make it impractical for us to have such insurance. Therefore, we are subject to business and product liability exposure. See "Risk
Factors – We have limited insurance coverage to protect us against all risks associated with our business operations."
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Regulation
Our operation in China is
subject to a number of PRC laws and regulations. This section summarizes the most significant PRC laws and regulations relevant to our
business and operations in China and the key provisions of such regulations.
Regulations on Foreign Investment
The Foreign Investment Law
of the PRC was adopted by the 2nd session of the thirteenth National People's Congress on March 15, 2019 and became effective on
January 1, 2020. The Foreign Investment Law sets out the basic regulatory framework for foreign investments and proposes to implement
a system of pre-entry national treatment with a negative list for foreign investments, pursuant to which (i) foreign natural persons,
enterprises or other organizations, collectively the foreign investors, shall not invest in any sector forbidden by the negative list
for access of foreign investment, (ii) for any sector restricted by the negative list, foreign investors shall conform to the investment
conditions provided in the negative list, and (iii) sectors not included in the negative list shall be managed under the principle that
domestic investment and foreign investment shall be treated equally. The Foreign Investment Law also sets forth necessary mechanisms to
facilitate, protect and manage foreign investments and proposes to establish a foreign investment information report system in which foreign
investors or foreign-funded enterprises shall submit the investment information to competent departments of commerce through the enterprise
registration system and the enterprise credit information publicity system.
On December 30, 2019, the
Ministry of Commerce and the State Administration for Market Regulation issued the Measures for the Reporting of Foreign Investment Information,
which came into effect on January 1, 2020 and replaced Interim Administrative Measures. Since January 1, 2020, for foreign investors carrying
out investment activities directly or indirectly in China, the foreign investors or foreign-invested enterprises shall submit investment
information to the commerce authorities pursuant to these measures.
Special Administrative Measures for Entrance
of Foreign Investment (Negative List) (2020 Version)
The Special Administrative
Measures for Entrance of Foreign Investment (Negative List) (2020 Version), or the Negative List, which was promulgated jointly by the
Ministry of Commerce and the National Development and Reform Commission on June 23, 2020 and became effective on July 23, 2020, replaced
and abolished the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2019 Version) regulating the access
of foreign investors to China. Pursuant to the Negative List, foreign investors should refrain from investing in any of prohibited sectors
specified in the Negative List, and foreign investors are required to obtain the permit for access to other sectors that are listed in
the Negative List but not classified as "prohibited". The Negative List covers 12 industries. Fields not covered in the Negative
List shall be administrated under the principle of equal treatment to domestic and foreign investments.
We are a Cayman Islands company
and our businesses by nature in China are mainly financial and taxation solution services, education support services and software and
maintenance services, which are not restricted or prohibited for foreign investors by the Negative List.
Regulations on Intellectual Property Rights
Patent
.  Patents
in the PRC are principally protected under the Patent Law of the PRC. The duration of a patent right is 10 years, 15 years or 20 years
from the date of application, depending on the type of patent right.
Copyright
. Copyrights
in the PRC, including copyrighted software, is principally protected under the Copyright Law of the PRC and related rules and regulations.
Under the Copyright Law, the term of protection for copyrighted software is 50 years.
Trademark
. The
PRC Trademark Law has adopted a "first-to-file" principle with respect to trademark registration. Registered trademarks are
protected under the Trademark Law of the PRC and related rules and regulations. Trademarks are registered with the Trademark Office of
the SAIC. Where registration is sought for a trademark that is identical or similar to another trademark which has already been registered
or given preliminary examination and approval for use in the same or similar category of commodities or services, the application for
registration of such trademark may be rejected. Trademark registrations are effective for a renewable ten-year period, unless otherwise
revoked.
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Domain Names
. Domain
name registrations are handled through domain name service agencies established under the relevant regulations, and applicants become
domain name holders upon successful registration.
We have adopted necessary
mechanisms to register, maintain and enforce intellectual property rights in the PRC. However, we cannot assure you that we can prevent
our intellectual property from all the unauthorized use by any third party, neither can we promise that none of our intellectual property
rights would be challenged any third party.
Regulations on Internet Information Services
According to the Administrative
Measures on Internet Information Services promulgated by the State Council on September 25, 2000, and amended on January 8, 2011, internet
information services are classified into two categories: (1) profitable internet information services; and (2) non-profitable internet
information services. Profitable internet information services refer to the provision, via the internet, of information or webpage development
etc. for payment to internet users. Non-profitable internet information services refer to the provision, via the internet, of open or
sharable information for free to internet users. PRC applies the license system to profitable internet information services and applies
the record-filing system to non-profitable internet information services. We have completed the registration required by the measures
for the website we operate.
Regulations Relating to Taxation
Regulations on Dividend Withholding Tax
Pursuant to the Enterprise
Income Tax 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 20%. Pursuant to the Arrangement between Mainland China
and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion 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 State Administration of Taxation
on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or Circular 81, 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 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.
According to the Circular
on Several Issues regarding the "Beneficial Owner" in Tax Treaties, which was issued on February 3, 2018 by the SAT, effective
as of April 1, 2018, when determining the applicant's status of the "beneficial owner" regarding tax treatments in connection
with dividends, interests or royalties in the tax treaties, several factors, including without limitation, whether the applicant is obligated
to pay more than 50% of its income in twelve months to residents in any third country or region, whether the business operated by the
applicant constitutes the actual business activities, and whether the counterparty country or region to the tax treaties does not levy
any tax or grant tax exemption on relevant incomes or levy tax at an extremely low rate, will be taken into account, and it will be analyzed
according to the actual circumstances of the specific cases. This circular further provides that applicants who intend to prove his or
her status of the "beneficial owner" shall submit the relevant documents to the relevant tax bureau according to the Announcement
on Issuing the Measures for the Administration of Non-Resident Taxpayers' Enjoyment of the Treatment under Tax Agreements.
On October 14, 2019, the State
Administration of Taxation issued the Notice on the Administrative Measures for Non-resident Enterprises to Enjoy Contractual Benefits
(Circular No. 35 of the State Administration of Taxation in 2019, Circular 35), which was implemented from January 1, 2020. According
to Circular 35, non-resident enterprises may enjoy the benefits by the way of "self-judgment, declaration and enjoyment, and retention
of relevant information for future reference". If a non-resident enterprise judges that it meets the conditions for enjoying the
contractual benefits, it may enjoy the contractual benefits at the time of tax declaration or through the withholding agent. At the same
time, it shall collect and retain relevant information for reference in accordance with Circular 35, and accept the follow-up management
of the tax authorities.
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Regulations on Enterprise Income Tax
According to the Enterprise
Income Tax Law which was issued by the National People's Congress on March 16, 2007 and last revised and came into effect on December
29, 2018, and the Implementation Rules to the Enterprise Income Tax Law issued by the State Council on December 6, 2007 and effective
on January 1, 2008 and was revised on April 23, 2019, both domestic and foreign-invested enterprises established under the laws of foreign
countries or regions whose "de facto management bodies" are located in the PRC are considered resident enterprises, and will
generally be subject to EIT at the rate of 25% of their global income. Under the Implementing Rules of the Enterprise Income Tax Law,
a "de facto management body" is defined as a body that has material and overall management and control over the manufacturing
and business operations, personnel and human resources, finances and properties of an enterprise. A circular issued by the State Administration
of Taxation of the PRC in April 2009 and amended in 2017, regarding the standards used to classify certain Chinese invested enterprises
controlled by Chinese enterprises or Chinese enterprise groups and established outside of China as "resident enterprise",
which also clarified that dividends and other income paid by such PRC "resident enterprises" will be considered PRC source
income and subject to PRC withholding tax, currently at a rate of 10%, when paid to shareholders outside of the PRC. This circular also
subjects such PRC "resident enterprises" to various reporting requirements with the PRC tax authorities. We believe that Lichen
China Limited or any of our subsidiaries outside of China is not 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 bodies".
Regulations on Value-Added Tax
In November 2011, the Ministry
of Finance and the State Administration of Taxation promulgated the Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax.
In March 2016, the Ministry of Finance and the State Administration of Taxation further promulgated the Notice on Fully Promoting the
Pilot Plan for Replacing Business Tax by Value-Added Tax. On March 20, 2019, the Ministry of Finance, the State Administration of Taxation
and General Administration of Customs issued Announcement on Policies for Deepening the VAT Reform jointly, under which the VAT rates
under the basic mechanism is 13% for the sectors such as operating and financial leases of equipment, 9% for sectors such as transportation,
postal, basic telecommunication, and construction services as well as sales and leases of real property and real property rights, 0% for
exported services and 6% for all remaining services, including financial services. Unlike business tax, a taxpayer is allowed to offset
the qualified input VAT paid on taxable purchases against the output VAT chargeable on the modern services provided. Furthermore, according
to Announcement of the State Taxation Administration on Matters relating to Expanding the Scope of the Pilot Scheme for Issuance of Special
VAT Invoices by Small-Scale Taxpayers issued by State Administration on February 3, 2019, the basic mechanism may not apply to small-scale
taxpayers who may pay the VAT taxes at the levy rates of 3% and 5% on the basis of their sales amount. As of the date of this annual report,
our PRC subsidiaries are generally subject to VAT rates of 6%.
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, most recently amended in August 2008.
Under the PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest payments and trade
and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with
certain procedural requirements. By contrast, approval from or registration with appropriate government authorities is required where
RMB is to be converted into foreign currency and remitted out of China to pay capital account items, such as direct investments, repayment
of foreign currency-denominated loans, repatriation of investments and investments in securities outside of China.
In November 2012, SAFE promulgated
the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, which substantially
amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign
exchange accounts, such as pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment
of RMB proceeds derived by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested
enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same
entity may be opened in different provinces, which was not possible previously. In addition, SAFE promulgated another circular in May
2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must
be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in the PRC based
on the registration information provided by SAFE and its branches. On February 13, 2015, SAFE promulgated the Notice on Further Simplifying
and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13. After SAFE Notice 13 became
effective on June 1, 2015, instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and
overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations from qualified banks.
The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration.
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On March 30, 2015, SAFE promulgated
Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested
enterprises nationwide. Circular 19 came into force and replaced both previous Circular 142 and Circular 36 on June 1, 2015. On June 9,
2016, SAFE promulgated Circular 16 to further expand and strengthen such reform. Under Circular 19 and Circular 16, foreign-invested enterprises
in the PRC are allowed to use their foreign exchange funds under capital accounts and RMB funds from exchange settlement for expenditure
under current accounts within its business scope or expenditure under capital accounts permitted by laws and regulations, except that
such funds shall not be used for (i) expenditure beyond the enterprise's business scope or expenditure prohibited by laws and regulations;
(ii) investments in securities or other investments than banks' principal-secured products; (iii) granting of loans to non-affiliated
enterprises, except where it is expressly permitted in the business license; and (iv) construction or purchase of real estate for purposes
other than self-use (except for real estate enterprises).
In January 2017, SAFE promulgated
the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or
SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities
to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution,
the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for
previous years' losses before remitting the profits. Further, according to SAFE Circular 3, domestic entities shall make detailed
explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing
the registration procedures in connection with an outbound investment.
Regulations on Foreign Exchange Registration
of Overseas Investment by PRC Residents
SAFE issued SAFE Circular
on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through Special Purpose Vehicles,
or SAFE Circular 37, that became effective in July 2014, replacing the previous SAFE Circular 75. SAFE Circular 37 regulates foreign exchange
matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing
or conduct round trip investment in China. Under SAFE Circular 37, a SPV refers to an offshore entity established or controlled, directly
or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate
onshore or offshore assets or interests, while "round trip investment" refers to direct investment in China by PRC residents
or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights.
SAFE Circular 37 provides that, before making contribution into an SPV, PRC residents or entities are required to complete foreign exchange
registration with SAFE or its local branch. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the
Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular
37, requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their
establishment or control of an offshore entity established for the purpose of overseas investment or financing.
PRC residents or entities
who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration as required before the
implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified banks. An amendment
to the registration is required if there is a material change with respect to the SPV registered, such as any change of basic information
(including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges
of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent
notice, or making misrepresentation on or failure to disclose controllers of the foreign-invested enterprise that is established through
round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant foreign-invested enterprise,
including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation,
to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities
to penalties under PRC foreign exchange administration regulations.
Our PRC resident beneficial
owners subject to these registration requirements have registered with the Jinjiang SAFE branch and/or qualified banks to reflect the
recent changes to our corporate structure.
61
Regulations on Dividend Distribution
Under our current corporate
structure, the Company may rely on dividend payments from Lichen Education and Lichen Zixun, which are wholly foreign-owned enterprises
incorporated in China, to fund any cash and financing requirements we may have. The principal regulations governing distribution of dividends
of foreign-invested enterprises include Foreign Investment Law of the People's Republic of China and Company Law of the People's
Republic of China. Under these laws, wholly foreign-owned enterprises in China may freely make remittance inward and outward in RMB or
foreign exchange of capital contribution, profits, capital yield, income from asset disposal, intellectual property licensing fees, indemnity
obtained according to law or income from compensation and liquidation. In addition, wholly foreign-owned enterprises in China are required
to allocate at least 10% of their respective accumulated profits each year as a statutory reserve fund, if any, to fund the reserve fund
until the statutory reserves fund has reached 50% of the registered capital of the enterprises. Wholly foreign-owned companies may, at
their discretion, allocate a portion of their after-tax profits based on PRC accounting standards to optional reserve funds. After making
up the losses and allocating reserve funds, the remaining after-tax profits of wholly foreign-owned enterprises may be distributed to
the shareholders. As of December 31, 2021, and June 30, 2022, the statutory reserves fund of Lichen Zixun has reached 50% of the registered
capital of the enterprise. As of December 31, 2020 and June 30, 2021, the statutory reserves fund of Lichen Education is nil as it has
not made any profit after tax.
Regulations Relating to Employment
The PRC Labor Law and the
Labor Contract Law require that employers must execute written employment contracts with full-time employees. If an employer fails to
enter into a written employment contract with an employee within one year from the date on which the employment relationship is established,
the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the
employee's salary for the period from the day following the lapse of one month from the date of establishment of the employment
relationship to the day prior to the execution of the written employment contract. All employers must compensate their employees with
wages equal to at least the local minimum wage standards. Violations of the PRC Labor Law and the Labor Contract Law may result in the
imposition of fines and other administrative sanctions, and serious violations may result in criminal liabilities.
Enterprises in China are required
by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namely a pension plan,
a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing
provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances,
of the employees as specified by the local government from time to time at locations where they operate their businesses or where they
are located. Failure to make adequate contributions to various employee benefit plans may be subject to fines and other administrative
sanctions.
Currently, we are making contributions
to the plans based on the minimum standards, although the PRC laws required such contributions to be based on the actual employee salaries
up to a maximum amount specified by the local government. Therefore, in our consolidated financial statements, we have made an estimate
and accrued a provision in relation to the potential make-up of our contributions for these plans as well as to pay late contribution
fees and fines. If we are subject to late contribution fees or fines in relation to the underpaid employee benefits, our financial condition
and results of operations may be adversely affected. See "Risk Factors — Risks Relating to Doing Business in the People's
Republic of China — Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may
subject us to penalties."
Regulations Relaing to Overseas Securities
Oferring and Listing
On 17 February 2023, the CSRC
promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the "Overseas Listing
Trial Measures") and relevant five guidelines, which became effective on 31 March 2023. The Overseas Listing Trial Measures comprehensively
improve and reform the existing regulatory regime for overseas offering and listing of PRC domestic companies' securities and will
regulate both direct and indirect overseas offering and listing of PRC domestic companies' securities by adopting a filing-based
regulatory regime. According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in
overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information.
Where a listed company that has been issued and listed overseas transfer of listing, it shall report the specific situation to the CSRC
within 3 working days from the date of the occurrence and announcement of relevant matters. See "Risk Factors — Risks Relating
to Doing Business in the People's Republic of China —The filing, approval or other administration requirements of the CSRC
or other PRC government authorities may be required in connection with our future offshore offering under PRC law, and, if required, we
cannot predict whether or for how long we will be able to complete the filing procedure with the CSRC and obtain such approval or complete
such filing, as applicable."
As of the date of this annual
report, our operations are run in compliance with the all PRC regulations disclosed above.
62
C. Organizational structure.
The following
is a list of our subsidiaries as of the date of this annual report.
Subsidiaries
Place of Incorporation
Incorporation Time
Legend Consulting Limited (BVI)
British Virgin Islands
December 20, 2013
Legend Consulting Limited (HK)
Hong Kong SAR
January 8, 2014
Fujian Lichen Management Consulting Limited (PRC)
People's Republic of China
April 14, 2004
Xiamen Lichen Education Service Limited (PRC)
People's Republic of China
July 30, 2014
The following diagram illustrates the corporate
structure of Lichen China Limited and its subsidiaries as of the date of this annual report:
63
D. Property, Plant and Equipment
Facilities
Real property
There is no private land and
property ownership in China. The right to possess the property is held by the government and the right to use the property has been transferred
to our operating subsidiaries in PRC.
Location
Description and tenure
Use of
property
Approximate
Gross Floor
Area
(sq.m.)
Office Premises in Xiamen and Six Car parking Spaces in the Basement (Units 13A, 13B, 13C, Level 13, No. 10 Hubin Bei Road, Siming District, Xiamen City, Fujian Province, PRC)
The property is subject to a right to use the land for a term until December 1, 2044 for office purposes.
Office
1,715.87
Office Premises in Jinjiang (Unit B2306, Block B, Tower 3, Jinjiang Wanda Plaza Commercial Complex, 888 Century Avenue, Meiling Street, Jinjiang City, Fujian Province, PRC)
N/A
Office
344.5
Office Premises in Shanghai (Level 28 of Zhongyi Building No. 1040 Caoyang Road Putuo District Shanghai City, PRC)
The property is subject to a right to use the land for a maximum term of 50 years for composite purpose.
Office
1,156.29
Leased property
Lichen Zixun leased the following
property in the PRC:
Location
Term
Use of property
Rent
Termination
Broadcasting studio in Beijing (LG1, Left Bank Community, 68 North Fourth Ring West Road, Haidian District, Beijing City, PRC)
April 1, 2022 to March 31, 2025
Broadcasting studio
RMB $650,000 per year
Either party may terminate this Agreement with thirty days prior written notice to the other party. Lichen Zixun may renew the lease with two-month's written notice prior to the end of the lease. We intend to renew as of the date of this annual report.
64
Intellectual Property
Our "Lichen" brand
is an important element of our business. The registered trademarks and copyrights in the PRC, and the domains are as follows:
Trademarks
Registrant
Trademark
Application Code
Category
Application Area
Lichen Zixun
14288203
35
Advertisement, business operations, business management, office management
Lichen Zixun
14288204
36
Financial evaluation, real estate evaluation, capital investment
Lichen Zixun
14288205
41
School, boarding school, training, coaching
Lichen Zixun
24220583
41
School, boarding school, training, coaching
Lichen Zixun
65114101
38
Network broadcasting, information transfer, video conferencing service
Lichen Zixun
65114094
42
Computer software maintenance, Software as a Service (SaaS), packaging design services
Lichen Zixun
65170613
9
Computer, data processing, communication and transmission
Copyrights
Registrant
Copyright
Registration No.
Registration Date
Lichen Education
Enterprise Financial Intelligence Analysis System V1.0
2020SR0515804
May 26, 2020
Lichen Education
Lichen Education Land Tax Declaration Simulation System V1.0
2015SR250983
December 9, 2015
Lichen Education
Lichen Education Government Tax Declaration Simulation System V1.0
2015SR251364
December 9, 2015
Lichen Education
Lichen Education Value-added Tax Billing Simulation System V1.0
2015SR250218
December 8, 2015
Lichen Education
Lichen Education Examination Simulation System V1.0
2015SR250978
December 9, 2015
Lichen Education
Lichen Education Accounting Practice System V1.0
2015SR252772
December 10, 2015
Lichen Education
Lichen Education Internet School System V1.0
2015SR250018
December 8, 2015
Lichen Education
Lichen Education Academic Affairs Management System V1.0
2016SR086921
April 26, 2016
65
Domains
Registrant
Domain name
Expiration Date
Lichen Education
xmqcw.com.cn
May 16, 2023
Lichen Education
lichenjy.com
October 18, 2023
Lichen Education
lichenkj.com
January 14, 2024
Lichen Education
lichenzx.com
October 24, 2023
Lichen Education
lichenjyfz.com
January 4, 2024
Lichen Education
kj2008.com
September 2, 2023
The software copyrights we
owned have the effective protection period of 50 years from the registration date for each registered copyright according to the Copyright
Law in China. It is not renewable or extendable. We plan to continue upgrading our software and register copyright of the updated software.
We believe the expiration of the copyrights will not have material impact on our business.
As of the date of this annual
report, we have not (i) received any intellectual property infringement-related complaints or claims against us; (ii) been notified of
any infringement of any intellectual property of any third party by us or of any of our intellectual property being infringed by any third
party; and (iii) been involved in any litigation in relation to claims of infringement of intellectual property.
Item
4A. Unresolved Staff Comments
None.
Item 5. Operating and Financial
Review and Prospects
You should read the following discussion and
analysis of our financial condition and results of operations in conjunction with our audited consolidated financial statements and the
related notes included elsewhere in this annual report. This discussion contains forward-looking statements that involve risks and uncertainties.
Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements
as a result of various factors, including those set forth under "
Item 3. Key
Information
— 3.D. Risk Factors" and elsewhere in this annual report.
Overview
We are a leading financial
and taxation service provider in China, in terms of revenue, according to the industry report of Frost & Sullivan. We have operated
as a dedicated financial and taxation solution service specialist of professional and high-quality services in China for over 18 years.
We focus on providing (i) financial and taxation solution services; (ii) education support services; and (iii) software and maintenance
services in the PRC under our "Lichen" brand. With over 18 years of operation history, we have gained substantial experience
and established a solid reputation with our proven track record in the PRC.
In recognition of our expertise
and experience earned from over 18 years in the financial and taxation solution services industry, we have built up our reputation as
a dedicated financial and taxation solution services provider of professional and high-quality services in the PRC. From 2012 to 2021,
we had been recognized as one of the Top 50 Providers of Management Consulting Services in China for ten consecutive years by the China
Enterprise Confederation Management Advisory Committee.
66
In
order to curtail the COVID-19 pandemic, the Chinese government has established a series of restrictions, including some lockdown rules,
and during this period, we provided our consulting services to our clients online and postponed or reduced part of the on-site procedures.
Due to the impact of the COVID-19 pandemic, we had a 4.93% decrease in revenue for the six months ended June 30, 2022 compared to the
six months ended June 30, 2021. At the same time, our cost of revenues increased by 1.27% due to the extended project period and the
increase in personnel cost, and our net income decreased to approximately $4.33 million for the six months ended June 30, 2022, from
approximately $4.87 million for the six months ended June 30, 2021, a decrease of 11.14%. Although, the effects of the COVID-19 pandemic
on our financial results were limited, we expect to continue our new business model that combines remote and on-site consultation services
after the COVID-19 pandemic subsides.
Recent
Developments
On
February 8, 2023, the Company completed its initial public offering on the National Association of Securities Dealers Automated Quotations
("NASDAQ"). In this offering, 4,000,000 Class A Ordinary Shares were issued at a price of $4.00 per share. The gross proceeds
received from the initial public offering totaled USD 16 million. The Offering closed on February 8, 2023 and the Class A Ordinary Shares
began trading on February 6, 2023 on The Nasdaq Capital Market under the ticker symbol "LICN."
5.A.
Operating Results
.
Factors
Affecting Our Results of Operations
Our
operating results are primarily affected by the following factors:
●
Growth
                                            of the Chinese Economy
We
    operate our business within China and the growth or decline of the Chinese economy in general affects our business.
●
Industry
                                            Demand
Since
    China is still a developing country, the financial and taxation solution industry has barely reached its full capacity and the current
    and potential demand for financial and taxation solutions is still expected to remain at a relatively high level.
●
Contract
                                            Pricing and Terms
To
    provide our clients with high-quality financial and taxation solution services, a fair price and reasonable terms are essential for
    us to operate successfully in the industry in the long term.
●
Competition
The
    financial and taxation solution consulting market is highly dispersed and competitive with a large number of participants. To maintain
    the goodwill and reputation under the brand "Lichen" is essential for the Company to grow.
●
Strategic
                                            Acquisitions and Investments
Strategic
    acquisitions could significantly reinforce our market position with larger scale of operation, consolidation of resources, expanding
    customer base and more market share. Specifically, by merging with providers of various operational sizes and/or with different industry
    specialty, establishing representative offices in more cities, recruiting additional staff to support our business expansion plans,
    would firmly expand our business and strengthen our market position; and the ability to access capital is also very important to
    execute our acquisition strategy. We do not have acquisition targets now and the proceeds from this offering will not be used for
    acquisitions.
●
Changes
                                            to Government Policies
China
    has highly complicated taxation regulations and the fast-changing business environment we operate in is constantly adapting to these
    policy changes.
●
Our
                                            Ability to Broaden Service Offerings and Diversify Our Customer Base
Service
    offerings dictate our added value to our customers and the profitability of the Company; and the diversification of our customer
    base in turn dictates the range of services we offer.
67
Impact
of COVID-19 on our business
Following
the global outbreak of COVID-19 in early 2020, our business operations and service provision to our customers in the PRC were temporarily
disrupted since the Chinese New Year holidays of 2020, due to temporary suspension of operation of our offices, the Partnered Institutions
and our enterprise customers in response to the respective local government's policies. We have resumed operation in full since
February 10, 2020. We had been closely monitoring and evaluating the effect of the COVID-19 pandemic on our services, especially financial
and taxation solution services provided to our enterprise customers and education support services provided to our Partnered Institutions.
Meanwhile,
considering that the PRC government has gradually relaxed the lockdown measures or travel restrictions and allowed resumption of business,
the reported number of new cases had dropped from the height of the crisis and the slowdown in the decrease in revenue and gross profit
of our Lichen Group as illustrated below, we believe that the adverse effect on, and business interruption to, us as a result of the
of COVID-19 pandemic is only temporary in nature.
Due
to the impact of the COVID-19 pandemic, as compared to the year ended December 31, 2019, the total revenue of our Group for the year
ended December 31, 2020 decreased by approximately $0.93 million, which was attributable to the decrease in revenue generated from financial
and taxation solution services by approximately $1.68 million, but offset by the increase in revenue generated from education support
services and software and maintenance services by approximately $0.05 million and $0.70 million, respectively. There is no further impact
for the year ended December 31, 2021 as the total revenue of our Group for the year ended December 31, 2021 increased by approximately
$3.63 million to approximately $34.30 million from approximately $30.67 million for the year ended December 31, 2020. The increase was
primary due to the resumption of our business and operations and the increase in the number of our consulting services orders. During
March and April 2022, many cities in China have been affected by COVID-19, especially the southeast coastal city. Our business has been
affected as well. The total revenue of our Group for the six months ended June 30, 2022 decreased by approximately $0.84 million, or
4.93%, to approximately $16.15 million from approximately $16.99 million for the six months ended June 30, 2022. The total revenue of
our Group for the year ended December 31, 2022 decreased by approximately $0.49 million to approximately $33.81 million from approximately
$34.30 million for the year ended December 31, 2021. There is no further impact for the year ended December 31, 2022.
As
a whole, our business and services were subject to different degree of delays, due to temporary suspension of business operations, lockdown
measures and travel restrictions. In particular, our internal consultants and external experts have not been able to provide certain
on-site consultation or meet face-to-face with our enterprise customers or deliver in-person seminars or talks at premises of our Partnered
Institutions. For our financial and taxation solution services, save for the postponed completion of 24 financial and taxation related
management or internal control management consultation projects resulting in expected delay in recognition of revenue of approximately
RMB2.29 million (approximately $0.35 million) and cancellation or termination of 43 annual or regular consultation projects resulting
in expected loss of revenue of approximately RMB13.18 million (approximately $2.02 million), our management confirmed that the COVID-19
pandemic had not resulted in any substantial delay or difficulties in discharging our obligations under any financial and taxation solution
service contracts or agreements, and we had not been subject to any late charges or damages imposed on us by our customers. The aforesaid
postponed projects were completed and the relevant revenue of approximately RMB2.29 million (approximately $0.35 million) was fully recognized
by June 2020.
68
Our
Partnered Institutions had temporarily suspended the provision of in-person trainings, seminars or talks to their participants, owing
to travel restrictions, lockdown and/or quarantine measures imposed by local governments as well as the governments' recommendation
to maintain social distancing to reduce the chance of transmission of COVID-19. To mitigate the disruption of our services provided to
our Partnered Institutions, we commenced offering technical support to online education courses to our Partnered Institutions. Since
late May 2020, our Partnered Institutions resumed provision of in-person trainings, seminars and talks. As of the date of this prospectus,
none of our Partnered Institutions has terminated our services or requested compensation from our Group due to disruptions attributed
to the COVID-19 pandemic.
For
our software and maintenance services, due to temporary suspension of business operations or classes, six enterprise customers and eight
universities or colleges cancelled their order of software, and accordingly we recorded loss of revenue of approximately RMB3.7 million
(approximately $0.54 million) for the year ended December 31, 2020. Given that sales of software and maintenance support services do
not generally require a lot of face-to-face meetings with our customers on a day-to-day basis, we have not encountered or experienced,
and do not expect to encounter, any material disruption to our software and maintenance services due to the COVID-19 pandemic. There
is no order cancelled during the fiscal year ended December 31, 2022 and 2021 by any of our customers or universities or colleges.
We
believe that the COVID-19 pandemic caused a certain level of business disruption and had a negative impact to business results and financial
performance of business enterprises in the PRC, which are our major customers for financial and taxation solution services As a consequence,
business owners and entrepreneurs tended to tighten their budgets, reduced expenditures or postponed their projects in order to mitigate
the impact of COVID-19 to their businesses at the initial stage of the outbreak. In addition, certain projects were referred by our Partnered
Institutions. Due to the temporary suspension of in-person trainings, seminars or talks held by our Partnered Institutions, our promotion
through these in-person activities to participants of our Partnered Institutions was also disrupted.
Following
the resumption of in-person trainings, seminars or talks by our Partnered Institutions in late May 2020, our promotion to participants
of our Partnered Institutions or referrals from Partnered Institutions gradually resumed. Since the pandemic has been downgraded and
the social order and economy is recovering, we believe that the demand in our financial and taxation solution services should continue
to pre-pandemic levels.
69
Key
Components of Results of Operations
Comparison
of Years Ended December 31, 2022 and 2021
The
following table summarizes the consolidated results of our operations for the years ended December 31, 2022 and 2021, respectively, and
provides information regarding the dollar and percentage increase or (decrease) during such periods.
(All
amounts, other than percentages, in thousands of U.S. dollars)
December 31, 2022
December 31, 2021
Statement of Operations Data:
Amount
As %
of
Revenues
Amount
As %
of
Revenues
Amount
Increase
(Decrease)
Percentage
Increase
(Decrease)
Revenue
$
33,805
100.00
%
$
34,295
100.00
%
$
(490
)
(1.43
)%
Cost of revenues
(13,613
)
(40.27
)%
(13,820
)
(40.30
)%
207
(1.50
)%
Gross profit
20,192
59.73
%
20,475
59.70
%
(283
)
(1.38
)%
Operating expenses
Selling and marketing
(2,111
)
(6.24
)%
(2,009
)
(5.86
)%
(102
)
5.08
%
General and administrative
(7,433
)
(21.99
)%
(7,168
)
(20.90
)%
(265
)
3.70
%
Total operating expenses
(9,544
)
(28.23
)%
(9,177
)
(26.76
)%
(367
)
4.00
%
Income from operations
10,648
31.50
%
11,298
32.94
%
(650
)
(5.75
)%
Other income (expenses)
Interest income (expense)
60
0.18
%
28
0.08
%
32
114.29
%
Other income, net
34
0.10
%
188
0.55
%
(154
)
(81.91
)%
Income before income taxes
10,742
31.78
%
11,514
33.57
%
(772
)
(6.70
)%
Provision for income taxes
(2,924
)
(8.65
)%
(3,052
)
(8.90
)%
128
(4.19
)%
Net income
$
7,818
23.13
%
$
8,462
24.67
%
$
(644
)
(7.61
)%
Revenues
We
generate revenue from the provision of financial and taxation solution services, education support services and software and maintenance
services. Our total revenue was approximately $33.81 million for the year ended December 31, 2022, compared to approximately $34.30 million
for the year ended December 31, 2021, a decrease of approximately $0.49 million, or 1.43%. Such decrease was due to an approximately
$0.21 million decrease in revenue from financial and taxation solution services, an approximately $0.23 million decrease in revenue from
our education support services, and an approximately $0.05 million decrease in revenue from our software and maintenance services, which
we began providing in the year ended December 31, 2019.
70
Revenue
from financial and taxation solution services amounted to approximately $26.28 million, or 77.73% of total revenue, for the year ended
December 31, 2022, decreased by $0.21 million, or 0.80%, from approximately $26.49 million for the year ended December 31, 2021. Such
decrease was primarily due to the depreciation of RMB by 9.24% in fiscal year 2022 from December 31, 2021 to December 31, 2022. Revenue
from financial and taxation solution services amounted to approximately RMB 176.65 million for the year ended December 31, 2022, increased
by RMB 5.84 million, or 3.42% from approximately RMB 170.91 million for the year ended December 31, 2021. Such increase was mainly due
to continuous expansion of the branding and business that brought new clients and orders. The quantity of the customers increased by
68 from 516, or 13.18% for the year ended December 31, 2021 to 584 for the year ended December 31, 2022.
Revenue
from education support services decreased by $0.23 million, or 4.88%, from approximately $4.64 million or 13.52% of total revenue, for
the year ended December 31, 2021, to approximately $4.41 million, or 13.04 % of total revenue for the year ended December 31, 2022. Such
decrease was primarily due to the impact of the COVID-19 pandemic.
Our
operations for software and maintenance services began in March 2019. Revenue from this business amounted to approximately $3.12 million,
or 9.22% of total revenue, for the year ended December 31, 2022, decreased by $0.05 million, or 1.61%, from approximately $3.17 million
for the year ended December 31, 2021. The main reason is due to the depreciation of RMB by 9.24% in fiscal year 2022 from December 31,
2021 to December 31, 2022.
Cost
of revenue
Our
cost of revenue includes employee salaries, registration fees paid to our Partner Institutions and amortization of software in software
sales. Our cost of revenue decreased by $0.21 million, or 1.50%, to approximately $13.61 million for the year ended December 31, 2022,
from approximately $13.82 million for the year ended December 31, 2021. Such decrease was in line with our decreased revenue.
Selling
and marketing expenses
Our
selling and marketing expenses consist primarily of online and offline promotion, video broadcast promotion and self-media promotion.
Our selling and marketing expenses increased by $0.10 million, or 5.08%, to approximately $2.11 million for the year ended December 31,
2022, from approximately $2.01 million for the year ended December 31, 2021. Such increase was primarily due to the strengthened online
promotion of the company. As a percentage of revenue, selling and marketing expenses increased to 6.24% for the year ended December 31,
2022, from 5.86% for the year ended December 31, 2021.
General
and administrative expenses
Our general and administrative
expenses consist primarily of compensation for management, social security payment, depreciation of property and equipment, amortization
of intangible assets and IPO related expense. Our general and administrative expenses increased by $0.27 million, or 3.70%, to approximately
$7.43 million for the year ended December 31, 2022, from approximately $7.17 million for the year ended December 31, 2021. As a percentage
of revenue, general and administrative expenses increased to 21.99% for the year ended December 31, 2022, from 20.90% for the year ended
December 31, 2021.
Income
from operations
As a result of the foregoing,
we recorded income from operations of approximately $10.65 million for year ended December 31, 2022, compared $11.30 million for the year
ended December 31, 2021.
71
Total
other income (expense)
We
had approximately $0.09 million in total other income (expense) for the year ended December 31, 2022, as compared to approximately $0.22
million in total other income for the year ended December 31, 2021. Total other income (expenses) for the year ended December 31, 2022
consisted of other income, net, in the amount of approximately $0.03 million and interest income in the amount of approximately $0.06
million. Total other income (expenses) for the year ended December 31, 2021 consisted of other income, net, in the amount of approximately
$0.19 million and interest income in the amount of approximately $0.03 million.
Provision
for income tax
We recorded income tax expenses
of approximately $2.92 million for the year ended December 31, 2022, as compared to approximately $3.05 million for the year ended December
31, 2021; a decrease of approximately $0.13 million, or 4.19%. The decrease in the income tax expense mainly resulted from the decrease
in our revenue.
Net
income
As a result of the cumulative
effect of the factors described above, our net income decreased by approximately $0.64 million, or 7.61%, to approximately $7.82 million
for the year ended December 31, 2022, from approximately $8.46 million for the year ended December 31, 2021.
5.B.
Liquidity and Capital Resources
.
Cash
Flow Summary
(All
amounts in thousands of USD, except for share and per share data, unless otherwise noted)
Year Ended
December 31,
2022
2021
Net cash provided by operating activities
$
10,766
$
7,304
Net cash used in investing activities
(2,842
)
561
Net cash used in financing activities
(327
)
-
Effects of exchange rate changes on cash and cash equivalents
(1,843
)
315
Net increase (decrease) in cash
5,754
8,180
Cash, beginning of period
16,845
8,665
Cash, end of period
$
22,599
$
16,845
72
Operating
Activities:
Net cash provided by operating
activities was approximately $10.77 million for the year ended December 31, 2022, as compared to approximately $7.30 million for the year
ended December 31, 2021. For the year ended December 31, 2022, net cash provided by operating activities was mainly resulted from the
net income of $7.82 million, and the depreciation of property and equipment and the amortization of intangible, right-of-use and other
assets in the amount of approximately $2.73 million, the due to the related parties in the amount of approximately $1.02 million, the
deferred IPO costs in the amount of approximately $0.10 million and the prepayments and other current assets in the amount of approximately
$0.71 million. For the year ended December 31, 2021, net cash provided by operating activities was mainly resulted from the net income
of $8.46 million, the unearned revenues in the amount of approximately $0.14 million, and the depreciation of property and equipment and
the amortization of intangible and other assets in the amount of approximately $2.54 million, the accounts receivable in the amount of
approximately $1.45 million and the prepayments and other current assets in the amount of approximately $2.37 million.
Investing
Activities
Net cash used in investing
activities was approximately $2.84 million for the year ended December 31, 2022, as compared to approximately $0.56 million in net cash
provided in investing activities for the year ended December 2021. Net cash provided in investing activities for the year ended December
31, 2022 was mainly resulted from the purchases of property plant and equipment in the amount of approximately $1.95 million and purchase
of intangible assets in the amount of approximately $0.89 million, while net cash used in investing activities for the year ended December
31, 2021 was mainly resulted from the purchases of property and equipment in the amount of approximately $0.03 million and disposal of
property and equipment in the amount of approximately $0.59 million.
Financing
Activities:
Net
cash used in financing activities was approximately $0.33 million for the year ended December 31, 2022 consisted entirely of repayments
on short-term loans in the amount of approximately $0.33 million. The company has no net cash used in financing activities for the year
ended December 31, 2021.
Accounts Receivable and Unbilled receivable
Accounts
receivable represents our right to consideration in exchange for goods and services that we have transferred to the customers before
payment is due. Accounts receivable is stated at the historical carrying amount, net of an estimated allowance for uncollectible accounts.
We review on a periodic basis for doubtful accounts for the outstanding trade receivable balances based on historical collection trends,
aging of receivables and other information available. Additionally, we evaluate individual customer's financial condition, credit
history, and the current economic conditions to make specific bad debt provisions when it is considered necessary, based on (i) our specific
assessment of the collectability of all significant accounts; and (ii) any specific knowledge we have acquired that might indicate that
an account is uncollectible. The facts and circumstances of each account may require us to use substantial judgment in assessing its
collectability. The allowance is based on management's best estimates of specific losses on individual exposures, as well as a
provision on historical trends of collections. Account balances are charged off against the allowance after all means of collection have
been exhausted and the potential for recovery is considered remote. Our management continues to evaluate the reasonableness of the valuation
allowance policy and update it if necessary. There was no allowance for accounts receivable set up by us as of December 31, 2022 and
2021, respectively.
The
aging of all accounts receivable balance is within one year as of December 31, 2022.
Unbilled receivable represents
the Company's right to consideration in exchange for goods and service, which is the percentage of completion of revenue recognized
in excess of accounts receivable.
Capital
Expenditures
We made capital expenditures
of approximately $2.84 million and approximately $0.03 million for the years ended December 31, 2022 and 2021, respectively. In these
periods, our capital expenditures were mainly used for purchasing the office located in Shanghai for our operation and the development
for our software. We plan to continue to make capital expenditures to meet the needs that result from the expected growth of our business.
73
Dividend
The
holders of our ordinary shares are entitled to such dividends as may be declared by our Board of Directors subject to the Cayman Islands
Companies Act. The Directors may from time to time declare dividends (including interim dividends) and distributions on the issued and
outstanding shares of the Company and authorize payment of the same out of the funds of the Company lawfully available therefor. Dividends
may also be declared or paid out of share premium account or otherwise permitted by the Cayman Islands Companies Act, provided that in
no circumstances may we pay a dividend if this would result in our company being unable to pay its debts as they fall due in the ordinary
course of business.
Off-Balance
Sheet Commitments and Arrangements
We
did not have any off-balance sheet commitments or arrangements as of December 31, 2022.
5.C.
Research and Development, Patent and Licenses, etc.
Please
refer to "Item 4. Information on the Company – D. Property, Plant and Equipment – Intellectual Property."
5.D.
Trend Information.
Other
than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that
are reasonably likely to have a material effect on our net revenues, income from continuing operations, profitability, liquidity or capital
resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial
condition or results of operations.
5.E.
Critical Accounting Policies.
An
accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are
highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes
in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
We
prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually
evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various
other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the
financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting
policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.
The
following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial
statements and other disclosures included in this annual report. When reviewing our financial statements, you should consider (i) our
selection of critical accounting policies, (ii) the judgments and other uncertainties affecting the application of such policies and
(iii) the sensitivity of reported results to changes in conditions and assumptions.
74
Revenue
recognition
The
Company adopted ASC Topic 606, Revenue from Contracts with Customers, effective as of January 1, 2019. Accordingly, the consolidated
financial statements for the years ended December 31, 2022, 2021 and 2020 are presented under ASC 606. The core principle of the guidance
is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is the transaction price
the Company expects to be entitled to in exchange for the promised goods or services in a contract in the ordinary course of the Company's
activities and is recorded net of value-added tax ("VAT"). To achieve that core principle, the Company applies the following
steps:
Step
1: Identify the contract (s) with a customer
Step
2: Identify the performance obligations in the contract
Step
3: Determine the transaction price
Step
4: Allocate the transaction price to the performance obligations in the contract
Step
5: Recognize revenue when (or as) the entity satisfies a performance obligation
No
practical expedients were used when the Company adopted the ASC 606. Revenue recognition policies for each type of revenue stream are
as follows:
Financial
and taxation solution services
Revenues
from financial and taxation solution services for which control of services is transferred over time is recognized progressively based
on the contract costs incurred to date (primarily comprising staff costs and industry expert cost by reference to the time as recorded
in the monthly working record incurred to date) as compared to the total costs to be incurred under the transaction (by reference to
the total budgeted time of the respective project) to depict the Company's performance in transferring control of services promised
to a customer. The Company recognizes revenues over time only if it can reasonably measure its progress toward complete satisfaction
of the performance obligation. The Company normally requires the customers to pay a deposit upon entering into the service contracts.
Progress payments are normally billed with the final payment received upon completion of the contract.
Education
support services - sales of teaching and learning materials
Revenues
from the sales of educational materials for which control of assets is transferred at a point in time is recognized when the goods are
delivered to customers. The Company does not provide any sales-related warranties. There is no right of return by customers under the
Company's standard contract terms.
Education
support services - Provision of marketing, operation and technical support services
Revenues
from provision of marketing, operation and technical support services from the partnered institutions is recognized on a straight-line
basis over the term of the partnership agreement. The transaction price inclusive of value added tax as received from customers in advance
is recognized as a unearned revenue at the time of the initial transaction and is released on a straight-line basis over the period of
service (usually one year).
Software
and maintenance services
Standard
software is a right to use license because the software has standalone functionality and the customer can use the software as it is available
at a point in time. The Company recognizes revenues for such licenses at a point in time when the customer has received licenses and
thus has control over the software. In case there is an update of the standard software, end customers or distributors are required to
pay additional consideration to buy upgraded version. Revenues from maintenance services is recognized over time within the service period.
75
Unearned
revenues
Unearned
revenue is recorded when a payment is received from a customer before the Company transfers the related services. Unearned revenue is
recognized as revenue when the Company performs the services under the contract.
Disaggregated
information of revenues by services:
For the years ended December 31,
2022
2021
2020
Financial and taxation solution services
$
26,278
$
26,491
$
23,338
Education support services
4,409
4,635
4,558
Software and maintenance services
3,118
3,169
2,771
Revenue
$
33,805
$
34,295
$
30,667
Segment
reporting
The
Company's Chief Executive Officer, Mr.Ya Li, has been identified as the chief operating decision-maker ("CODM"), who
is responsible for overall performance of all the service lines and reviews of the consolidated results when making decisions about allocating
resources and assessing the performance of the Company as a whole. We set up departments by functionality but not by service lines. All
services lines are supervised by one vice president, who directly reports to CEO; and selling and operation functions are supervised
by other vice presidents. As our clients from all the three services could be the same, and we treated the services as a whole consulting
package to our clients. For example, while providing our financial solution services, we also try to sell our software to the clients
to assist them with office software upgrades. Additionally, we do not separate or allocate our research and development activities to
selling functions or other supporting functions into these services. The Company prepares the forecast annually by departments instead
of services. We set up certain revenue targets by service lines; however, we do not prepare other forecasts by services lines for costs
or expenses. Our CEO, the CODM, reviews the forecasts annually and reviews finance performance monthly. He reviews the consolidated balance
sheets, statements of operations, and cash flows thoroughly and raises his review comments at the group level. The Board of Directors
reviews the finance performance annually at the group level as well. Furthermore, there is no compensation based on the performance of
a single service line as the Company considered the compensation is based on the performance result of the total target set at the beginning
of the year, which is based on the whole performance of the three service lines. Hence, the Company has only one single operating segment.
The Company does not distinguish between markets or segments for the purpose of internal reporting. The Company's long-lived assets
are all located in the PRC and substantially all of the Company's revenues are derived from the PRC. Therefore, no geographical
segments are presented in these financial statements.
Value
added tax ("VAT")
Revenue
represents the invoiced value of goods and service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%,
depending on the type of products sold or service provided. Entities that are VAT general taxpayers are allowed to offset qualified input
VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable.
All of the VAT returns filed by the Company's subsidiaries in PRC remain subject to examination by the tax authorities for five
years from the date of filing.
76
Income
tax expenses
The
Company follows the liability method of accounting for income taxes in accordance with ASC 740 ("ASC 740"), Income Taxes.
The Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are
recognized when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated
financial statements. 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.
The
Company is not subject to tax on income or capital gain under the current tax laws of U.S. And the Company is subject to tax on income
or capital gain under the tax laws of PRC.
An
uncertain tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained
in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on
examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. For the years ended
December 31, 2022, 2021 and 2020, no uncertain tax position is recognized. Penalties and interest incurred related to underpayment of
income tax are classified as income tax expense in the period incurred. No significant penalties or interest relating to income taxes
have been incurred during the years ended December 31, 2022, 2021 and 2020. All of the tax returns of the Company's subsidiaries
in PRC remain subject to examination by the tax authorities for five years from the date of filing.
Statutory
surplus reserves
The
Company's PRC subsidiaries are required to allocate at least 10% of their after-tax profit to the general reserve in accordance
with the PRC accounting standards and regulations. The allocation to the general reserve will cease if such reserve has reached to 50%
of the registered capital of respective company. These reserves can only be used for specific purposes and are not transferable to the
Company in form of loans, advances, or cash dividends. There is no such regulation of providing statutory reserve in Hong Kong. None
of the statutory surplus reserves were recognized for the years ended December 31, 2022, 2021 and 2020.
Advertising
expenses
Advertising
expenditures are expensed as incurred and such expenses were included as part of selling and marketing expenses. For the years ended
December 2022, 2021 and 2020, the advertising expenses amounted to approximately $1.43 million, $1.35 million and $1.1 million, respectively.
Comprehensive
income
Comprehensive
income consists of two components, net income and other comprehensive income. Other comprehensive income refers to revenue, expenses,
gains and losses that under GAAP are recorded as an element of equity but are excluded from net income. Other comprehensive income consists
of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.
Earnings
per share
The
Company computes earnings per share ("EPS") in accordance with ASC 260, Earnings per Share. ASC 260 requires companies to
present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period.
Diluted EPS presents the dilutive effect on a per-share basis of the potential Ordinary Shares (e.g., convertible securities, options
and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential Ordinary
Shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the
calculation of diluted EPS.
77
Fair
value of financial instruments
ASC
825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize
the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as
follows:
●
Level
    1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in
    active markets.
●
Level
    2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets,
    quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable
    and inputs derived from or corroborated by observable market data.
●
Level
    3 — inputs to the valuation methodology are unobservable.
The
fair value of the Company's financial instruments, including cash, accounts receivable, other receivables – related party,
accounts payable, accrued expenses and other current liabilities, due to the related parties, and short-term bank loans, approximate
their recorded values due to their short-term maturities as of December 31, 2022 and 2021.
Recent
Accounting Pronouncements
New
Accounting Pronouncements Not Yet Adopted
The
Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.
Under the Jumpstart Our Business Startups Act of 2012, as amended ("the JOBS Act"), the Company meets the definition of an
emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards,
which delays the adoption of these accounting standards until they would apply to private companies.
In
June 2016, the FASB amended guidance related to the impairment of financial instruments as part of ASU 2016-13: Financial Instruments
– Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will be effective January 1, 2020. The
guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance
based on the estimate of expected credit loss. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic
326, Financial Instruments - Credit Losses, which clarified that receivables from operating leases are not within the scope of Topic
326 and instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842. On May
15, 2019, the FASB issued ASU 2019-05, which provides transition relief for entities adopting the Board's credit losses standard,
ASU 2016-13. Specifically, ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the
fair value option for financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of the credit
losses guidance in ASC 326-20, (3) are eligible for the fair value option under ASC 825-10, and (4) are not held-to-maturity debt securities.
For entities that have adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15,
2019, including interim periods therein. An entity may early adopt the ASU in any interim period after its issuance if the entity has
adopted ASU 2016-13. For all other entities, the effective date will be the same as the effective date of ASU 2016-13. In November 2019,
the FASB issued ASU 2019-11, "Codification Improvements to Topic 326, Financial Instruments – Credit Losses." ASU 2019-11
is an accounting pronouncement that amends ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments." The ASU 2019-11 amendment provides clarity and improves the codification to ASU 2016-03.
The pronouncement would be effective concurrently with the adoption of ASU 2016-03. The pronouncement is effective for fiscal years beginning
after December 15, 2019 and interim periods within those fiscal years. In February 2020, the FASB issued ASU No. 2020-02, which provides
clarifying guidance and minor updates to ASU No. 2016-13 – Financial Instruments – Credit Loss (Topic 326) ("ASU 2016-13").
ASU 2020-02 amends the effective date of ASU 2016-13, such that ASU 2016-13 and its amendments will be effective for the Company for
interim and annual periods in fiscal years beginning after December 15, 2022. The Company is currently evaluating the impact this ASU
will have on its consolidated financial statements and related disclosures.
78
In
December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, as part of its Simplification Initiative to
reduce the cost and complexity in accounting for income taxes. This standard removes certain exceptions related to the approach for intra
period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities
for outside basis differences. It also amends other aspects of the guidance to help simplify and promote consistent application of GAAP.
The amendments in these ASUs are effective for the Company's fiscal years, and interim periods within those fiscal years beginning
October 1, 2022. The Company does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption
of this guidance on the Company's consolidated financial statements.
Except
for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the consolidated
financial position, statements of operations and cash flows.
Holding
Company Structure
LICN
is a holding company incorporated in the Cayman Islands with no material operations of its own. We conduct our operations primarily in
the PRC through our subsidiaries in PRC.
As
a result, LICN's ability to pay dividends may depend upon dividends paid by 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.
Inflation
To
date, inflation in the PRC has not materially impacted our results of operations. However, we can provide no assurance that we will not
be affected in the future by higher rates of inflation in the PRC. For example, certain operating costs and expenses, such as employee
compensation and office operating expenses may increase as a result of higher inflation. Additionally, because a substantial portion
of our assets consists of cash and short-term investments, high inflation could significantly reduce the value and purchasing power of
these assets. We are not able to hedge our exposure to higher inflation in China.
Item 6.
Directors, Senior Management and Employees
6.A.
Directors and Senior Management
The
following table provides information regarding our executive officers and directors as of the date hereof:
Name
Age
Position(s)
Ya Li
44
Chief Executive Officer, Chairman of the Board, and Director
Zhixiang Fang
51
Chief Financial Officer
Yi Deng
43
Director
Zhihuang Deng
(1)(2)(3)
54
Independent Director
Lourdes Felix
(1)(2)(3)
56
Independent Director
Kipton Cariaga
(1)(2)(3)
36
Independent Director
(1)
Member
    of the Audit Committee
(2)
Member
    of the Compensation Committee
(3)
Member
    of the Nominating Committee
Ya
Li, Chief Executive Officer, Chairman of the Board and Director
Mr.
Li has served as our Chairman since January 4, 2017, Chief Executive Officer and Director since January 19, 2018. Mr. Li has over 21
years of experience in accounting, education and finance. From September 2013 to September 2014, Mr. Li was the chairman and a member
of the supervisory board of Peixin International Group N.V., a listed company on the Warsaw Stock Exchange in Poland (WSE stock code:
PEX) and a member of the audit committee and remuneration committee of the said supervisory board. Mr. Li was the general manager of
Jinjiang Xingminqi Financial Consulting Co., Ltd from January 2006 to September 2013. From April 2003 to December 2005, Mr. Li became
the principal of Jinjiang Xingminqi Accounting Vocational Training School ("Jinjiang School"). Prior to establishing in April
2004, Mr. Li was an assistant lecturer at Anhui University of Finance and Economics from February 1999 to June 2000. Mr. Li joined Jinjiang
Jiu Shen Company Limited from July 2000 to December 2002 as the chief financial officer in charge of the development of financial strategies
and maintaining of financial reports. Mr. Li obtained his bachelor's degree of management, majoring in accountancy from a program
jointly organized by China Central Radio and TV University (currently known as The Open University of China) and Beijing Technology and
Business University in April 2010.
79
Zhixiang
Fang, Chief Financial Officer
Mr.
Fang has over 24 years of experience in accounting and has served as our Chief Financial Officer since July 2018. From April 2021 to
February 2022, Mr. Fang is the independent director of Mobile Internet (China) Holdings Limited. Prior to that, Mr. Fang has served as
the deputy general manager of Lichen Zixun since 2013. Prior to joining us, Mr. Fang was the director of audit at Fujian Tianlun Group
Company Limited from December 2008 to January 2011. Mr. Fang was a lecturer in the teaching division of Chizhou University from July
1995 to December 2008. Mr. Fang obtained his diploma in accounting from Anhui University of Technology (previously known as Anhui Commercial
College), in June 1995. He later completed a part-time top-up course in accountancy at Hefei University of Technology in January 2008.
In December 2009, Mr. Fang became a member of the Chinese Institute of Certified Public Accountants. In May 1999, Mr. Fang was qualified
as a Medium Level Accountant in the PRC.
Yi
Deng, Director
Mr.
Deng has been a member of us for over 15 years. He was appointed as a director on April 15, 2018. Since December 2013, Mr. Deng became
a deputy general manager of Lichen Zixun. He is primarily responsible for overseeing the overall operations.
Mr.
Deng has been working at Huaqiao University as an instructor of postgraduate students since September 2018. In July 2017, Mr. Deng was
awarded the Small and Medium Enterprises Management Consultancy Services Expert and Database Expert in the PRC. Mr. Deng also has abundant
exposure to entrepreneurship training. In July 2009 and August 2014, Mr. Deng joined two entrepreneurship training courses organized
by China Employment Training Technical Instruction Center and subsequently obtained relevant qualifications as an entrepreneurship instructor.
Mr. Deng was also employed by Quanzhou Ocean Institute as a guest professor for two years in October 2013.
In
June 2016, Mr. Deng obtained a master's degree in business management from Huaqiao University. He graduated from Anhui University
Law School in 2009. Mr. Deng obtained his Junior College Education in law from Anhui Sanlian Career Technical College (currently known
as Anhui Sanlian University) in 2003.
Zhihuang
Deng, Independent Director and Chair of Compensation Committee
Mr.
Deng has over 25 years of experience in legal practice in the PRC. Since June 2020, he has been appointed as the independent director
and serving as the chairman of the remuneration committee and a member of each of the audit committee and nomination committee of Yik
Wo International Holdings Ltd., a company listed on GEM of the Stock Exchange (stock code: 8659). He is responsible for, among other
things, evaluating the performance of directors and senior management, monitoring the integrity of the company's financial statements
and annual reports and accounts, reviewing the company's financial controls and risk management and internal control systems and
making recommendations on any proposed changes to the board of directors to complement the company's corporate strategy. In July
2019, Mr. Deng became a senior partner at Beijing Yingke (Fuzhou) Law Firm. Mr. Deng was a senior partner at Fujian Zhixinheng Law Firm
from October 2005 to June 2019. Mr. Deng became a lawyer at Fujian Huawei Law Firm from April 2005 to October 2005. From April 1995 to
March 2005, Mr. Deng was a prosecutor of Fujian Province Fuzhou City People's Procuratorate.
Mr.
Deng obtained his bachelor's degree in law from Fujian Normal University in June 1992. After graduation, Mr. Deng became a lecturer
at Fujian Mechanical and Electrical School (currently known as Fujian University of Technology) from August 1992 to April 1995.
80
Lourdes
Felix, Independent Director and Chair of Audit Committee
Ms.
Felix is a female Hispanic entrepreneur and corporate finance executive with 30 years of combined experience in capital markets, public
accounting and in the private sector. She presently serves as Chief Executive Officer, Chief Financial Officer and Director of BioCorRx
Inc. (OTCQB: BICX), a leader in addiction treatment solutions and related disorders. She has been with BioCorRx since October 2012. Ms.
Felix is one of the founders of BioCorRx Pharmaceuticals Inc., a majority owned subsidiary of BioCorRx Inc. She has been instrumental
in capital procurement, completing multi-million dollars equity financing and accomplished in structuring and negotiating transactions
and favorable terms with investment banks. Along with other executives of the company, Ms. Felix rebranded the company, restructured
and expanded the business model to position it for long term growth in the addiction treatment space and drug development. Prior to joining
BioCorRx, she had experience in several private sectors, public accounting including audit and public company experience. She has expertise
in finance, accounting, budgeting and internal control principals including GAAP, SEC, and SOX Compliance. Ms. Felix has thorough knowledge
of federal and state regulations and has successfully managed and produced SEC regulatory filings. She has extensive experience in developing
and managing financial operations. Ms. Felix obtained a Bachelor of Science degree in Accounting from University of Phoenix in 2005.
Kipton
Cariaga, Independent Director and Chair of Nominating Committee
Mr.
Cariaga has over 10 years of experience in the financial industry. His expertise is in sales, marketing, education, equity and derivative
markets, and strategic planning. In May 2020, Mr. Cariaga founded Citrus Capital Consulting which offers business consulting services
to startup companies looking to expand into international markets. Since August 2021, Mr. Cariaga is a General Partner in Citrus Grove
Capital Management, a market-neutral hedge fund that helps wealthy individuals diversify their holdings. Since July 2020, Mr. Cariaga
serves as a General Partner in Shanghai Fengyu Investment Management Co. LTD, an international fund based in Shanghai. From 2014 to present,
he has been an options trader and business development specialist working in the family office of Orange Grove Trading Company. Mr. Cariaga
studied finance at California State University from 2006 to 2011 and in 2009, during his college days he worked for JPMorgan Chase and
became a licensed investment professional holding a FINRA Series 6, and 63 license as well as a California Life-Only insurance license
from 2010 to 2014.
Family
Relationships
None
of the directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
6.B.
Compensation
Employment
Agreements
We
have entered into an employment agreement with each of our executive officers and employee directors. Each of them 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. We may also terminate an executive officer's employment without cause upon advance written notice. The executive
officer and employee director may resign at any time with an advance written notice.
Compensation
of Directors and Executive Officers
For
the fiscal year ended December 31, 2022, we paid an aggregate of RMB 2,786,641 (approximately US$414,304), which is the total amount
of base salary plus bonus, in cash to our executive officers and employee directors. For the fiscal year ended December 31, 2021, we
paid an aggregate of RMB2,787,291 (approximately US$432,312), which is the total amount of base salary plus bonus, in cash to our executive
officers and employee directors. For the fiscal year ended December 31, 2020, we paid an aggregate of RMB2,788,601 (approximately US$404,286),
which is the total amount of base salary plus bonus, in cash to our executive officers and employee directors. Due to the impact of the
COVID-19 pandemic, the total revenue in 2020 has decreased, and thus we did not pay bonus to our Chief Executive Officer for the fiscal
year ended December 31, 2020. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to
our executive officers and directors.
81
6.C.
Board Practices
Board
of Directors
Our
Board of Directors consists of five (5) directors, a majority of whom are independent as such term is defined by the Nasdaq Capital Market.
A
director may vote in respect of any contract or transaction in which he is interested, provided, however that the nature of the interest
of any director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote on that matter.
A general notice or disclosure to the directors or otherwise contained in the minutes of a meeting or a written resolution of the directors
or any committee thereof of the nature of a director's interest shall be sufficient disclosure and after such general notice it
shall not be necessary to give special notice relating to any particular transaction. Provided that proper disclosure has been given
to the directors as mentioned above, a director may be counted for a quorum upon a motion in respect of any contract or arrangement which
he shall make with our company, or in which he is so interested and may vote on such motion.
Committees
of the Board of Directors
We
established three committees under the Board of Directors: an audit committee, a compensation committee and a nominating committee, and
adopted a charter for each of the three committees. Copies of our committee charters will be posted on our corporate investor relations
website. Each committee's members and functions are described below.
Audit
Committee
. Our Audit Committee consists of Mr. Zhihuang Deng, Ms. Lourdes Felix, and Mr. Kipton Cariaga. Ms. Lourdes Felix serves
as the chair of our audit committee. We have determined that these three individuals satisfy the "independence" requirements
of Nasdaq Rule 5605 and Rule 10A-3 under the Securities Exchange Act of 1934. Our Board of Directors has determined that Ms. Lourdes
Felix qualifies as an audit committee financial expert and has the accounting or financial management expertise as required under Item
407(d)(5)(ii) and (iii) of Regulation S-K of the SEC. The primary duties of the Audit Committee are, among other things:
●
Make
    recommendations to the Board in relation to the appointment;
●
Re-appoint
    and remove of the external auditor;
●
Monitor
    the reporting of our Company's financial statements, annual reports, accounts and half-year reports; and
●
Review
    and supervise our financial controls, internal control and risk management systems.
Compensation
Committee
. Our compensation committee consists of Mr. Zhihuang Deng, Ms. Lourdes Felix, and Mr. Kipton Cariaga. Mr. Zhihuang
Deng serves as the chairperson of our compensation committee. The primary duties of the compensation committee are, among other things:
●
Make
    recommendations to the Board in relation to our policy and structure for all Directors' and senior management's compensation;
●
Make
    recommendations to the Board on the compensation packages of individual directors and senior management personnel; and
●
Review
    performance-based compensation and to ensure that none of the Directors determine their own compensation.
82
Nominating
Committee
. Our nominating committee consists of Mr. Zhihuang Deng, Ms. Lourdes Felix, and Mr. Kipton Cariaga. Mr. Kipton Cariaga
serves as the chairperson of our nominating committee. The primary duties of the Nominating Committee are, among other things:
●
Review
    the structure, size and composition of the Board on a regular basis
●
Identify
    individuals suitably qualified to become Board members
●
Assess
    the independence of independent directors; and
●
Make
    recommendations to the Board in relation to the appointment or re-appointment of Directors.
Duties
of Directors
Under
Cayman Islands law, our directors have a duty to act honestly, in good faith and with a view to our best interests. Our directors
also have a duty to exercise the care, diligence and skills that a reasonably prudent person would exercise in comparable
circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our amended and restated memorandum
and articles of association. A shareholder may in certain circumstances have rights to damages if a duty owed by the directors is
breached.
Our
Board of Directors has all the powers necessary for managing, and for directing and supervising, our business affairs. The functions
and powers of our Board of Directors include, among others:
●
convening
    general meetings and reporting its work to shareholders at such meetings;
●
declaring
    dividends and distributions;
●
appointing
    officers and determining the term of office of the officers;
●
exercising
    the borrowing powers of our company and mortgaging the property of our company; and
●
approving
    the transfer of shares in our company, including the registration of such shares in our share register.
Corporate
Governance
The
business and affairs of the company are managed under the direction of our Board. Each of our directors has attended all meetings either
in person, via telephone conference, or through written consent for special meetings. Shareholders will be given specific information
on how they can direct communications to the officers and directors of the Company at our annual shareholders' meetings. All communications
from shareholders are relayed to the members of the Board.
Board
Diversity
Board
Diversity Matrix (As of the date of this annual report)
Country
    of Principal Executive Offices:
PRC
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
1
4
0
0
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
—
LGBTQ+
—
83
6.D.
Employees
As
of the date of this annual report, we have 399 employees. All of our employees are located in the PRC.
The
following table sets out the number of our employees, excluding external experts, categorized by functions as of the date of this annual
report:
Function
Number of
Employees
Management
12
Finance
9
Research and Development
45
Human Resource Administration
7
Operating Center
58
Quality Control Center
14
Consultation Service Center
254
Total
399
We
strive to maintain a high-quality work force with specialized financial and taxation industry expertise. As a general recruitment policy,
we typically require our internal consultants and project managers to possess at least three and seven years of related working experience,
respectively.
Our
internal consultants carry out their services for financial and taxation solution projects under the supervision of our project managers.
Annual performance evaluations are conducted on our internal consultants and project managers, so that our team of internal consultants
and project managers may comprise a balanced mix of professional and experienced members, in an effort to provide quality services to
our customers. In accordance with applicable PRC laws and regulations, we have made contributions to social security insurance funds
(including pension, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance plans) and housing
provident funds for our employees. None of our employees are represented by a labor organization. As of the date of this annual report,
we did not experience any strikes or significant labor disputes which materially affected our operations, and we believe we have maintained
good relationship with our employees.
6.E.
Share Ownership
Except
as specifically noted, the following table sets forth information with respect to the beneficial ownership of our Class A Ordinary Shares
as of the date of this annual report by:
●
Each
    person who is known by us to beneficially own more than 5% of our outstanding Class A Ordinary Shares and Class B Ordinary Shares;
●
Each
    of our director, director nominees and named executive officers; and
●
All
    directors and named executive officers as a group.
The
calculations in the table below are based on 17,500,000 Class A Ordinary Shares and 9,000,000 Class B Ordinary Shares issued and outstanding
as of the date of this annual report. Holders of Class A Ordinary Shares will be entitled to one (1) vote per share. Holders of Class
B Ordinary Shares will be entitled to ten (10) votes per share.  Information with respect to beneficial ownership has been furnished
by each director, officer or beneficial owner of more than 5% of either Class A Ordinary Shares or Class B Ordinary Shares. Beneficial
ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power
with respect to securities.
84
Beneficial
ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned
by a person and the percentage ownership of that person, we have included 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 shares, however,
are not included in the computation of the percentage ownership of any other person. Unless otherwise indicated in the footnotes, the
address for each principal shareholder is in the care of our Company at B2306, Block B Tower 3, Jinjiang Wanda Plaza Commercial Complex
888 Century Avenue Meiling Street, Jinjiang City Fujian Province People's Republic of China. As of the date hereof, we have 15
shareholders of record.
Executive Officers and Directors
Amount of
Beneficial
Ownership
of Class A
Ordinary
Shares
(1)
Percentage
Ownership
of Class A
Ordinary
Shares
(2)
Amount of
Beneficial
Ownership
of Class B
Ordinary
Shares
Percentage
Ownership
of Class B
Ordinary
Shares
Combined
Voting
Power of
Class A and
Class B
Ordinary
Shares
(2)
Directors and Named Executive Officers:
Ya Li (4)
-
-
9,000,000
100
%
83.72
%
Zhixiang Fang
-
-
-
-
-
Yi Deng
-
-
-
-
-
Zhihuang Deng
-
-
-
-
-
Lourdes Felix
-
-
-
-
-
Kipton Cariaga
-
-
-
-
-
All executive officers and directors as a group (6 persons)
-
-
9,000,000
100
%
83.72
%
5% or Greater Shareholders
Silver Sky Investment Limited (3)
-
-
9,000,000
100
%
83.72
%
Sensation Corporate Service Co., Limited (4)
2,250,000
12.5
%
-
-
2.09
%
China EC Investment (Hong Kong) Limited (5)
1,125,000
6.25
%
-
-
1.05
%
Dong Chang Ventures Limited (6)
1,125,000
6.25
%
-
-
1.05
%
Suqin Deng
1,012,500
5.63
%
-
-
*
Chunyan Wei
1,012,500
5.63
%
-
-
*
Shengbi Chen
900,000
5.00
%
-
-
*
Meizhen Li
900,000
5.00
%
-
-
*
Hongyu Wang
900,000
5.00
%
-
-
*
Zhen Wang
900,000
5.00
%
-
-
*
Shishan Wu
900,000
5.00
%
-
-
*
Peng Ye
675,000
3.75
%
-
-
*
*
<
    1%
(1)
Beneficial
    ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the Class
    A Ordinary Shares and Class B Ordinary Shares. All shares represent only Class A Ordinary Shares and Class B Ordinary Shares held
    by shareholders as no options are issued or outstanding.
(2)
Calculation
    based on 17,500,000 Class A Ordinary Shares and 9,000,000 Class B Ordinary Shares issued and outstanding. Holders of Class A Ordinary
    Share are entitled to one (1) vote per share. Holders of Class B Ordinary Shares are entitled to ten (10) votes per share.
(3)
Ya
    Li is deemed to beneficially own 9,000,000 Class B Ordinary Shares through Silver Sky Investment Limited, a British Virgin Islands
    company holding 9,000,000 shares of our Class B Ordinary Shares. Ya Li has the sole voting and dispositive power of all the shares
    held by Silver Sky Investment Limited.
(4)
Wenjuan
    Chen is deemed to beneficially own 2,250,000 Class A Ordinary Shares through Sensation Corporate Service Co., Limited, a Hong Kong
    company holding 2,250,000 shares of our Class A Ordinary Shares. Wenjuan Chen has the sole voting and dispositive power of all the
    shares held by Sensation Corporate Service Co., Limited.
(5)
Yinong
    Wu is deemed to beneficially own 1,125,000 Class A Ordinary Shares through China EC Investment (Hong Kong) Limited, a Hong Kong company
    holding 1,125,000 shares of our Class A Ordinary Shares. Yinong Wu has the sole voting and dispositive power of all the shares held
    by China EC Investment (Hong Kong) Limited.
(6)
Weinan
    Shi is deemed to beneficially own 1,125,000 Class A Ordinary Shares through Dong Chang Ventures Limited, a British Virgin Islands
    company holding 1,125,000 shares of our Class A Ordinary Shares. Weinan Shi has the sole voting and dispositive power of all the
    shares held by Dong Chang Ventures Limited.
85
Item
7. Major Shareholders and Related Party Transactions
7.A.
Major Shareholders
Please
refer to "Item 6. Directors, Senior Management and Employees — 6.E. Share Ownership."
7.B.
Related Party Transactions
Terms
of Directors and Officers
See
"Item 6. Directors, Senior Management and Employees—6.C. Board Practices—Terms of Directors and Officers."
Employment
Agreements and Indemnification Agreements
See
"Item 6. Directors, Senior Management and Employees—6.B. Compensation—Employment Agreements."
Other
Related Party Transactions
The
table below sets forth the major related parties and their relationships with the Company as of December 31, 2022 and 2021:
Name
of related parties
Relationship
    with the Company
Jinjiang
    Xingminqi Accounting Vocational Training School ("Jinjiang School")
A
    company controlled by the Company's controlling shareholder
Quanzhou
    City Lichen Accounting Vocational Training School ("Quanzhou School")
A
    company controlled by the Company's controlling shareholder
i)
Significant transactions with related parties were as follows:
For the years ended December 31,
2022
2021
2020
Provision of marketing, operation and technical support services to Jinjiang School
$
67
$
70
$
70
Provision of marketing, operation and technical support services to Quanzhou School
126
132
130
Processing of academic education applications to Jinjiang School
183
90
176
Processing of academic education applications to Quanzhou School
234
113
229
Sales of teaching and learning materials to Jinjiang School
71
70
80
Sales of teaching and learning materials to Quanzhou School
62
66
77
Online training to Jinjiang School
37
24
7
Online training to Quanzhou School
35
23
7
Total revenues – related parities
$
815
$
588
$
776
ii)
Significant
    balances with related parties were as follows:
As of
December 31,
2022
As of
December 31,
2021
In thousands of USD
Other receivable – related party
Ya Li
$
-
$
419
Due to the related parties
Quanzhou School
$
97
$
105
Ya Li
981
Jinjiang School
-
1
Total
$
1078
$
106
Balances
due to Ya Li and Quanzhou School are the result of the normal business transactions stated above. The balance due to Ya Li comprise mainly
payments made on behalf such as deferred IPO costs, whereas the balance due to Quanzhou represents amounts received in advance for services
to be performed. The balances were all unsecured, non-interest bearing and payable on demand.
86
Item
8. Financial Information
A.
Consolidated Statements and Other Financial Information
Please
refer to "Item 18. Financial Statements."
Legal
and Administrative Proceedings
Lichen
Education, our operating subsidiary in the PRC, has involved in legal and other disputes in the ordinary course of our business, including
but not limited to allegations against us for potential infringement of third-party copyrights or other intellectual property rights.
However, we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our
business or financial condition.
Litigation
or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial costs and diversion of
our resources, including our management's time and attention. For potential impact of legal or administrative proceedings on us,
see "Item 3. Key Information — 3.D. Risk Factors—Risks Relating to Our Business and Industry —
We may
face disputes from time to time relating to the intellectual property rights of third parties. We cannot assure you that our teaching
and learning materials supplied to the Partnered Institutions under the Partnership Agreements or our self-developed software do not
or will not infringe intellectual property rights of third parties
".
Dividend
Policy
We
do not have any plan to declare or pay any cash dividends on our Class A or Class B Ordinary Shares in the foreseeable future. We
currently intend to retain most, if not all, of our available funds and any future earnings to support operations and to finance the
growth and development of our business. Any future determination relating to our dividend policy will be made at the discretion of our
Board of Directors and will depend on a number of factors, including future earnings, capital requirements, financial condition and future
prospects and other factors the Board of Directors may deem relevant.
If
we determine to pay dividends on any of our Class A or Class B Ordinary Shares in the future, as a holding company, we will be dependent
on receipt of funds from our operating subsidiaries. Dividend distributions from our PRC subsidiaries to us are subject to PRC taxes,
such as withholding tax. In addition, regulations in the PRC currently permit payment of dividends of a PRC company only out of accumulated
distributable after-tax profits as determined in accordance with its articles of association and the accounting standards and regulations
in China. PRC regulations may restrict the ability of our PRC subsidiary to pay dividends to us. See "Item 4.B. – Regulation—Regulations
on Foreign Currency Exchange" and "Item 4.B. – Regulation—Regulations on Dividend Distribution."
87
8.B. Significant
Changes
Except
as otherwise disclosed in this report, we have not experienced any significant changes since the date of our audited consolidated financial
statements included herein.
Item
9. The Offer and Listing
9.A.
Offer and listing details
Not
applicable for annual reports on Form 20-F.
9.B. Plan
of distribution
Not
applicable for annual reports on Form 20-F.
9.C.
Markets
Our
Class A Ordinary Shares are listed on the Nasdaq Capital Market under the symbol "LICN."
9.D.
Selling shareholders
Not
applicable for annual reports on Form 20-F.
9.E.
Dilution
Not
applicable for annual reports on Form 20-F.
9.F.
Expenses of the issue
Not
applicable for annual reports on Form 20-F.
Item
10. Additional Information
10.A.
Share capital
Not
applicable for annual reports on Form 20-F.
10.B.
Memorandum and articles of association
The
following are summaries of the material provisions of our amended and restated memorandum and articles of association and the Companies
Act (as revised), insofar as they relate to the material terms of our Class A Ordinary Shares. They do not purport to be complete. Reference
is made to our amended and restated memorandum and articles of association, a copy of which is filed as an exhibit to the annual report
(and which is referred to in this section as, respectively, the "memorandum" and the "articles").
Meetings
of Shareholders
Any
of our directors may convene general meetings of shareholders at such times and in such manner and places within or outside the Cayman
Islands as the director considers necessary or desirable. The director convening a general meeting shall give at least five days'
notice of the general meeting to those shareholders whose names on the date the notice is given appear as members in the register of
members of the Company and are entitled to vote at the meeting, and each of the Company's directors. Our Board of Directors must
convene a general meeting upon the written request of one or more shareholders holding no less than 10% of the Company's paid-up
capital as at the date of the deposit of the requisition carries the right of voting at general meetings of the Company.
No
business may be transacted at any general meeting unless a quorum is present at the time the meeting proceeds to business. Two shareholders
present in person or by proxy shall be a quorum. For so long as any shares are listed on the Nasdaq Capital Market (and any other stock
exchange on which the Company's shares are listed for trading), one or more shareholders holding shares that represent not less
than one-third of the outstanding issued shares carrying the right to vote at such general meeting. If, within half an hour from the
time appointed for the meeting, a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved.
In any other case, it shall stand adjourned to the same day in the next week at the same time and place or to such other time or such
other place as the directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time
appointed for the meeting, the shareholders present shall be a quorum and may transact the business for which the meeting was called.
The chairman, if any, of our Board of Directors shall preside as chairman at every general meeting of the Company, or if there is no
such chairman, or if he shall not be present within fifteen minutes after the time appointed for the holding of the general meeting,
or is unwilling to act, the directors present shall elect one of their number to be chairman of the general meeting.
88
Meetings
of Directors
Subject
to the Cayman Islands Companies Act and the amended and restated articles of association of our company, the management of our company
is entrusted to our Board of Directors, who will make decisions by voting on resolutions of directors. At any meeting of directors, a
quorum will be present if two directors are present, unless otherwise fixed by the directors. If there is a sole director, that director
shall be a quorum. A director and his appointed alternate director shall be considered as only one person for the purpose of calculating
quorum. An alternate director or proxy appointed by a director shall be counted in a quorum at a meeting at which the director appointing
him is not present. An action that may be taken by the directors at a meeting may also be taken by a resolution of directors consented
to in writing by all of the directors.
Winding
Up
On
a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of shares), assets available for distribution
among the holders of ordinary shares shall be distributed among the holders of our shares in proportion to the capital paid up. If our
assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses
are borne by our shareholders in proportion to the capital paid up.
Calls
on Ordinary Shares and forfeiture of Ordinary Shares
Our
Board of Directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served
to such shareholders at least 14 days prior to the specified time of payment provided that no call shall be payable at less than one
month from the date fixed for the payment of the last preceding call. The ordinary shares that have been called upon and remain unpaid
are subject to forfeiture if the call remains unpaid after a second notice by the directors in accordance with the amended and restated
articles of association.
Repurchase
of Shares
The
Cayman Islands Companies Act and our amended and restated memorandum and articles of association permit us to purchase our own shares,
subject to certain restrictions and requirements. Our directors may only exercise this power on our behalf, subject to the Cayman Islands
Companies Act, our amended and restated memorandum and articles of association and to any applicable requirements imposed from time to
time by the Nasdaq, the Securities and Exchange Commission, or by any other recognized stock exchange on which our securities are listed.
Provided
the necessary shareholders and board approval have been obtained, we may issue shares on terms that are subject to redemption, at our
option or at the option of the holders of these shares, on such terms and in such manner, provided the requirements under the Cayman
Islands Companies Act have been satisfied. Under the Cayman Islands Companies Act, the repurchase of any share may be paid out of our
company's profits, out of the share premium account or out of the proceeds of a fresh issue of shares made for the purpose of such
repurchase, or out of capital. If the repurchase proceeds are paid out of our Company's capital, our Company must, immediately
following the date of such payment, be able to pay its debts as they fall due in the ordinary course of business. In addition, under
the Cayman Islands Companies Act, no such share may be repurchased (1) unless it is fully paid up, (2) if such repurchase would result
in there being no shares outstanding, and (3) unless the manner of purchase (if not so authorized under the amended and restated memorandum
and articles of association) has first been authorized by a resolution of our shareholders. In addition, under the Cayman Islands Companies
Act, our Company may accept the surrender of any fully paid share for no consideration unless, as a result of the surrender, the surrender
would result in there being no shares outstanding (other than shares held as treasury shares).
89
Variations
of Rights of Shares
The
rights attached to any class or series of shares (unless otherwise provided by the terms of issue of the shares of that class or series),
whether or not our company is being wound-up, may be varied with the consent in writing of the holders of three-fourths of the issued
shares of that class or series or with the sanction of a special resolution passed at a separate meeting of the holders of the shares
of the class or series. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly
provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking
pari passu with such existing class of shares.
Changes
in the number of shares we are authorized to issue and those in issue
We
may from time to time by resolution of shareholders in the requisite majorities:
●
amend
    our amended and restated memorandum of association to increase the authorized share capital of our Company or cancel any shares which
    at the date of the passing of the resolution have not been taken or agreed to be taken by any person;
●
subdivide
    our authorized and issued shares into a larger number of shares; and
●
consolidate
    our authorized and issued shares into a smaller number of shares.
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 register of members or
our corporate records. However, we will provide our shareholders with annual audited financial statements.
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 governing the ownership threshold above which shareholder ownership must be disclosed.
Issuance
of additional Ordinary 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 that there are sufficient authorized but unissued shares.
Exempted
Company
We
are an exempted company with limited liability under the Cayman Islands Companies Act. The Cayman Islands 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. An exempted company shall not trade in the Cayman
Islands with any person, firm or corporation except in furtherance of the business of the exempted company carried on outside the Cayman
Islands:
●
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;
90
●
does
    not have to hold an annual general meeting;
●
is
    prohibited from making any invitation to the public in the Cayman Islands to subscribe for any of its securities if it is not listed
    on the Cayman Islands Stock Exchange;
●
may
    issue bearer shares or shares with no par value;
●
may
    obtain an undertaking against the imposition of any future taxation (for a period of up to 30 years);
●
may
    register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
●
may
    register as an exempted 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.
10.C.
Material contracts
Other
than those described in this annual report, we have not entered into any material agreements other than in the ordinary course of business.
10.D.
Exchange controls
The
Cayman Islands, British Virgin Islands and Hong Kong currently have no exchange control regulations or currency restrictions.
Under
existing PRC foreign exchange regulations, payment of current account items, such as profit distributions and trade and service-related
foreign exchange transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange,
or the SAFE, by complying with certain procedural requirements. Therefore, our PRC subsidiaries are able to pay dividends in foreign
currencies to us without prior approval from SAFE, subject to the condition that the remittance of such dividends outside of the PRC
complies with certain procedures under PRC foreign exchange regulations, such as the overseas investment registrations by our shareholders
or the ultimate shareholders of our corporate shareholders who are PRC residents. Approval from, or registration with, appropriate government
authorities is, however, required where the RMB 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. The PRC government may also at its discretion restrict access in the
future to foreign currencies for current account transactions. Current PRC regulations permit our PRC subsidiaries to pay dividends to
the Company only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations.
As of the date of this annual report, there are no restrictions or limitations imposed by the Hong Kong government on the transfer of
capital within, into and out of Hong Kong (including funds from Hong Kong to the PRC), except for transfer of funds involving money laundering
and criminal activities. Cayman Islands law prescribes that a company may only pay dividends out of its profits. Other than that, there
is no restrictions on Lichen China Limited's ability to transfer cash to investors. See "Item 3 – Transfers of Cash
between Our Company and Our Subsidiaries" and "Item 3.D. Risk Factors - Risks Relating to Doing Business in China - To the
extent cash or assets in the business is in the PRC or Hong Kong or a PRC or Hong Kong entity, the funds or assets may not be available
to fund operations or for other use outside of the PRC or Hong Kong due to interventions in or the imposition of restrictions and limitations
on the ability of us or our subsidiaries by the PRC government to transfer cash or assets," "Item 3.D. Risk Factors - Risks
Relating to Doing Business in China - We 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 adverse effect on our ability to conduct our business," and "Item 3.D. Risk Factors - Risks Relating to Doing
Business in China - Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may have
a material adverse effect on our ability to conduct our business."
91
10.E
.
Taxation
Cayman
Islands Taxation
The
Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is
no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government
of the Cayman Islands, except for stamp duties which may be applicable on instruments executed in, or after execution brought within
the jurisdiction of the Cayman Islands. The Cayman Islands is a party to a double tax arrangement entered with the United Kingdom in
2010, but otherwise 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.
As
an exempted company incorporated in the Cayman Islands, the Company is required to pay an annual government fee ("Government Fee"),
which is determined on a sliding scale by reference to the level of its authorized share capital. The Government Fee is payable at the
end of January in every year and is based on the level of the authorized share capital at the time when the fee is due.
Payments
of dividends and capital in respect of our Class A Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding
will be required on the payment of a dividend or capital to any holder of our Class A Ordinary Shares, nor will gains derived from the
disposal of our Class A Ordinary Shares be subject to Cayman Islands income or corporation tax.
No
stamp duty is payable in the Cayman Islands in respect of the issue of the shares or on an instrument of transfer in respect of a share
of a Cayman company except those which hold interests in land in the Cayman Islands and except where the relevant document or instrument
is executed in or brought to the Cayman Islands, or produced before a Cayman Islands court.
People's
Republic of China Taxation
Under
the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a "de facto management
body" within the PRC is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on
its global income. The implementation rules define the term "de facto management body" as the body that exercises full and
substantial control over and overall management of the business, productions, personnel, accounts and properties of an enterprise. In
April 2009, the State Administration of Taxation issued a circular, known as Circular 82, 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. Although this circular 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 State Administration of Taxation's
general position on how the "de facto management body" test 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 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.
92
On
March 17, 2017, the State Tax Administration promulgated the "Administrative Measures for Adjustment of Special Tax Investigation
and Mutual Consultation Procedures" (State Administration of Tax Practice Announcement No.6, 2017), which came into force on May
1, 2017), which provides that tax authorities have implemented special tax adjustment monitoring and management for enterprises through
related declaration review, contemporaneous data management, profit level monitoring and other means. If an enterprise is found to have
special tax adjustment risks, the tax authorities may serve a "Notice" to remind such enterprise of the tax risks. If
an enterprise receives a special tax adjustment risk alert or finds that it has a special tax adjustment risk, it may adjust the supplementary
tax on its own. If the enterprise adjusts the supplementary tax by itself, the tax authorities may still carry out special tax investigation
and adjustment in accordance with the relevant provisions. If an enterprise requires the tax authorities to confirm the special tax adjustment
matters, such as the pricing principles and methods of related party transactions, the tax authorities shall initiate the special tax
investigation procedures. It also stipulates that if the principle of independent transactions is not met, tax authorities may implement
a special tax adjustment in the full amount of the amount deducted before tax under the following circumstances:
(1)
The
    enterprise and its affiliated parties transfer or accept the right to use intangible assets that do not bring economic benefits and
    collect or pay royalties;
(2)
The
    enterprise pays royalties to related parties that only own intangible assets but do not contribute to their value;
(3)
An
    enterprise establishes a holding company or a financing company overseas for the main purpose of financing and listing, and pays
    royalties to overseas affiliated parties only for the incidental benefits arising from the financing and listing activities;
(4)
The
    taxable income or income amount of the enterprise or its affiliated party is reduced because the payment or collection of the price
    of the labor service transaction between the enterprise and its affiliated party does not meet the principle of independent transactions;
    and
(5)
The
    enterprise pays fees to overseas related parties that fail to perform their functions, bear risks and have no substantial business
    activities.
Although
we believe all our related party transactions, including all payments by our PRC subsidiaries and consolidated affiliated entities to
our non-PRC entities, are made on an arm's-length basis and our estimates are reasonable, the ultimate decisions by the relevant
tax authorities may differ from the amounts recorded in our financial statements and may materially affect our financial results in the
period or periods for which such determination is made.
We
believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. We do not believe that Lichen China
Limited meets all of the conditions above. Lichen China Limited is a company incorporated outside the PRC. As a holding company, its
key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions
of its Board of Directors and the resolutions of its shareholders) are maintained, outside the PRC. For the same reasons, we believe
our other entities outside of China are not PRC resident enterprises either. 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." There can be no assurance that the PRC government will ultimately take a view that is consistent with us.
However,
if the PRC tax authorities determine that Lichen China Limited is a PRC resident enterprise for enterprise income tax purposes, we may
be required to withhold a 20% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. In addition,
non-resident enterprise shareholders may be subject to a 10% PRC tax on gains realized on the sale or other disposition of Class A Ordinary
Shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be
subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a
PRC resident enterprise. If any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless a
reduced rate is available under an applicable tax treaty. However, it is also unclear whether non-PRC shareholders of Lichen China Limited
would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that Lichen China
Limited is treated as a PRC resident enterprise.
Provided
that the Company is not deemed to be a PRC resident enterprise, holders of our Class A Ordinary Shares who are not PRC residents will
not be subject to PRC income tax on dividends distributed by us or gains realized from the sale or other disposition of our shares. However,
under SAT Circular 7, where a non-resident enterprise conducts an "indirect transfer" by transferring taxable assets, including,
in particular, equity interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding
company, the non-resident enterprise, being the transferor, or the transferee or the PRC entity which directly owned such taxable assets
may report to the relevant tax authority such indirect transfer. Using a "substance over form" principle, the PRC tax authority
may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose
of reducing, avoiding or deferring PRC 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. We and our non-PRC resident investors may be at risk
of being required to file a return and being taxed under SAT Circular 7, and we may be required to expend valuable resources to comply
with SAT Circular 7, or to establish that we should not be taxed under these circulars. See "Risk Factors — Risks Relating
to Doing Business in China — Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact
on potential acquisitions we may pursue in the future."
93
United
States Federal Income Tax Considerations
The
following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of our
Class A Ordinary Shares by a U.S. holder (as defined below) that holds our Class A Ordinary Shares as "capital assets" (generally,
property held for investment) under the United States Internal Revenue Code of 1986, as amended (the "Code"). This discussion
is based upon existing United States federal income tax law, which is subject to differing interpretations and may be changed, possibly
with retroactive effect. No ruling has been sought from the Internal Revenue Service (the "IRS") with respect to any United
States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary
position. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors
in light of their individual circumstances, including investors subject to special tax rules (for example, banks or other financial institutions,
insurance companies, broker-dealers, pension plans, cooperatives, traders in securities that have elected the mark-to-market method of
accounting for their securities, partnerships and their partners, regulated investment companies, real estate investment trusts, and
tax-exempt organizations (including private foundations)), holders who are not U.S. holders, holders who own (directly, indirectly, or
constructively) 10% or more of our voting stock, holders who will hold their Class A Ordinary Shares as part of a straddle, hedge, conversion,
constructive sale, or other integrated transaction for United States federal income tax purposes, or investors that have a functional
currency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized
below. In addition, this discussion does not discuss any non-United States, alternative minimum tax, state, or local tax considerations,
or the Medicare tax on net investment income. Each U.S. holder is urged to consult its tax advisors regarding the United States federal,
state, local, and non-United States income and other tax considerations with respect to the ownership and disposition of our Class A
Ordinary Shares.
General
For
purposes of this discussion, a "U.S. holder" is a beneficial owner of our Class A Ordinary Shares that is, for United States
federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity
treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States
or any state thereof or the District of Columbia, (iii) an estate the income of which is subject to United States federal income taxation
regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court
and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that
has otherwise elected to be treated as a United States person under applicable United States Treasury regulations.
If
a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our Class
A Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities
of the partnership. Partnerships holding our Class A Ordinary Shares and partners in such partnerships are urged to consult their tax
advisors as to the particular United States federal income tax consequences of an investment in our Class A Ordinary Shares.
94
Passive
Foreign Investment Company Considerations
A
non-United States corporation, such as our company, will be a "passive foreign investment company," or "PFIC,"
for United States federal income tax purposes, if, in any particular taxable year, 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 average quarterly value of its assets (as determined
on the basis of fair market value) during such year produce or are held for the production of passive income. For this purpose, cash
is categorized as a passive asset and the company's unbooked intangibles associated with active business activities may generally
be classified as active assets. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains
from the disposition of passive assets. We will be treated as owning a proportionate share of the assets and earning a proportionate
share of the income of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock.
Based
upon our income and assets and the value of our Class A Ordinary Shares, we do not believe that we were a PFIC for the taxable years
ended December 31, 2022 and 2021, and do not anticipate becoming a PFIC in the foreseeable future.
Although
we do not believe that we were a PFIC for the taxable year ended December 31, 2022 and 2021 and do not anticipate becoming a PFIC in
the foreseeable future, the determination of whether we are or will become a PFIC will depend in part upon the value of our goodwill
and other unbooked intangibles (which will depend upon the market value of our Class A Ordinary Shares from time-to-time, which may be
volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our market capitalization.
Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may be or become a PFIC for the
current or future taxable years. It is also possible that the IRS may challenge our classification or valuation of our goodwill and other
unbooked intangibles, which may result in our company being or becoming a PFIC for the current or one or more future taxable years.
The
determination of whether we will be or become a PFIC will also depend, in part, on the composition of our income and assets, which may
be affected by how, and how quickly, we use our liquid assets and the cash raised in our initial public offering. If we determine not
to deploy significant amounts of cash for active purposes, our risk of being classified as a PFIC may substantially increase. Because
our PFIC status for any taxable year is a factual determination that can be made only after the close of a taxable year, there can be
no assurance that we will not be a PFIC for the current taxable year or any future taxable year. If we are a PFIC for any year during
which a U.S. holder held our Class A Ordinary Shares, we generally would continue to be treated as a PFIC for all succeeding years during
which such U.S. holder held our Class A Ordinary Shares.
The
discussion below under "Dividends" and "Sale or Other Disposition of Class A Ordinary Shares" is written on the
basis that we will not be or become a PFIC for United States federal income tax purposes. The United States federal income tax rules
that apply if we are a PFIC for the current taxable year or any subsequent taxable year are generally discussed below under "Passive
Foreign Investment Company Rules."
Dividends
Subject
to the PFIC rules discussed below, any cash distributions (including the amount of any tax withheld) paid on our Class A Ordinary Shares
out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, will generally
be includible in the gross income of a U.S. holder as dividend income on the day actually or constructively received by the U.S. holder.
Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution
paid will generally be reported as a "dividend" for United States federal income tax purposes. A non-corporate recipient
of dividend income will generally be subject to tax on dividend income from a "qualified foreign corporation" at a reduced
United States federal tax rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding
period requirements are met.
A
non-United States corporation (other than a corporation that is a PFIC for the taxable year in which the dividend is paid or the preceding
taxable year) will generally be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive
tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this
provision and which includes an exchange of information program, or (b) with respect to any dividend it pays on stock which is readily
tradable on an established securities market in the United States. In the event we are deemed to be a resident enterprise under the PRC
Enterprise Income Tax Law, we may be eligible for the benefits of the United States-PRC income tax treaty (which the U.S. Treasury Department
has determined is satisfactory for this purpose) and in that case we would be treated as a qualified foreign corporation with respect
to dividends paid on our Class A Ordinary Shares. Each non-corporate U.S. holder is advised to consult its tax advisors regarding the
availability of the reduced tax rate applicable to qualified dividend income for any dividends we pay with respect to our Class A Ordinary
Shares. Dividends received on the Class A Ordinary Shares will not be eligible for the dividends received deduction allowed to corporations.
Dividends
will generally be treated as income from foreign sources for United States foreign tax credit purposes and will generally constitute
passive category income. In the event that we are deemed to be a PRC "resident enterprise" under the Enterprise Income Tax
Law, a U.S. holder may be subject to PRC withholding taxes on dividends paid on our Class A Ordinary Shares. (See "—People's
Republic of China Taxation"). In that case, a U.S. holder 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 Class A Ordinary Shares. A U.S.
holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction, for United States federal
income tax purposes, in respect of such withholdings, but only for a year in which such U.S. holder elects to do so for all creditable
foreign income taxes. The rules governing the foreign tax credit are complex. U.S. holders are advised to consult their tax advisors
regarding the availability of the foreign tax credit under their particular circumstances.
95
Sale
or Other Disposition of Class A Ordinary Shares
Subject
to the PFIC rules discussed below, a U.S. holder will generally recognize capital gain or loss upon the sale or other disposition of
Class A Ordinary Shares in an amount equal to the difference between the amount realized upon the disposition and the U.S. holder's
adjusted tax basis in such ordinary shares. Any capital gain or loss will be long-term if the Class A Ordinary Shares have been held
for more than one year and will generally be United States source gain or loss for United States foreign tax credit purposes. Long-term
capital gain of non-corporate U.S. holders is generally eligible for a reduced rate of taxation. The deductibility of a capital loss
may be subject to limitations. In the event that we are treated as a PRC "resident enterprise" under the Enterprise Income
Tax Law and gain from the disposition of the Class A Ordinary Shares is subject to tax in the PRC, a U.S. holder that is eligible for
the benefits of the income tax treaty between the United States and the PRC may elect to treat the gain as PRC source income. U.S. holders
are advised to consult tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our Class A Ordinary
Shares, including the availability of the foreign tax credit under their particular circumstances and the election to treat any gain
as PRC source.
Passive
Foreign Investment Company Rules
If
we are a PFIC for any taxable year during which a U.S. holder holds our Class A Ordinary Shares, and unless the U.S. holder makes a mark-to-market
election (as described below), the U.S. holder will generally be subject to special tax rules that have a penalizing effect, regardless
of whether we remain a PFIC, for subsequent taxable years, on (i) any excess distribution that we make to the U.S. holder (which generally
means any distribution paid during a taxable year to a U.S. holder that is greater than 125% of the average annual distributions paid
in the three preceding taxable years or, if shorter, the U.S. holder's holding period for the Class A Ordinary Shares), and (ii)
any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, of Class A Ordinary Shares. Under
the PFIC rules:
●
such
    excess distribution and/or gain will be allocated ratably over the U.S. holder's holding period for the Class A Ordinary Shares;
●
such
    amount allocated to the current taxable year and any taxable years in the U.S. holder's holding period prior to the first taxable
    year in which we are a PFIC, or pre-PFIC year, will be taxable as ordinary income;
●
such
    amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect
    for that year; and
●
an
    interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year,
    other than a pre-PFIC year.
If
we are a PFIC for any taxable year during which a U.S. holder holds our Class A Ordinary Shares and any of our non-United States subsidiaries
is also a PFIC, such U.S. holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for
purposes of the application of these rules. U.S. holders are advised to consult their tax advisors regarding the application of the PFIC
rules to any of our subsidiaries.
As
an alternative to the foregoing rules, a U.S. holder of "marketable stock" in a PFIC may make a mark-to-market election.
Since our Class A Ordinary Shares have been approved for listing on Nasdaq, and provided that the Class A Ordinary Shares will be regularly
traded on Nasdaq, a U.S. holder holds Class A Ordinary Shares will be eligible to make a mark-to-market election if we are or were to
become a PFIC. If a mark-to-market election is made, the U.S. holder will generally (i) include as ordinary income for each taxable year
that we are a PFIC the excess, if any, of the fair market value of Class A Ordinary Shares held at the end of the taxable year over the
adjusted tax basis of such Class A Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis
of the Class A Ordinary Shares over the fair market value of such Class A Ordinary Shares held at the end of the taxable year, but only
to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. holder's adjusted
tax basis in the Class A Ordinary Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election.
If a U.S. holder makes an effective mark-to-market election, in each year that we are a PFIC, any gain recognized upon the sale
or other disposition of the Class A Ordinary Shares will be treated as ordinary income and loss will be treated as ordinary loss, but
only to the extent of the net amount previously included in income as a result of the mark-to-market election. If a U.S. holder makes
a mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years unless
the Class A Ordinary Shares are no longer regularly traded on a qualified exchange or the Internal Revenue Service consents to the revocation
of the election.
96
If
a U.S. holder makes a mark-to-market election in respect of a PFIC and such corporation ceases to be a PFIC, the U.S. holder will not
be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not a PFIC.
Because
a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. holder who makes a mark-to-market election
with respect to our Class A Ordinary Shares may continue to be subject to the general PFIC rules with respect to such U.S. holder's
indirect interest in any of our non-United States subsidiaries if any of them is a PFIC.
We
do not 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.
As
discussed above under "Dividends," dividends that we pay on our Class A Ordinary Shares will not be eligible for the reduced
tax rate that applies to qualified dividend income if we are a PFIC for the taxable year in which the dividend is paid or the preceding
taxable year. In addition, if a U.S. holder owns our Class A Ordinary Shares during any taxable year that we are a PFIC, such holder
would generally be required to file an annual IRS Form 8621. Each U.S. holder is advised to consult its tax advisors regarding the potential
tax consequences to such holder if we are or become a PFIC, including the possibility of making a mark-to-market election.
Information
Reporting
Certain
U.S. holders may be required to report information to the IRS relating to an interest in "specified foreign financial assets,"
including shares issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign financial
assets exceeds US$50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception for
shares held in custodial accounts maintained with a United States financial institution). These rules also impose penalties if a U.S.
holder is required to submit such information to the IRS and fails to do so.
In
addition, U.S. holders may be subject to information reporting to the IRS with respect to dividends on and proceeds from the sale or
other disposition of our Class A Ordinary Shares. Each U.S. holder is advised to consult with its tax advisor regarding the application
of the United States information reporting rules to their particular circumstances.
10.F.
Dividends and paying agents
Not
applicable for annual reports on Form 20-F.
10.G.
Statement by experts
Not
applicable for annual reports on Form 20-F.
10.H.
Documents on display
We
are subject to the information requirements of the Exchange Act. In accordance with these requirements, the Company files reports and
other information with the SEC. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street,
N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC also maintains a web site at http://www.sec.gov that contains reports and other information regarding registrants that
file electronically with the SEC.
97
10.I.
Subsidiary Information
For
a list of our subsidiaries, see "Item 4. Information of the Company – C. Organizational Structure."
10.J.
Annual Report to Security Holders
Not
applicable.
Item
11. Quantitative and Qualitative Disclosures About Market Risk
Foreign
Exchange Risk
All
of our revenues and substantially all of our expenses are denominated in RMB. In our consolidated financial statements, our financial
information that uses RMB as the functional currency has been translated into U.S. dollars. We do not believe that we currently have
any significant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk.
The
value of the RMB against the U.S. dollar and other currencies is affected by, among other things, changes in China's political
and economic conditions. The PRC government allowed the RMB to appreciate by more than 20% against the U.S. dollar between July 2005
and July 2008. Between July 2008 and June 2010, the exchange rate between the RMB and the U.S. dollar had been stable and traded within
a narrow band. Since June 2010, the PRC government has allowed the RMB to appreciate slowly against the U.S. dollar, though there have
been periods when the RMB has depreciated against the U.S. dollar. In particular, on August 11, 2015, the PBOC allowed the RMB to depreciate
by approximately 2% against the U.S. dollar. It is difficult to predict how long the current situation may last and when and how the
relationship between the RMB and the U.S. dollar may change again.
To
the extent that we need to convert U.S. dollars into RMB for our operations, appreciation of the RMB against the U.S. dollar would have
an adverse effect on the RMB amount we receive from the conversion. Conversely, if we decide to convert RMB into U.S. dollars, appreciation
of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amounts available to us.
Interest
rate risk
Interest
rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. Our interest rate risk arises primarily from short-term borrowings. Borrowings issued at variable rates and fixed rates
expose us to cash flow interest rate risk and fair value interest rate risk respectively.
Inflation
Risk
We
are also exposed to inflation risk. Inflationary factors, such as increases in labor costs, could impair our operating results. Although
we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of
inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses.
Item
12. Description of Securities Other than Equity Securities
12.A.
Debt Securities
Not
applicable.
12.B.
Warrants and Rights
Not
applicable.
12.C.
Other Securities
Not
applicable.
12.D.
American Depositary Shares
Not
applicable.
98
PART
II
Item
13. Defaults, Dividend Arrearages and Delinquencies
We
do not have any material defaults in the payment of principal, interest, or any installments under a sinking or purchase fund.
Item
14. Material Modifications to the Rights of Securities Holders and Use of Proceeds
14.A.
– 14.D. Material Modifications to the Rights of Security Holders
See
"Item 10. Additional Information" for a description of the rights of shareholders, which remain unchanged.
14.E.
Use of Proceeds
The
following "Use of Proceeds" information relates to the registration statement on Form F-1 (File No. 333-264624),
as amended, including the annual report contained therein, which registered 4,000,000 Class A Ordinary Shares and was declared effective
by the SEC on February 3, 2023, for our initial public offering, which completed on February 8, 2023, at an initial offering price of
US$4.00 per Class A Ordinary Share. Univest Securities, LLC was the representative of the underwriters.
In
connection with the issuance and distribution of the Class A
Ordinary Shares
in our initial
public offering, our expenses incurred and paid to others totaled approximately US$2.59 million, which included US$1.50 million
for underwriting discounts and commissions. None of the transaction expenses included direct or indirect 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 or others. We received
an aggregate net proceeds of approximately US$14.1 million from our initial public offering.
As
of the date of this annual report, we used US$1.45 million of the net proceeds received from our initial public offering for internal
investment, deposit for potential acquisition, and general corporate purposes. We still intend to use the remainder of the proceeds from
our initial public offering as disclosed in our registration statements on Form F-1.
None
of these net proceeds from our initial public offering and the optional offering was 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 or others.
Item
15. Controls and Procedures
(a)
Disclosure Controls and Procedures.
Our
management, with the participation of our Chief Executive Officer and Chief Financial Officer, has performed an evaluation of the effectiveness
of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period
covered by this report, as required by Rule 13a-15(b) under the Exchange Act.
Based
upon that evaluation, our management has concluded that, as of December 31, 2022, our disclosure controls and procedures were ineffective
as our management has identified a material weakness that has been identified related to our lack of sufficient financial reporting and
accounting personnel with appropriate knowledge of the generally accepted accounting principles in the United States ("U.S. GAAP")
and SEC reporting requirements to properly address complex U.S. GAAP accounting issues and to prepare and review our consolidated financial
statements and related disclosures to fulfill U.S. GAAP and SEC financial reporting requirements. The other material weakness that has
been identified related to our lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP.
99
To
remedy the identified material weaknesses, we have implemented and will continue to implement several measures to improve our internal
control over financial reporting, including: (i) that we engaged experienced financial consultant who worked closely with our internal
finance team to assist us in preparing our financial statements and related disclosures in accordance with U.S. GAAP; (ii) that our Chief
Financial Officer received additional training in U.S. GAAP through self-study and webinar courses, and began to periodically review
major accounting literature updates provided by a major accounting firm which provide an overview of recent U.S. accounting pronouncements.
(iii) conducting regular and continuous U.S. GAAP training programs and webinars for our financial reporting and accounting personnel;
(iv) improving financial oversight function for handling complex accounting issues under U.S. GAAP. However, the implementation of these
measures may not fully address the deficiencies in our internal control over financial reporting. We are not able to estimate with reasonable
certainty the costs that we will need to incur to implement these and other measures designed to improve our internal control over financial
reporting. See "Item 3.D. Risk Factors—Risks Relating to Our Business—
If we fail to establish and maintain proper
internal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could
be impaired
."
Pursuant
to the JOBS Act, we qualify as an "emerging growth company as we recorded revenues less than US$1.235 billion in our most recent
fiscal year, which allows us to 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, in the assessment of the emerging growth company's internal control over financial reporting.
Neither
we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control under the Sarbanes-Oxley
Act for purposes of identifying and reporting any weakness in our internal control over financial reporting, which, however, will be
required once we become a public company and after we cease to be an "emerging growth company" as such term is defined in
the JOBS Act. Had we performed a formal assessment of our internal control over financial reporting or had our independent registered
public accounting firm performed an audit of our internal control over financial reporting, additional control deficiencies may have
been identified.
(b)
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 Rule 13a-15(f) and 15d-15(f) under
the Exchange Act. Our management evaluated the effectiveness of our internal control over financial reporting, as required by Rule 13a-15(c) of
the Exchange Act, based on criteria established in 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 has concluded that our internal control
over financial reporting was not effective as of December 31, 2022 due to a material weakness identified in our internal control over
financial reporting as described above.
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections
of any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
(c)
Attestation report of the registered public accounting firm.
This
annual report on Form 20-F does not include an attestation report of our registered public accounting firm due to a transition
period established by rules of the SEC for newly public companies.
(d)
Changes in internal control over financial reporting.
There
have been no changes in our internal controls over financial reporting occurred during the fiscal year ended December 31, 2022, that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
100
Item
16. [Reserved]
Item
16A. Audit Committee Financial Expert
Our
audit committee consists of Mr. Zhihuang Deng, Ms. Lourdes Felix, and Mr. Kipton Cariaga and is chaired by Ms. Lourdes Felix. Mr. Zhihuang
Deng, Ms. Lourdes Felix, and Mr. Kipton Cariaga each satisfies the "independence" requirements of Rule 5605 of the Corporate
Governance Rules of Nasdaq Stock Market and meets the independence standards under Rule 10A-3 under the Exchange Act. We have determined
that Ms. Lourdes Felix qualifies as an "audit committee financial expert."
Item
16B. Code of Ethics
The
Company has adopted a Code of Business Conduct and Ethics that applies to the Company's directors, officers, employees and advisors.
The Code of Business Conduct and Ethics is attached as an exhibit to this annual report. Copy of the Code of Business Conduct and Ethics
is also available on our website at https://ir.lichenzx.com.
Item
16C. Principal Accountant Fees and Services
TPS
Thayer, LLC was appointed by the Company to serve as its independent registered public accounting firm for fiscal years ended December
31, 2022 and 2021. Audit services provided by TPS Thayer, LLC for fiscal years ended December 31, 2022 and 2021 included the examination
of the consolidated financial statements of the Company.
Briggs
& Veselka Co. was appointed by the Company to serve as its independent registered public accounting firm for fiscal years ended December
31, 2020. Audit services provided by Briggs & Veselka Co. for fiscal years ended December 31, 2020 included the examination of the
consolidated financial statements of the Company.
Fees
Paid to Independent Registered Public Accounting Firm
Auditor
Fees
The
following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered
by TPS Thayer, LLC and Briggs & Veselka Co., our independent registered public accounting firms, for the periods indicated.
Year Ended December 31,
Services
2020
2021
2022
US$
US$
US$
Audit Fees(1) - TPS Thayer, LLC
-
180,000
257,000
Audit Fees(1) - Briggs & Veselka Co.
260,000
45,000
80,000
Total
260,000
225,000
337,000
Note
1: Audit fees include the aggregate fees billed in each of the fiscal years for professional services rendered by our independent registered
public accounting firm for the audit of our annual financial statements, review of the interim financial statements and for the
audits of our financial statements in connection with our initial public offering, and comfort letter in connection with the underwritten
public offering.
The
policy of our audit committee is to pre-approve all audit and non-audit services provided by our independent registered
public accounting firm, including audit services and audit-related services as described above, other than those for de minimus services
which are approved by the audit committee prior to the completion of the audit.
101
Item
16D. Exemptions from the Listing Standards for Audit Committees
Not
applicable.
Item
16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not
applicable.
Item
16F. Change in Registrant's Certifying Accountant
Not
applicable.
Item
16G. Corporate Governance
As
a company listed on the Nasdaq Capital Market, we are subject to the Nasdaq corporate governance listing standards. However, Nasdaq 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 corporate governance listing standards.
Currently,
we do not plan to rely on home country practice with respect to our corporate governance. However, to the extent we choose to follow
home country practice in the future, our shareholders may be afforded less protection than they otherwise would under the Nasdaq corporate
governance listing standards applicable to U.S. domestic issuers. See "Item 3.D. Risk Factors—Risks Relating to Our
Class A Ordinary Share—
Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance standards
applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.
"
Item
16H. Mine Safety Disclosure
Not
applicable.
Item
16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not
applicable.
Item
16J.
Insider Trading Policies
We
have adopted insider trading policies governing the purchase, sale, and other dispositions of our securities by directors, senior management,
and employees. A copy of the insider trading policies is attached as an exhibit to this annual report.
102
PART
III
Item
17. Financial Statements
See
"Item 18. Financial Statements."
Item
18. Financial Statements
Our
consolidated financial statements are included at the end of this annual report, beginning with page F-1.
Item
19. Exhibits
Exhibit
    No.
Description
    of Exhibit
1.1
Amended and Restated Memorandum and Articles of Association of Lichen China Limited (incorporated by reference to Exhibit 3.1 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
2.1*
Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
2.2
Form of Underwriter's Warrant (incorporated by reference to Exhibit 4.1 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
4.1
Translation of Employment Agreement by and between Lichen Zixun and Ya Li (incorporated by reference to Exhibit 10.1 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
4.2
Translation of Employment Agreement by and between Lichen Zixun and Zhixiang Fang (incorporated by reference to Exhibit 10.2 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
4.3
Translation of Employment Agreement by and between Lichen Zixun and Yi Deng (incorporated by reference to Exhibit 10.3 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
4.4
Director
Offer Letter by and between the Registrant and Zhihuang Deng (incorporated by reference to Exhibit 10.4 to our registration statement
on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
4.5
Director Offer Letter by and between the Registrant and Lourdes Felix (incorporated by reference to Exhibit 10.5 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
4.6
Director Offer Letter by and between the Registrant and Kipton Cariaga (incorporated by reference to Exhibit 10.6 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
4.7
Translation Form of the Expert Corporation Agreement (incorporated by reference to Exhibit 10.7 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
4.8
Translation Form of the Partnership Agreement (incorporated by reference to Exhibit 10.8 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
103
8.1
List of Subsidiaries (incorporated by reference to Exhibit 21.1 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
11.1
Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to our registration statement on Form F-1 (File No. 333-264624), as amended, initially filed with the SEC on May 2, 2022)
11.2*
Insider Trading Policies
12.1*
Certification of Chief Executive Officer Required by Rule 13a-14(a)
12.2*
Certification of Chief Financial Officer Required by Rule 13a-14(a)
13.1**
Certification of Chief Executive Officer Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code
13.2**
Certification of Chief Financial Officer Required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code
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 Labels 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 with
    this annual report on Form 20-F
**
Furnished
    with this annual report on Form 20-F
104
SIGNATURES
The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
Lichen
    China Limited
By:
/s/
    Ya Li
Name:
Ya
    Li
Title:
Chief
    Executive Officer
Date:
May 1, 2023
105
LICHEN CHINA LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm PCAOB ID #
6706
F-2
Report of Independent Registered Public Accounting Firm
F-3
Consolidated Balance Sheets as of December 31, 2022 and 2021
F-4
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2022, 2021 and 2020
F-5
Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2022, 2021 and 2020
F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020
F-7
Notes to Consolidated Financial Statements
F-8
F-
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and
Shareholders of Lichen China Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lichen
China Limited and subsidiaries (collectively, the "Company"), as of December 31, 2022 and 2021, and the related consolidated
statements of income and comprehensive income, changes in shareholders' equity and cash flows for each of two years period ended
December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements
present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the
consolidated results of its operations and its cash flows for each of the years in the two years period ended December 31, 2022,
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 audit 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
misstatements 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 provided a reasonable basis for our opinion.
/s/
TPS Thayer, LLC
We have served as the Company's auditor since 2022
Sugar Land,
Texas
May 1, 2023
F-
2
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Shareholders of Lichen China Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheet of Lichen China Limited and subsidiaries (collectively, the "Company") as of December 31, 2020, and the related
consolidated statements of income and comprehensive income, changes in shareholders' equity, and cash flows for the year then ended,
and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly,
in all material respects, the financial position of the Company as of December 31, 2020 and the results of its operations and its cash
flows for the year then ended, 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
audit. 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 audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit 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 audit, 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 audit included performing procedures to assess
the risks of material misstatement of the consolidated 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 audit provides a reasonable basis for
our opinion.
/s/Briggs & Veselka Co.
Houston, Texas
August 12, 2021
We have served as the Company's auditor since 2021.
F-
3
LICHEN CHINA LIMITED
CONSOLIDATED BALANCE
SHEETS
AS OF THE YEARS ENDED DECEMBER 31, 2022 AND
2021
(All amounts in thousands
of USD, except for share and per share data, unless otherwise noted)
2022
2021
Assets
Current assets:
Cash
$
22,599
$
16,845
Accounts receivable and unbilled receivable
3,545
3,942
Other receivables – related party
-
419
Inventories
127
150
Prepayments, deposits, and other current assets
996
2,532
Total current assets
27,267
23,888
Property and equipment, net
13,298
14,937
Intangible assets, net
4,522
3,868
Operating lease – right-of-use asset, net
202
-
Deferred IPO costs
1,095
-
Other assets
141
250
Total assets
$
46,525
$
42,943
Liabilities And Shareholders' Equity
Current liabilities:
Accounts payable
$
161
$
123
Accrued expenses and other current liabilities
1,701
3,061
Unearned revenues
1,146
1,273
Taxes payable
1,058
1,203
Due to the related parties
1,078
106
Short-term bank loan
-
345
Current maturities of operating lease liability
88
-
Total current liabilities
5,232
6,111
Long-term portion of operating lease liability
184
-
Total Liabilities
5,416
-
Commitments and contingencies
-
-
Shareholders' equity:
Class A Ordinary Share, $
0.00004
par value,
1,000,000,000
shares authorized;
13,500,000
shares issued and outstanding
1
1
Class B Ordinary Share, $
0.00004
par value,
250,000,000
shares authorized;
9,000,000
shares issued and outstanding
-
-
Additional paid-in capital
1,487
1,487
Statutory surplus reserves
789
789
Retained earnings
40,832
33,014
Accumulated other comprehensive (loss)/ income
(
2,000
)
1,541
Total shareholders' equity
41,109
36,832
Total liabilities and shareholders' equity
$
46,525
$
42,943
The accompanying notes are an integral part
of these consolidated financial statements.
F-
4
LICHEN CHINA LIMITED
CONSOLIDATED STATEMENTS
OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021
AND 2020
(All amounts in thousands
of USD, except for share and per share data, unless otherwise noted)
2022
2021
2020
Revenues
Financial and taxation solution services
$
26,278
$
26,491
$
23,338
Education support services
4,409
4,635
4,558
Software and maintenance services
3,118
3,169
2,771
Total revenues
33,805
34,295
30,667
Cost of revenues
(
13,613
)
(
13,820
)
(
11,831
)
Gross profit
20,192
20,475
18,836
Operating expenses:
Selling and marketing
(
2,111
)
(
2,009
)
(
1,590
)
General and administrative
(
7,433
)
(
7,168
)
(
8,459
)
Total operating expenses
(
9,544
)
(
9,177
)
(
10,049
)
Income from operations
10,648
11,298
8,787
Other income (expenses):
Other income, net
34
188
106
Interest income
60
28
103
Income before income taxes
10,742
11,514
8,996
Provision for income tax
(
2,924
)
(
3,052
)
(
2,589
)
Net income
$
7,818
$
8,462
$
6,407
Comprehensive income:
Net income
$
7,818
$
8,462
$
6,407
Foreign currency translation adjustments
(
3,541
)
727
1,859
Comprehensive income
$
4,277
$
9,189
$
8,266
Weighted average number of ordinary shares outstanding – basic and diluted
22,500,000
22,500,000
22,500,000
Earnings per ordinary share – basic and diluted
0.35
0.38
0.28
The accompanying notes
are an integral part of these consolidated financial statements.
F-
5
LICHEN CHINA LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021
AND 2020
(All amounts in thousands
of USD, except for share and per share data, unless otherwise noted)
Class A Ordinary
Shares
(US$ 0.00004 par
value)
Class B Ordinary
Shares
(US$ 0.00004 par
value)
Additional
paid-in
Statutory
surplus
Retained
Accumulated
other
comprehensive
income
Total
shareholders'
Shares
Amount
Shares
Amount
capital
reserves
earnings
(loss)
equity
Balance as of December 31, 2019
13,500,000
$
1
9,000,000
-
$
1,487
$
789
$
22,493
$
(
1,045
)
23,725
Net income
-
-
-
-
-
-
6,407
-
6,407
Dividend
-
-
-
-
-
-
(
4,348
)
-
(
4,348
)
Foreign currency translation
-
-
-
-
-
-
-
1,859
1,859
Balance as of December 31, 2020
13,500,000
$
1
9,000,000
-
$
1,487
$
789
$
24,552
$
814
$
27,643
Net income
-
-
-
-
-
-
8,462
-
8,462
Foreign currency translation
-
-
-
-
-
-
-
727
727
Balance as of December 31, 2021
13,500,000
$
1
9,000,000
$
-
$
1,487
$
789
$
33,014
$
1,541
$
36,832
Net income
-
-
-
-
-
-
7,818
-
7,818
Foreign currency translation
-
-
-
-
-
-
-
(
3,541
)
(
3,541
)
Balance as of December 31, 2022
13,500,000
$
1
9,000,000
$
-
$
1,487
$
789
$
40,832
$
(
2,000
)
$
41,109
The accompanying notes are an integral part
of these consolidated financial statements.
F-
6
LICHEN CHINA LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021
AND 2020
(All amounts in thousands
of USD, except for share and per share data, unless otherwise noted)
2022
2021
2020
Cash Flows from Operating Activities:
Net income
$
7,818
$
8,462
$
6,407
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment
651
660
719
Amortization of intangible assets
1,958
1,786
1,441
Amortization of right-of-use assets
72
-
-
Amortization of other assets
50
93
87
Loss on disposal of property and equipment
-
(
30
)
-
Changes in operating assets and liabilities:
Accounts receivable
66
(
1,451
)
(
465
)
Prepayments and other current assets
(
712
)
(
2,370
)
(
6
)
Deferred IPO costs
(
1,095
)
-
-
Other receivables – related party
397
7
(
1,007
)
Accounts payable
51
25
4
)
Unearned revenues
(
20
)
(
142
)
(
145
)
Accrued expenses and other current liabilities
548
(
26
)
71
Due to the related parties
1,016
1
886
Tax payables
(
45
)
131
)
347
Inventories
11
(
126
)
11
Net cash provided by operating activities
10,766
7,304
8,350
Cash Flows from Investing Activities:
Purchases of property and equipment
(
1,950
)
(
28
)
-
Purchase of intangible assets
(
892
)
-
(
1,160
)
Proceeds from disposal of equipment
-
589
-
Net cash (used in)/provided by investing activities
(
2,842
)
561
(
1,160
)
Cash Flows from Financing Activities:
Repayments on short-term loans
(
327
)
-
-
Dividend payment
-
-
(
4,348
)
Net cash used in by financing activities
(
327
)
-
(
4,348
)
Effect of exchange rate changes on cash and cash equivalents
(
1,843
)
315
433
Net increase in cash and cash equivalents
5,754
8,180
3,275
Cash at the beginning of year
16,845
8,665
5,390
Cash at the end of year
$
22,599
$
16,845
$
8,665
Supplemental disclosures of cash flows information:
Cash paid for income taxes
$
2,955
$
2,976
$
2,310
Cash paid for interest expense
$
1
$
15
$
15
Supplemental disclosures of non-cash information:
Obtaining right-of-use asset in exchange for operating lease liability
$
266
$
-
$
-
Purchase of intangible assets prepaid in prior year
$
2,081
$
-
$
-
The accompanying notes are an integral part
of these consolidated financial statements.
F-
7
Lichen China Limited
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021
AND 2020
(All amounts in thousands of USD, except for
share and per share data, unless otherwise noted)
1.
ORGANIZATION AND NATURE OF OPERATIONS
Legend China Limited was incorporated in the Cayman
Islands on April 13, 2016 as a limited liability company. Pursuant to a special resolution dated November 8, 2016, Legend China Limited
changed its name to Legend China Ltd. Pursuant to a special resolution dated April 6, 2017, Legend China Ltd. changed its name to Lichen
China Limited. ("Lichen").
Lichen is an investment holding company. Through
its wholly owned subsidiaries, Lichen is principally engaged in the provision of: (i) financial and taxation solution services; (ii) education
support services to partnered institutions; and (iii) software and maintenance services.
Lichen owns
100
% interests in its subsidiaries,
all of which are private limited liability companies, the particulars of which are set out below:
F-
8
During the reporting periods, the Company has
several subsidiaries in PRC. Details of the Company and its operating subsidiaries are set out below:
Name of subsidiaries
Place
of
incorporation
Date
of
incorporation
Percentage
of direct or
indirect
interests
Principal activities
Legend Consulting Investments Limited ("Legend Consulting BVI")
The British Virgin Islands ("BVI")
December 20, 2013
100
%
Investment holding
Legend Consulting Limited ("Legend Consulting HK")
Hong Kong
January 8, 2014
100
%
Investment holding
Fujian Province Lichen Management and Consulting Company Limited ("Lichen Zixun")
Fujian, the People's Republic of China ("PRC")
April 14, 2004
100
%
Provision of financial and taxation solution services, education support services and software and maintenance services
Xiamen City Legend Education Services Company Limited ("Lichen Education")
Fujian, PRC
July 30, 2014
100
%
Provision of financial and taxation solution services and education support services
As shown above, Legend Consulting BVI is an investment
holding company wholly owned by Lichen.
Legend Consulting HK is an investment holding
company wholly owned by Legend Consulting BVI.
Lichen Zixun, which is wholly owned by Legend
Consulting HK, is engaged in providing financial and taxation solution services and education support services.
Lichen Education, which is wholly owned by Lichen
Zixun, is engaged in providing financial and taxation solution services and education support services.
Initial Public Offering
On February 6, 2023, the Company announced the
closing of its initial public offering of
4,000,000
Class A ordinary shares at a public offering price of $
4.00
per Class A ordinary share
for a total of $
16,000,000
in gross proceeds. The Company raised total net proceeds of $
14,098,140
after deducting underwriting discounts
and commissions and offering expenses. In addition, the Company granted to its underwriters an option for a period of 45 days after the
closing of the initial public offering to purchase up to an additional
600,000
Class A Ordinary Shares at the public offering price, less
underwriting discounts.
F-
9
Reorganization and Share Issuance
On April 28, 2021, Lichen passed a resolution
to increase the share capital. Pursuant to such resolution, the authorized share capital of Lichen was increased from HK$
50,000
divided
into
5,000,000
shares with a nominal or par value of HK$
0.01
each ("HKD Shares") to the aggregate of (i) HK$
50,000
divided
into
5,000,000
HKD Shares and (ii) US$
50,000
divided into (a)
400,000,000
Class A Ordinary Shares with a nominal or par value of US$
0.0001
each and (b)
100,000,000
Class B Ordinary Shares with a nominal or par value of US$
0.0001
each.
5,400,000
Class A Ordinary Shares and
3,600,000
Class B Ordinary Shares (collectively, the "USD Shares") were issued at the consideration of US$
0.0001
per share.
Upon the completion of the share issuance, all HKD Shares issued were repurchased by Lichen at the consideration HK$
0.01
per share and
cancelled immediately upon repurchase. Upon completion of the repurchase, the
5,000,000
unissued HKD Shares of the Company were cancelled
resulting in the reduction of the authorized share capital of the Company to US$
50,000
divided into (a)
400,000,000
Class A Ordinary Shares
with a nominal or par value of US$
0.0001
each and (b)
100,000,000
Class B Ordinary Shares with a nominal or par value of US$
0.0001
, each
in accordance with section 13 of the Cayman Islands Companies Act. The issuance of
5,400,000
Class A Ordinary Shares and
3,600,000
Class
B Ordinary Shares, the repurchase and the cancellation of HKD Shares were completed on April 28, 2021.
On December 15, 2021, Lichen executed a special
resolution to change the par value of the ordinary shares from $
0.0001
to $
0.00004
. Pursuant to such resolution, the authorized share
capital of Lichen was US$
50,000
divided into
(a) 1,000,000,000 Class A Ordinary Shares with a nominal or par value of US$0.00004 each
and (b) 250,000,000 Class B Ordinary Shares with a nominal or par value of US$0.00004, each in accordance with section 13 of the Cayman
Islands Companies Act.
The changes were completed on December 23, 2021. The change in capital structure is treated as being effective
as of the beginning of the first period presented in the consolidated financial statements.
The consideration paid by Lichen and its subsidiaries
has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the
beginning of the first period presented in the consolidated financial statements. As all the entities involved in the process of the Reorganization
are under common control before and after the Reorganization, the Reorganization is accounted for in a manner similar to a pooling-of-interest
with the assets and liabilities of the parties to the Reorganization carried over at their historical amounts.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
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").
F-
10
Principles of consolidation
The consolidated financial statements include
the financial statements of Lichen and its wholly owned subsidiaries (collectively, the "Company"). All significant inter-company
transactions and balances have been eliminated upon consolidation.
Use of estimate and assumptions
The preparation of the Company's consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and
the reported amounts of revenues and expenses during the reporting periods presented. Estimates are adjusted to reflect actual experience
when necessary. Significant accounting estimates reflected in the Company's consolidated financial statements include, allowance
for doubtful accounts, useful lives of long-lived assets, impairment of long-lived assets and uncertain tax position. Actual results could
differ from these estimates.
Functional currency and foreign currency translation
The reporting currency of the Company is the United
States dollar ("US$"). The Company's operations are principally conducted through its subsidiaries in PRC in the local
currency, Renminbi (RMB), as its functional currency. The functional currency of the Company's entities incorporated in Hong Kong
is the Hong Kong dollars ("HK$"). The determination of the respective functional currency is based on the criteria of Accounting
Standard Codification ("ASC") 830, Foreign Currency Matters. Assets and liabilities are translated at the unified exchange
rate as quoted by the PBOC ("The People's Bank of China") at the balance sheet date. The statement of income accounts
is translated at the average exchange rates for the periods and the equity accounts are translated at historical rates. Translation adjustments
resulting from this process are included in accumulated other comprehensive income (loss). Transaction gains and losses that arise from
exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of
operations as incurred.
Translation adjustments included in accumulated
other comprehensive income (loss) amounted to ($
2.00
) million, $
1.54
million and $
0.81
million as of December 31, 2022, 2021
and 2020, respectively. The shareholders' equity accounts were stated at their historical rate. Cash flows are also translated at
average translation rates for the periods, therefore, amounts reported on the statement of cash flows will not necessarily agree with
changes in the corresponding balances on the consolidated balance sheets.
Translation of foreign currencies into US$
1
have
been made at the following exchange rates for the respective periods:
December 31,
2022
December 31,
2021
December 31,
2020
Period-end RMB: US$
1
exchange rate
6.9646
6.3757
6.5249
Period-end HK$: US$
1
exchange rate
7.7967
7.7981
7.7530
December 31,
2022
December 31,
2021
December 31,
2020
Period-end RMB: US$
1
exchange rate
6.7261
6.4515
6.8976
Period-end HK$: US$
1
exchange rate
7.8310
7.7729
7.7562
F-
11
Related parties
Parties, which can be a corporation or individual,
are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject
to common control or common significant influence, such as a family member or relative, shareholder, or a related corporation.
Fair value of financial instruments
ASC 825-10 requires certain disclosures regarding
the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes
the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of
unobservable inputs. The three levels of inputs used to measure fair value are as follows:
●
Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
●
Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.
●
Level 3 — inputs to the valuation methodology are unobservable.
The fair value of the Company's financial
instruments, including cash, accounts receivable, other receivables – related party, accounts payable, accrued expenses and other
current liabilities, due to the related parties, and short-term bank loans, approximate their recorded values due to their short-term
maturities as of December 31, 2022 and 2021.
Cash
Cash consist of cash on hand, cash in banks, which
are unrestricted as to withdrawal or use, and have insignificant risk of changes in value. The Company maintains most of its bank accounts
in the PRC.
Accounts receivable and allowance for doubtful
accounts
Accounts receivable represents the Company's
right to consideration in exchange for goods and services that the Company has transferred to the customers before payment is due. Accounts
receivable is stated at the historical carrying amount, net of an estimated allowance for uncollectible accounts. The Company reviews
on a periodic basis for doubtful accounts for the outstanding trade receivable balances based on historical collection trends, aging of
receivables and other information available. Additionally, the Company evaluates individual customer's financial condition, credit
history, and the current economic conditions to make specific bad debt provisions when it is considered necessary, based on (i) the Company's
specific assessment of the collectability of all significant accounts; and (ii) any specific knowledge we have acquired that might indicate
that an account is uncollectible. The facts and circumstances of each account may require the Company to use substantial judgment in assessing
its collectability. The allowance is based on management's best estimates of specific losses on individual exposures, as well as
a provision on historical trends of collections. Account balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. The Company's management continues to evaluate the reasonableness
of the valuation allowance policy and update it if necessary. There was no allowance for doubtful accounts deemed necessary as of December
31, 2022 and 2021, respectively.
Unbilled receivable
Unbilled receivable represents the
Company's right to consideration in exchange for goods and service performed, which invoice has not been issued.
F-
12
Inventories
Inventories are stated at the lower of cost and
net realizable value. Cost elements of inventories comprise the purchase price of products, shipping charges to receive products from
the suppliers when they are embedded in the purchase price. Cost is determined using the weighted average method. Provisions are made
for excessive, slow moving, expired and obsolete inventories as well as for inventories with carrying values in excess of market. Certain
factors could impact the realizable value of inventory, so the Company continually evaluates the recoverability based on assumptions about
customer demand and market conditions. The evaluation may take into consideration historical usage, inventory aging, expiration date,
expected demand, anticipated sales price, product obsolescence and other factors. The reserve or write-down is equal to the difference
between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions.
If actual market conditions are less favorable than those projected by management, additional inventory reserves or write-downs may be
required that could negatively impact the Company's gross margin and operating results. If actual market conditions are more favorable,
the Company may have higher gross margin when products that have been previously reserved or written down are eventually sold. As of December
31, 2022 and 2021, management compared the cost of inventories with their net realizable value and determined no inventory write-down
was necessary.
Prepayments
Represents cash deposited for software development
service. The deposits are refundable and bear no interest pursuant to terms of contract. The project is in progress and anticipated to
be completed by September 2023.
Property and equipment
Property and equipment are stated at cost less
accumulated depreciation and impairment if any. Depreciation is computed using the straight-line method over the following estimated useful
lives.
Useful Life
Estimated
Residual
Value
Building
20
-
50
years
5
%
Motor vehicles
10
years
5
%
Furniture and equipment
3
-
5
years
5
%
The cost and related accumulated depreciation
of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of
income and comprehensive income. Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals
and betterments, which are expected to extend the useful life of assets, are capitalized. The Company also re-evaluates the periods of
depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives.
Intangible assets
Intangible assets consist primarily of software
acquired, which are stated at cost less accumulated amortization and impairment, if any. Intangible assets are amortized using the straight-line
method over the estimated useful lives, which are generally
5
-
10
years. The estimated useful lives of amortized intangible assets are
reassessed if circumstances occur that indicate the original estimated useful lives have changed.
F-
13
Impairment of long-lived assets
The Company evaluates its long-lived assets, including
property and equipment and intangibles with finite lives, for impairment whenever events or changes in circumstances, such as a significant
adverse change to market conditions that will impact the future use of the assets, indicate that the carrying amount of an asset may not
be fully recoverable. When these events occur, the Company evaluates the recoverability of long-lived assets by comparing the carrying
amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their eventual disposition.
If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company recognizes an impairment
loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting
the cash flows expected to be generated by the assets, when the market prices are not readily available. The adjusted carrying amount
of the assets become new cost basis and are depreciated over the assets' remaining useful lives. Long-lived assets are grouped with
other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other
assets and liabilities. Given no events or changes in circumstances indicating the carrying amount of long-lived assets may not be recovered
through the related future net cash flows, the Company did not recognize any impairment loss on long-lived assets for the years ended
December 31, 2022 and 2021. There can be no assurance that future events will not have impact on the Company's revenue or financial
position which could result in impairment in the future.
Leases
Leases are classified at lease commencement date
as either a finance lease or an operating lease. A lease is a finance lease if it meets any of the following criteria: (a) the lease transfers
ownership of the underlying asset to the lessee by the end of the lease term. (b) the lease grants the lessee an option to purchase the
underlying asset that the lessee is reasonably certain to exercise, (c) the lease term is for the major part of the remaining economic
life of the underlying asset, (d) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that
is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset or (e) the
underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease
term. When none of the criteria meets, the lease shall be classified as an operating lease.
For lessee, a lease is recognized as a right-of-use
asset with a corresponding liability at lease commencement date. The lease liability is calculated at the present value of the lease payments
not yet paid by using the lease term and discount rate determined at lease commencement. The right-of-use asset is calculated as the lease
liability, increased by any initial direct costs and prepaid lease payments, reduced by any lease incentives received before lease commencement.
The right-of-use asset itself is amortized on a straight-line basis unless another systematic method better reflects how the underlying
asset will be used by and benefits the lessee over the lease term.
In February 2016, the Financial Accounting Standards
Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842). The amendments in this
ASU require an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition,
measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain
quantitative and qualitative disclosures about leasing arrangements. The Company adopted ASC 842 effective on January 1, 2022 with using
a modified retrospective transition approach in the accompanying financial statements of the Company. The adoption of this standard had
a material impact on the Company's financial position, with no material impact on the results of operations and cash flows (see
Note 7 and Note 12).
F-
14
Contingencies
From time to time, the Company is a party to various
legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable
and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company's
management does not expect any liability from the disposition of such claims and litigation individually or in the aggregate would have
a material adverse impact on the Company's consolidated financial position, results of operations and cash flows.
Revenue recognition
The Company adopted ASC Topic 606, Revenue from
Contracts with Customers, effective as of January 1, 2019. Accordingly, the consolidated financial statements for the years ended December
31, 2022, 2021 and 2020 are presented under ASC 606. The core principle of the guidance is that an entity should recognize revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. Revenue is the transaction price the Company expects to be entitled to in exchange
for the promised goods or services in a contract in the ordinary course of the Company's activities and is recorded net of value-added
tax ("VAT"). To achieve that core principle, the Company applies the following steps:
Step 1: Identify the contract (s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance
obligations in the contract
Step 5: Recognize revenue when (or as)
the entity satisfies a performance obligation
No practical expedients were used when the Company
adopted the ASC 606. Revenue recognition policies for each type of revenue stream are as follows:
Financial and taxation solution services
Revenues from financial and taxation solution
services for which control of services is transferred over time is recognized progressively based on the contract costs incurred to date
(primarily comprising staff costs and industry expert cost by reference to the time as recorded in the monthly working record incurred
to date) as compared to the total costs to be incurred under the transaction (by reference to the total budgeted time of the respective
project) to depict the Company's performance in transferring control of services promised to a customer. The Company recognizes
revenues over time only if it can reasonably measure its progress toward complete satisfaction of the performance obligation. The Company
normally requires the customers to pay a deposit upon entering into the service contracts.
Education support services - sales of teaching
and learning materials
Revenues from the sales of educational materials
for which control of assets is transferred at a point in time is recognized when the goods are delivered to customers. The Company does
not provide any sales-related warranties. There is no right of return by customers under the Company's standard contract terms.
Education support services - Provision of marketing,
operation and technical support services
Revenues from provision of marketing, operation
and technical support services from the partnered institutions is recognized on a straight-line basis over the term of the agreement.
The transaction price inclusive of value added tax as received from customers in advance is recognized as a unearned revenue at the time
of the initial transaction and is released on a straight-line basis over the period of service (usually one year).
F-
15
Software and maintenance services
Standard software is a right to use license because
the software has standalone functionality and the customer can use the software as it is available at a point in time. The Company recognizes
revenues for such licenses at a point in time when the customer has received licenses and thus has control over the software. In case
there is an update of the standard software, end customers or distributors are required to pay additional consideration to buy upgraded
version. Revenues from maintenance services is recognized over time within the service period.
Unearned revenues
Unearned revenue is recorded when a payment is
received from a customer before the Company transfers the related services. Unearned revenue is recognized as revenue when the Company
performs the services under the contract.
Disaggregated information of revenues by services:
For the years ended December 31,
2022
2021
2020
Financial and taxation solution services
$
26,278
$
26,491
$
23,338
Education support services
4,409
4,635
4,558
Software and maintenance services
3,118
3,169
2,771
Revenue
$
33,805
$
34,295
$
30,667
Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as
the Chief Executive Officer who allocates resources to and assesses the performance of the operating segments of an entity. The Group's
reporting segments are decided based on its operating segments while taking full consideration of various factors such as products and
services, geographic location and regulatory environment related to administration of the management. Operating segments meeting the same
qualifications are allocated as
one
reporting segment, providing independent disclosures. The Group does not distinguish between
markets or segments for the purpose of internal reports. The Group does not distinguish revenues, costs and expenses between segments
in its internal reporting, and reports costs and expenses by nature as a whole. Hence, the Group has only one reportable segment
F-
16
Value added tax ("VAT")
Revenue represents the invoiced value of goods
and service, net of VAT. The VAT is based on gross sales price and VAT rates range up to
17
%, depending on the type of products sold or
service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output
VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable. All of the VAT returns filed by the Company's
subsidiaries in PRC remain subject to examination by the tax authorities for five years from the date of filing.
Income taxes
The Company follows the liability method of accounting
for income taxes in accordance with ASC 740 ("ASC 740"), Income Taxes. The Company accounts for current income taxes in accordance
with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist between the tax bases
of assets and liabilities and their reported amounts in the consolidated financial statements. 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.
The Company is not subject
to tax on income or capital gain under the current tax laws of U.S. And the Company is subject to tax on income or capital gain under
the tax laws of PRC.
An uncertain tax position is recognized as a benefit
only if it is "more likely than not" that the tax position would be sustained in a tax examination. The amount recognized
is the largest amount of tax benefit that is greater than
50
% likely of being realized on examination. For tax positions not meeting the
"more likely than not" test, no tax benefit is recorded. For the years ended December 31, 2022, 2021 and 2020, no uncertain
tax position is recognized. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense
in the period incurred. No significant penalties or interest relating to income taxes have been incurred during the years ended December
31, 2022, 2021 and 2020. All of the tax returns of the Company's subsidiaries in PRC remain subject to examination by the tax authorities
for five years from the date of filing.
Statutory surplus reserves
The Company's PRC subsidiaries are required
to allocate at least
10
% of their after-tax profit to the general reserve in accordance with the PRC accounting standards and regulations.
The allocation to the general reserve will cease if such reserve has reached to
50
% of the registered capital of respective company. These
reserves can only be used for specific purposes and are not transferable to the Company in form of loans, advances, or cash dividends.
There is no such regulation of providing statutory reserve in Hong Kong. None of the statutory surplus reserves were recognized for the
years ended December 31, 2022, 2021 and 2020.
Advertising expenses
Advertising expenditures are expensed as incurred
and such expenses were included as part of selling and marketing expenses. For the years ended December 2022, 2021 and 2020, the advertising
expenses amounted to approximately $
1.43
million, $
1.35
million and $
1.1
million, respectively.
Comprehensive income
Comprehensive income consists of two components,
net income and other comprehensive income. Other comprehensive income refers to revenue, expenses, gains and losses that under GAAP are
recorded as an element of equity but are excluded from net income. Other comprehensive income consists of a foreign currency translation
adjustment resulting from the Company not using the U.S. dollar as its functional currencies.
F-
17
Earnings per share
The Company computes earnings per share ("EPS")
in accordance with ASC 260,
Earnings per Share
. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured
as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents the dilutive effect on a per-share
basis of the potential Ordinary Shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning
of the periods presented, or issuance date, if later. Potential Ordinary Shares that have an anti-dilutive effect (i.e., those that increase
income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were no dilutive or anti-dilutive
potential Ordinary Shares or effect for the years ended 2022, 2021 and 2020.
Reclassification
Certain prior periods have been reclassified to conform
to the current period presentation. The reclassification had no impact on the Consolidated Balance Sheet and Consolidated Statement of
Income or Consolidated Statement of Cash Flow.
Recent accounting pronouncements
New Accounting Pronouncements Adopted
In December 2019, the FASB issued ASU No. 2019-12,
Income Taxes (''ASU 2019-12''), which simplifies the accounting for income taxes by removing exceptions and simplifies
the accounting for income taxes regarding franchise tax, good will, separate financial statements, enacted change in tax laws or rates
and employee stock ownership plans. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods
therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have
not yet been issued. The Company adopted the ASU on January 1, 2022, which did not have a material impact on the Company's financial
results or financial position."
New Accounting Pronouncements Not Yet Adopted
The Company considers the applicability and impact
of all ASUs. Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of
2012, as amended ("the JOBS Act"), the Company meets the definition of an emerging growth company, or EGC, and has elected
the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards
until they would apply to private companies.
In June 2016, the FASB issued ASU 2016-13, Financial
Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, and issued subsequent amendments to the
initial guidance within ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11 and ASU 2020-02, collectively referred to as "ASC 326".
ASC 326 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount
expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the
financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of
expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable
and supportable forecasts that affect the collectability of the reported amount. ASC 326 eliminates the probable initial recognition threshold
in current GAAP and, instead, reflects an entity's current estimate of all expected credit losses. The Company will adopt this ASC
326 on January 1, 2023. The adoption of this standard will result in a change of the Company's provision policy primarily for accounts
receivable, but is not expected to have a material impact on the Company's consolidated financial statements.
Except for the above-mentioned pronouncements,
there are no new recent issued accounting standards that will have a material impact on the consolidated financial position, statements
of operations and cash flows.
F-
18
3.
Cash
Cash consist of cash on hand, cash in banks, which
are unrestricted as to withdrawal or use, and have insignificant risk of changes in value. Cash is denominated in the following currencies:
2022
2021
In thousands of USD
RMB
$
22,597
$
16,844
HKD
1
1
USD
1
-
Total
$
22,599
$
16,845
4
.
Accounts
receivable and unbilled receivable
Accounts receivables consisted of the following
as of December 31, 2022 and 2021:
2022
2021
In thousands of USD
Accounts receivables
$
3,117
$
3,539
Unbilled receivables
428
403
Total
$
3,545
$
3,942
There was no allowance for doubtful accounts recognized as of December
31, 2022 and 2021, respectively.
5.
Prepayments,
deposits, and other current assets
Prepaid expenses and other current assets
consisted of the following as of December 31, 2022 and 2021:
2022
2021
In thousands of USD
Deposits to software developer
$
675
$
2,196
Prepayments to suppliers
275
290
Other current assets
46
46
Total
$
996
$
2,532
On November 28, 2022, the Company made a deposit
of $$
0.17
M (RMB
1.2
million) to Beijing Yizhilu Technology Co., Ltd to purchase the 3D Accounting Intelligent Analysis System; On December
13, 2022, the Company made a deposit of $
0.5
M (RMB
3.5
million) to Xiamen University to purchase the AI System Intelligent Analysis System.
F-
19
6.
Property
and equipment, net
Property and equipment, net consisted of the
following:
2022
2021
In thousands of USD
Buildings
$
14,995
$
16,201
Furniture and equipment
983
977
Motor vehicles
14
16
Office improvements
895
977
Subtotal
16,887
18,171
Less: accumulated depreciation
(
3,589
)
(
3,234
)
Property and equipment, net
$
13,298
$
14,937
Depreciation expenses
recognized in general and administrative expenses for the years ended December 31, 2022, 2021 and 2020 amounted to approximately
$
0.65
million, $
0.66
million and $
0.81
million, respectively.
The Company has no pledged
property and equipment as of December 31, 2022 and 2021.
The Company did not recognize
any impairment loss on property and equipment for the years ended December 31, 2022, 2021 and 2020.
7.
Intangible
assets
The Company's intangible
assets with definite useful lives primarily consisted of licensed software, which are for sales or support the Company's business
and operation. The following table summarizes the components of acquired intangible asset balances.
2022
2021
In thousands of USD
Software
$
11,689
$
9,631
Less: accumulated amortization
(
7,167
)
(
5,763
)
Intangible assets, net
$
4,522
$
3,868
Amortization expense
recognized in cost of revenues for the years ended December 31, 2022, 2021 and 2020 amounted to approximately $
1.94
million, $
1.77
million and $
1.42
million, respectively. Amortization expense recognized in general and administrative expenses for the years ended December
31, 2022, 2021 and 2020 amounted to approximately $
0.02
million, $
0.02
million and $
0.02
million, respectively. The weighted average amortization
period for licensed software is approximately
5.26
years,
5.28
years and
5.04
years as of December 31, 2022, 2021 and 2020, respectively.
The Company has no pledged
intangible assets as of December 31, 2022 and 2021.
The Company did not recognize
any impairment loss on intangible asset for the years ended December 31, 2022, 2021 and 2020.
F-
20
The future amortization
expense of the intangible assets for the twelve months ending December 31 of the following years is expected as follows:
Year ending December 31,
Amortization
expenses
In thousands
of USD
2023
$
2,080
2024
883
2025
792
2026
576
2027
191
Total
$
4,522
8.
Leases
Operating lease right -of-use asset, net was
as follows as of December 31, 2022 and 2021:
2022
2021
In thousands of USD
Beijing Office
$
266
$
-
Less: accumulated amortization
(
64
)
-
Right-of-use assets, net
$
202
$
-
The Company recognized lease expense amounted
to approximately $
0.07
million for the year ended December 31, 2022. The lease period of the operating lease right-of-use asset Beijing
office is
3
years.
Operating lease liability
as of December 31, 2022 and 2021 consisted of the following:
2022
2021
In thousands of USD
Beijing office
$
202
$
-
Total operating lease liability
$
202
$
-
Analyzed for reporting
purposes as:
2022
2021
In thousands of USD
Current maturities of operating lease liability
$
88
$
-
Long-term portion of operating lease liability
184
-
Total
$
272
$
-
Maturity analysis of
operating lease liability as of December 31, 2022 is as follows:
Operating lease payment
BJ office
Discount rate at commencement
3.5
%
One year
$
93,330
Two years
186,658
Total undiscounted cash flows
$
279,988
Total financing lease liabilities
271,650
Difference between undiscounted cash flows and discounted cash flows
8,338
The incremental borrowing
rate for the Company is
3.5
% and remaining lease term is
2.25
years.
F-
21
9
Related
party transactions and balances
The table below sets
forth the major related parties and their relationships with the Company as of December 31, 2022, 2021 and 2020:
Name of related parties
Relationship with the Company
Jinjiang Xingminqi Accounting Vocational Training School ("Jinjiang School")
A company controlled by the Company's controlling shareholder
Quanzhou City Lichen Accounting Vocational Training School ("Quanzhou School")
A company controlled by the Company's controlling shareholder
Mr. Ya Li
Chief Executive Officer, Chairman of the Board
i)
Significant
transactions with related parties were as follows:
2022
2021
2020
Provision of marketing, operation and technical support services to Jinjiang School
$
67
$
70
$
70
Provision of marketing, operation and technical support services to Quanzhou School
126
132
130
Processing of academic education applications to Jinjiang School
183
90
176
Processing of academic education applications to Quanzhou School
234
113
229
Sales of teaching and learning materials to Jinjiang School
71
70
80
Sales of teaching and learning materials to Quanzhou School
62
66
77
Online training to Jinjiang School
37
24
7
Online training to Quanzhou School
35
23
7
Total revenues – related parties
$
815
$
588
$
776
ii)
Significant
balances with related parties were as follows:
2022
2021
In thousands of USD
Other receivable – related party
Ya Li
$
-
$
419
Due to the related parties
Quanzhou School
$
97
$
105
Ya Li
981
-
Jinjiang School
-
1
Total
$
1,078
$
106
Balances due to Ya Li
and Quanzhou School are the result of the normal business transactions stated above. The balance due to Ya Li comprise mainly payments
made on behalf such as deferred IPO costs, whereas the balance due to Quanzhou represents amounts received in advance for services to
be performed. The balances were all unsecured, non-interest bearing and payable on demand.
F-
22
10.
Accrued
expenses and other current liabilities
Accrued expenses and
other current liabilities consisted of the following:
2022
2021
In thousands of USD
Payable for property purchased
$
-
$
1,782
Salary payable
1,021
1,110
Other
680
169
Total
$
1,701
$
3,061
11.
Unearned
revenue
2022
2021
In thousands of USD
Unearned revenue
$
1,146
$
1,273
Total
$
1,146
$
1,273
Unearned revenue refers to the payment received
from a customer before the Company transfers the related services in advance. Unearned revenue primarily consists of advanced payment
received from customers for which the Company's revenue recognition criteria have not been met. The unearned revenue will be recognized
as revenue once the criteria for revenue recognition have been met. The unearned revenue amounted to $
1,273
was totally recognized in
the revenue of FY2022.
12.
Taxes
(a)
Taxes
payable
Taxes payable consisted of the following:
2022
2021
In thousands of USD
Income tax payable
$
367
$
434
VAT payable
280
320
Other tax payable
411
449
Total
$
1,058
$
1,203
(b)
Corporate
Income Taxes ("CIT")
Cayman Islands
Under the current tax
laws of Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose
a withholding tax on payments of dividends to shareholders.
BVI
Under the current tax
laws of BVI, the Company is not subject to tax on income or capital gain. Additionally, the BVI does not impose a withholding tax on payments
of dividends to shareholders.
F-
23
Hong Kong
Under the current Hong
Kong Inland Revenue Ordinance, the Company's subsidiaries incorporated in Hong Kong are subject to
16.5
% on its taxable income generated
from operations in Hong Kong. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to the Company are not
subject to any Hong Kong withholding tax. The Company did not make any provision for Hong Kong profit tax as there were no assessable
profits derived from or earned in Hong Kong since inception.
PRC
The Company's PRC
subsidiaries are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated
at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect
thereof. Under the Enterprise Income Tax Laws of the PRC (the "EIT Laws"), domestic enterprises and Foreign Investment Enterprises
(the "FIE") are usually subject to a unified
25
% enterprise income tax rate while preferential tax rates, tax holidays and
even tax exemption may be granted on case-by-case basis. For the years ended December 31, 2022 and 2021, there is no preferential tax
rate.
i)
The
components of the income tax provision are as follows:
2022
2021
2020
Provisions for current income tax
$
2,924
$
3,052
$
2,589
Provisions for deferred income tax
-
-
-
Total
$
2,924
$
3,052
$
2,589
There are no deferred tax assets due to full valuation allowance for
the years ended December 31, 2022, 2021 and 2020.
ii)
The
following table reconciles PRC statutory rates to the Company's effective tax rate:
The following table reconciles the China statutory
rates to the Company's effective tax rate for the years ended December 31, 2022, 2021 and 2020:
2022
2021
2020
PRC statutory income tax rate
25.0
%
25.0
%
25.0
%
Effect of different tax jurisdiction
0.1
%
0.1
%
0.5
%
Non-deductible expenses (1)
0.6
%
0.6
%
0.6
%
Change in valuation allowance
0.8
%
1.1
%
2.6
%
Effective income tax rate
26.5
%
26.8
%
28.7
%
(1)
Non-deductible expenses represented meal and entertainment fees not-deductible in PRC tax returns.
iii)
Deferred
tax assets
2022
2021
Deferred tax assets:
In thousands of USD
Net accumulated loss-carry forward
$
1,200
$
1,400
Less: valuation allowance
(
1,200
)
(
1,400
)
Net deferred tax assets
$
-
$
-
F-
24
Movement of valuation allowance is as follows:
2022
2021
In thousands of USD
Beginning balance
$
1,400
$
1,292
Write-off
(
293
)
(
22
)
Change of valuation allowance
93
130
Ending balance
$
1,200
$
1,400
As of December 31, 2022, certain subsidiaries
had accumulated tax loss of approximately
4.8
million, which can be carried forward to offset future taxable income. The carryforwards
period for net operating losses under the EIT Law is five years. Valuation allowance is provided against deferred tax assets when the
Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future.
As of December 31, 2022, part of the valuation
allowance related to previous years' tax losses has expired, which cannot be used to offset future taxable income. The Company recognized
a write-off of approximately $
0.29
million and $
0.02
million for the year ended December 31, 2022 and 2021, respectively.
Uncertain tax positions
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, 2022 and 2021, the Company did not have any significant unrecognized uncertain tax positions.
The Company did not incur interest and penalties during the years ended December 31, 2022, 2021 and 2020.
13.
Ordinary
shares
The Company was established as a holding company
under the laws of Cayman Islands. The Company's authorized share capital of US$
50,000
is divided into (a)
1,000,000,000
Class A
Ordinary Shares with a nominal or par value of US$
0.00004
each and (b)
250,000,000
Class B Ordinary Shares with a nominal or par value
of US$
0.00004
each. As of December 31, 2022 and 2021,
13,500,000
Class A Ordinary Shares and
9,000,000
Class B Ordinary shares were issued
and outstanding.
Each Class A Ordinary Share has one (1) vote
and
each Class B Ordinary Share has ten (10) votes
. Each Class B Ordinary
Share is convertible into one Class A Ordinary Share at any time at the option of the holder thereof. Class A Ordinary Shares are not
convertible into Class B Ordinary Shares under any circumstances.
14.
Statutory
surplus reserves
The statutory surplus
reserve as determined pursuant to PRC statutory laws totaled approximately $
0.79
million as of December 31, 2022 and 2021. As of December
31, 2021, the statutory reserves fund of the Company has reached
50
% of the registered capital of the enterprise. No additional statutory
reserve was recognized in the years ended December 31, 2022 and 2021.
15.
Restricted
assets
The Company's ability
to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary. Relevant PRC statutory laws
and regulations permit payments of dividends by the PRC subsidiaries only out of its retained earnings, if any, as determined in accordance
with PRC accounting standards and regulations. The results of operations reflected in the accompanying consolidated financial statements
prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the PRC entities.
The PRC entities are
required to set aside at least
10
% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve
funds reach
50
% of its registered capital. In addition, the PRC entities may allocate a portion of its after-tax profits based on PRC
accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. The PRC entities may allocate a
portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve
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 State Administration of Foreign Exchange.
F-
25
As a result of the foregoing
restrictions, the PRC entities are restricted in their ability to transfer their assets to the Company. Foreign exchange and other regulation
in the PRC may further restrict the PRC entities from transferring funds to the Company in the form of dividends, loans and advances.
As of December 31, 2022 and 2021, amounts restricted are the paid-in-capital and statutory reserve of the PRC entities, which amount to
$
2.3
million and $
2.3
million, respectively. During the fiscal years ended December 31, 2020, Lichen Zixun made dividend payments of RMB
30
million (approximately $
4.3
million) to the then eventual shareholders of Lichen Zixun, who are PRC individuals.
16.
Risks
and Concentration
a)
Interest
rate risk
Interest rate risk is
the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Company's interest rate risk arises primarily from short-term borrowings. Borrowings issued at variable rates and fixed rates
expose the Company to cash flow interest rate risk and fair value interest rate risk respectively.
b)
Concentration
of credit risk
Financial instruments
that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of December 31, 2022 and
2021, approximately $
22.60
million and $
16.84
million were deposited with financial institutions located in the PRC, respectively. These
balances are not covered by insurance. While management believes that these financial institutions are of high credit quality, it also
continually monitors their credit worthiness.
The Company is also exposed
to risk from its accounts receivable and other receivables. These assets are subjected to credit evaluations. An allowance has been made
for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.
A majority of the Company's
expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries' assets and liabilities
are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required
by law to be transacted only by authorized financial institutions at exchange rates set by the PBOC. Remittances in currencies other than
RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain
supporting documentation in order to affect the remittance.
The Company's functional
currency is RMB, and its consolidated financial statements are presented in U.S. dollars. The RMB depreciated by
9.24
% in fiscal year
2022 from December 31, 2021 to December 31, 2022 and appreciated by
2.29
% in fiscal year 2021 from December 31, 2020 to December 31, 2021.
It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S.
dollar in the future. The change in the value of the RMB relative to the U.S. dollar may affect its financial results reported in the
U.S. dollar terms without giving effect to any underlying changes in its business or results of operations. Currently, the Company's
assets, liabilities, revenues and costs are denominated in RMB.
To the extent that the
Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation
of RMB against U.S. dollar would have an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if
the Company decides to convert RMB into U.S. dollar for the purpose of making payments for dividends, strategic acquisition or investments
or other business purposes, appreciation of U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to
the Company.
F-
26
c)
Concentration
of customers and suppliers
All revenue was derived
from customers located in PRC. There are no customers from whom revenues individually represent greater than
10
% of the total revenues
of the Company in any of the periods presented.
For the year ended December
31, 2022, Beijing Duoying Times Culture Media Co., Ltd, Guangzhou Xingjinhui Trade Co., Ltd, and Jimei university contributed approximately
26
%,
20
% and
18
% of total purchases of the Company, respectively. For the year ended December 31, 2021, Guangzhou Xingjinhui Trade Co.,
Ltd, Beijing Duoying Times Culture Media Co., Ltd and Jimei university contributed approximately
29
%,
26
% and
17
% of total purchases of
the Company, respectively. For the year ended December 31, 2020, Guangzhou Xingjinhui Trade Co., Ltd, Beijing Duoying Times Culture Media
Co., Ltd and one personal professional advisor contributed approximately
21
%,
20
% and
10
% of total purchases of the Company, respectively.
17.
Commitments
and contingencies
(a)
Commitments
The Company did not have
any significant commitments, long-term obligations, or guarantees as of December 31, 2022 and 2021.
(b)
Contingencies
The Company is subject
to legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with
certainty, but the Company does not anticipate that the final outcome arising out of any such matter will have a material adverse effect
on our consolidated financial position, cash flows or results of operations on an individual basis or in the aggregate. As of December 31,
2022 and 2021, the Company is not a party to any material legal or administrative proceedings.
18.
Subsequent
events
On February 6, 2023,
the Company announced the closing of its initial public offering of
4,000,000
Class A ordinary shares at a public offering price of $
4.00
per Class A ordinary share for a total of $
16,000,000
in gross proceeds. The Company raised total net proceeds of $
14,098,140
after deducting
underwriting discounts and commissions and offering expenses. In addition, the Company granted to its underwriters an option for a period
of 45 days after the closing of the initial public offering to purchase up to an additional
600,000
Class A Ordinary Shares at the public
offering price, less underwriting discounts. On February 8, 2023, the Company closed its initial public offering of
4,000,000
Class A
ordinary shares, par value $
0.00004
per Class A ordinary share. The Company became a foreign private issuer and trades under the symbol
LICN.
On March 9, 2023, the
Company (the "Buyer") entered into a purchase agreement (the "SPA") with Zhou Zisu, a PRC citizen (the "Seller"),
and Bounly Enterprise Limited, a proprietary company registered in HongKong (the "Target"), pursuant to which the Company
agreed to purchase
100
% of the equity interest of the Target. The purchase price for the Target shares will be determined after the completion
of the financial due diligence. The buyer immediately pays $
3
million deposit at the time of signing this agreement and the remaining
shall be settled at the Closing. The deposit is refundable and should be returned to the buyer if the conditions to Closing are not met.
In preparing these consolidated
financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through May 1, 2023,
the date the consolidated financial statements were available to be issued. No other events require adjustment to or disclosure in the
consolidated financial statements.
F-27