{"url_path":"/sec/bq/10-k/2026/item-18","section_key":"item-18","section_title":"Item 18 FINANCIAL STATEMENTS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-07-13","source_url":"https://www.sec.gov/Archives/edgar/data/1815021/0001213900-26-077593-index.html","accession_number":"0001213900-26-077593","cik":"0001815021","ticker":"BQ","issuer_name":"Boqii Holding Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1815021/0001213900-26-077593-index.html","primary_entity_key":"0001815021","primary_entity_name":"Boqii Holding Ltd"},"word_count":26310,"has_tables":true,"body_markdown":"**ITEM 18. FINANCIAL STATEMENTS**\n\n** **\n\n**BOQII HOLDING LIMITED**\n\n** **\n\n**INDEX TO CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n[Report of Independent Registered Public Accounting Firm (PCAOB ID# 6783)](#f_001)\n \nF-2 - F-3\n\n[Consolidated Balance Sheets as of March 31, 2025 and 2026](#f_002)\n \nF-4 - F-5\n\n[Consolidated Statements of Operations and Comprehensive Loss for the Years ended March 31, 2024, 2025 and 2026](#f_004)\n \nF-6\n\n[Consolidated Statements of Changes in Shareholders’ Equity for the Years ended March 31, 2024, 2025 and 2026](#f_005)\n \nF-7 - F-9\n\n[Consolidated Statements of Cash Flows for the Years ended March 31, 2024, 2025 and 2026](#f_006)\n \nF-10 - F-11\n\n[Notes to the Consolidated Financial Statements](#f_007)\n \nF-12 - F-59\n\n \n\nF-1\n\n \n\n \n\n**Report of Independent\nRegistered Public Accounting Firm**\n\n** **\n\nTo\nthe Shareholders and the Board of Directors of Boqii Holding Limited\n\n \n\n**Opinion\non the Financial Statements**\n\n \n\nWe\nhave audited the accompanying consolidated balance sheets of Boqii Holding Limited and its subsidiaries (the “Company”) as\nof March 31, 2025 and 2026, the related consolidated statements of operations and comprehensive loss, changes in shareholders’\nequity, and cash flows, for each of the three years in the period ended March 31, 2026 and the related notes (collectively referred to\nas the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated\nfinancial positions of the Company as of March 31, 2025 and 2026, and the consolidated results of its operations and its cash flows for\neach of the three years in the period ended March 31, 2026, in conformity with accounting principles generally accepted in the United\nStates of America.\n\n \n\n**Basis\nfor Opinion**\n\n \n\nThese\nfinancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s\nfinancial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board\n(United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the United\nStates federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe\nconducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain\nreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company\nis not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits,\nwe are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion\non the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur\naudit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or\nfraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding\nthe amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant\nestimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits\nprovide a reasonable basis for our opinion.\n\n \n\n**Critical\nAudit Matters**\n\n \n\nThe\ncritical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated\nor required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial\nstatements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters\ndoes not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit\nmatters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.\n\n \n\n**Allowance\nfor credit losses**\n\n \n\nAs\ndiscussed in Notes 2 and 5 to the consolidated financial statements, the Company’s net accounts receivable and allowance for credit\nlosses was RMB 11,924 thousand and RMB 206 thousand as of March 31, 2026. The Company reviews the accounts receivable on a periodic basis\nand estimates an allowance for expected credit losses based on an assessment of the collectability of individual balances. In evaluating\nthe collectability of individual receivable balances, the Company considers many factors, including the age of the balance, the customers’\nhistorical payment history, their current credit-worthiness, and current economic trends.\n\n \n\nF-2\n\n \n\n \n\nWe\ndetermined that the allowance for credit losses was a critical audit matter because management was required to exercise significant judgment\nin estimating expected credit losses. Auditing these estimates involved a high degree of auditor judgment, subjectivity and audit effort.\n\n \n\nOur\naudit of allowance for credit losses included, among others:\n\n \n\n●Evaluating\nthe appropriateness of the Company's methodology for estimating expected credit losses and\nassessing whether the methodology was appropriately applied to the Company's accounts receivable\nportfolio;\n\n   \n\n●Testing\nthe completeness and accuracy of the underlying data used in the estimation of the allowance\nfor credit losses, including accounts receivable aging, historical loss and collection information,\nand other relevant data;\n\n   \n\n●Evaluating\nthe reasonableness of significant assumptions and judgments used by management, including\nthe segmentation of accounts receivable based on credit risk characteristics, historical\nloss rates, current economic conditions, reasonable and supportable forecasts, and qualitative\nadjustments;\n\n   \n\n●Testing\nthe mathematical accuracy of management's calculation of the allowance for credit losses\nand reperformance of certain elements of the calculation;\n\n   \n\n●Evaluating\nselected delinquent and significant accounts receivable balances, including consideration\nof the customers' creditworthiness, historical payment patterns, subsequent collections,\ncredit memos, and write-offs;\n\n   \n\n●Testing\nsubsequent cash collections through the date of our auditor's report and considering whether\nsubsequent credit memos and write-offs provided evidence regarding the collectability of\naccounts receivable as of March 31, 2026.\n\n \n\n**Valuation\nof Available-for-Sale Debt Securities**\n\n \n\nAs\ndiscussed in Note 2 and 10 to the consolidated financial statements, the Company’s debt securities measured at fair value on a\nrecurring basis under Level 3 of the fair value hierarchy with an aggregate fair value of RMB 30,490 thousand as of March 31, 2026. The\nfair value of these investments is determined using valuation techniques that incorporate significant unobservable inputs and assumptions.\n\n \n\nThe\nprincipal considerations for our determination that the valuation of Level 3 investments was a critical audit matter were the significant\njudgments made by management in determining the fair value of these investments, including the selection of valuation methodologies and\nthe development of significant assumptions and unobservable inputs. Auditing these judgments and assumptions involved a high degree of\nauditor judgment and effort and required the involvement of professionals with specialized skill and knowledge.\n\n \n\nOur\naudit procedures related to the valuation of Level 3 investments included the following, among others:\n\n \n\n●Evaluating\nthe appropriateness of the valuation methodologies used by management and testing the application\nof those methodologies;\n\n   \n\n●Evaluating\nthe competence, capabilities, and objectivity of management's valuation specialist;\n\n   \n\n●Involving\nprofessionals with specialized skill and knowledge to assist us in evaluating the appropriateness\nof the valuation methodologies and the reasonableness of certain significant assumptions\nand inputs used in the valuations;\n\n   \n\n●Testing\nthe completeness and accuracy of significant data used in the valuations and comparing certain\nmarket-based inputs with information obtained from independent external sources;\n\n   \n\n●Evaluating\nthe reasonableness of significant assumptions and unobservable inputs used in the valuations,\nincluding selected valuation multiples, the discount for lack of marketability, scenario\nprobabilities, expected timing of liquidity events, risk-free interest rates, and volatility,\nas applicable; and\n\n   \n\n●Testing\nthe mathematical accuracy of the valuation calculations and independently recalculating certain\nelements of the fair value measurements.\n\n  \n\n/s/ Assentsure PAC  \n\nSingapore  \n\nJuly 13, 2026  \n\nPCAOB ID number: 6783  \n\n \n\nWe\nhave served as the Company’s auditor since 2024.\n\n \n\nF-3\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**CONSOLIDATED BALANCE SHEETS**\n\n**AS OF MARCH 31, 2025 AND 2026**\n\n**(All amounts in thousands, except for share\nand per share data, unless otherwise noted)**\n\n** **\n\n  \n   \nAs of March 31, \n\n  \nNote  \n2025  \n2026 \n\n  \n   \nRMB  \nRMB  \n\n**US$**\n\n**(Note 2(f))**\n \n\n  \n   \n   \n   \n  \n\nASSETS \n   \n   \n   \n  \n\nCurrent assets: \n   \n   \n   \n  \n\nCash and cash equivalents \n 4  \n 38,659  \n 49,427  \n 7,165 \n\nShort-term investments \n 23  \n 4,000  \n \n-\n  \n \n-\n \n\nAccounts receivable, net \n 5  \n 29,318  \n 11,924  \n 1,729 \n\nInventories, net \n 6  \n 40,076  \n 26,207  \n 3,799 \n\nPrepayments and other current assets \n 7  \n 90,465  \n 87,636  \n 12,704 \n\nAmounts due from related parties \n 25  \n 19,804  \n 18,439  \n 2,673 \n\nTotal current assets \n    \n 222,322  \n 193,633  \n 28,070 \n\nNon-current assets: \n    \n    \n    \n   \n\nProperty and equipment, net \n 8  \n 4,249  \n 1,339  \n 194 \n\nIntangible assets \n 9  \n 14,671  \n 94  \n 14 \n\nOperating lease right-of-use assets \n 13  \n 3,084  \n 3,739  \n 542 \n\nLong-term investments \n 10  \n 64,986  \n 35,908  \n 5,206 \n\nAmounts due from related parties, non-current \n 25  \n 4,935  \n 5,394  \n 782 \n\nOther non-current asset \n 11  \n 1,919  \n 1,660  \n 241 \n\nTotal non-current assets \n    \n 93,844  \n 48,134  \n 6,979 \n\nTotal assets \n    \n 316,166  \n 241,767  \n 35,049 \n\nLIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY \n    \n    \n    \n   \n\nCurrent liabilities \n    \n    \n    \n   \n\nShort-term borrowings (including amounts of the consolidated VIEs and VIEs’ subsidiaries without recourse to the Company of RMB 63 and RMB 8,000 as of March 31, 2025 and 2026, respectively) \n 19  \n 9,063  \n 16,000  \n 2,320 \n\nAccounts payable (including accounts payable of the consolidated VIEs and VIEs’ subsidiaries without recourse to the Company of RMB 421 and RMB 438 as of March 31, 2025 and 2026, respectively) \n    \n 19,558  \n 8,156  \n 1,182 \n\nSalary and welfare payable (including amounts of the consolidated VIEs and VIEs’ subsidiaries without recourse to the Company of RMB57 and RMB 535 as of March 31, 2025 and 2026, respectively) \n    \n 1,908  \n 1,027  \n 149 \n\nAccrued liabilities and other current liabilities (including amounts of the consolidated VIEs and VIEs’ subsidiaries without recourse to the Company of RMB 3,563 and RMB 468 as of March 31, 2025 and 2026, respectively) \n 12  \n 11,856  \n 31,357  \n 4,547 \n\nContract liabilities (including amounts of the consolidated VIEs and VIEs’ subsidiaries without recourse to the Company of RMB 1,768 and RMB 1,466 as of March 31, 2025 and 2026, respectively) \n    \n 1,768  \n 1,896  \n 275 \n\nOperating lease liabilities, current (including amounts of the consolidated VIEs and VIEs’ subsidiaries without recourse to the Company of RMB1,284 and RMB 873 as of March 31, 2025 and 2026, respectively) \n 13  \n 1,714  \n 1,070  \n 155 \n\nDerivative liabilities (including amounts of the consolidated VIEs and VIEs’ subsidiaries without recourse to the Company of Nil as of March 31, 2025 and 2026, respectively) \n 19  \n 5  \n \n-\n  \n \n-\n \n\nTotal current liabilities \n    \n 45,872  \n 59,506  \n 8,628 \n\n** **\n\nF-4\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**CONSOLIDATED BALANCE SHEETS (CONTINUED)**\n\n**AS OF MARCH 31, 2025 AND 2026**\n\n**(All amounts in thousands, except for share\nand per share data, unless otherwise noted)**\n\n \n\n  \n   \nAs of March 31, \n\n  \nNote  \n2025  \n2026 \n\n  \n   \nRMB  \nRMB  \n\n**US$**\n\n**(Note 2(f))**\n \n\n  \n   \n   \n   \n  \n\nLIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (CONTINUED) \n   \n   \n   \n  \n\nNon-current liabilities \n   \n   \n   \n  \n\nDeferred tax liabilities (including amounts of the consolidated VIEs and VIEs’ subsidiaries without recourse to the Company of Nil as of March 31, 2025 and 2026, respectively) \n 16  \n 2,433  \n \n-\n  \n \n-\n \n\nOperating lease liabilities, non-current (including amounts of the consolidated VIEs and VIEs’ subsidiaries without recourse to the Company of RMB 538 and RMB 2,021 as of March 31, 2025 and 2026, respectively)\n \n 13  \n 851  \n 2,273  \n 330 \n\nOther debts, non-current (including amounts of the consolidated VIEs and VIEs’ subsidiaries without recourse to the Company of RMB 200 and RMB 200 as of March 31, 2025 and 2026, respectively) \n 19  \n 38,635  \n 200  \n 29 \n\nTotal non-current liabilities \n    \n 41,919  \n 2,473  \n 359 \n\nTotal liabilities \n    \n 87,791  \n 61,979  \n 8,987 \n\nCommitments and contingencies (Note 26) \n    \n \n \n  \n \n \n  \n \n \n \n\n  \n    \n    \n    \n   \n\nMezzanine equity: \n    \n    \n    \n   \n\nRedeemable non-controlling interests \n 18  \n 8,804  \n \n-\n  \n \n-\n \n\nTotal mezzanine equity \n    \n 8,804  \n \n-\n  \n \n-\n \n\nShareholders’ equity: \n    \n    \n    \n   \n\nClass A ordinary shares (US$0.16 par value; 93,750,000 shares authorized, 2,798,074 and 4,298,128 shares issued and outstanding as of March 31, 2025 and 2026, respectively) \n 17  \n 3,114  \n 4,812  \n 697 \n\nClass B ordinary shares (US$0.16 par value; 12,500,000 shares  authorized, 81,486 shares issued and outstanding as of March 31, 2025 and 2026, respectively) \n 17  \n 82  \n 82  \n 12 \n\nClass C ordinary shares (US$0.16 par value; 1,000,000 shares authorized, 500,000 shares issued and outstanding as of March 31, 2026)\n\n \n 17  \n \n-\n  \n 571  \n 83 \n\nAdditional paid-in capital \n    \n 3,342,121  \n 3,364,191  \n 487,705 \n\nStatutory reserves \n    \n 3,876  \n 2,375  \n 344 \n\nAccumulated other comprehensive loss \n    \n (37,769) \n (56,824) \n (8,238)\n\nAccumulated deficit \n    \n (3,115,371) \n (3,120,958) \n (452,444)\n\nReceivable for issuance of ordinary shares \n 20  \n (6,248) \n (6,248) \n (906)\n\nTotal Boqii Holding Limited shareholders’ equity \n    \n 189,805  \n 188,001  \n 27,253 \n\nNon-controlling interests \n    \n 29,766  \n (8,213) \n (1,191)\n\nTotal shareholders’ equity \n    \n 219,571  \n 179,788  \n 26,062 \n\nTotal liabilities, mezzanine equity and shareholders’ equity \n    \n 316,166  \n 241,767  \n 35,049 \n\n \n\nThe accompanying notes are an integral part of these consolidated financial statements.\n\n \n\nF-5\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE\nLOSS**\n\n**FOR THE YEARS ENDED MARCH 31, 2024, 2025\nAND 2026**\n\n**(All amounts in thousands, except for share\nand per share data, unless otherwise noted)**\n\n** **\n\n  \n   \nYear Ended March 31, \n\n  \nNote  \n2024  \n2025  \n2026 \n\n  \n   \nRMB  \nRMB  \nRMB  \nUS$\n(Note 2(f)) \n\n  \n   \n   \n   \n   \n  \n\nNet revenues: \n   \n   \n   \n   \n  \n\nProduct sales \n    \n 680,143  \n 431,294  \n 381,208  \n 55,264 \n\nOnline marketing and information services and other revenue \n    \n 29,209  \n 37,600  \n 39,259  \n 5,691 \n\nTotal revenues \n    \n 709,352  \n 468,894  \n 420,467  \n 60,955 \n\nTotal cost of revenue \n    \n (568,615) \n (368,240) \n (310,028) \n (44,945)\n\nGross profit \n    \n 140,737  \n 100,654  \n 110,439  \n 16,010 \n\nOperating expenses: \n    \n    \n    \n    \n   \n\nFulfillment expenses \n    \n (59,506) \n (35,571) \n (23,251) \n (3,371)\n\nSales and marketing expenses \n    \n (85,091) \n (74,531) \n (81,638) \n (11,835)\n\nGeneral and administrative expenses \n    \n (59,265) \n (50,609) \n (35,915) \n (5,207)\n\nOther income, net \n    \n 2,966  \n 736  \n 399  \n 58 \n\nLoss from operations \n    \n (60,159) \n (59,321) \n (29,966) \n (4,345)\n\nInterest income \n    \n 2,638  \n 972  \n 431  \n 63 \n\nInterest expense \n 14  \n (7,326) \n (6,506) \n (825) \n (120)\n\nOther loss, net \n 15  \n (3,994) \n (236) \n 29,503  \n 4,277 \n\nFair value change of derivative liabilities \n    \n (1,034) \n 5,716  \n 5  \n 1 \n\nLoss before income tax expenses \n    \n (69,875) \n (59,375) \n (852) \n (124)\n\nIncome tax benefit \n 16  \n 927  \n 801  \n (1,274) \n (185)\n\nShare of results of equity investees \n    \n 50  \n (22) \n 242  \n 35 \n\nNet loss \n    \n (68,898) \n (58,596) \n (1,884) \n (274)\n\n Less: Net loss attributable to the non-controlling interest shareholders \n    \n (5,234) \n (4,471) \n 3,194  \n 464 \n\nNet loss attributable to Boqii Holding Limited \n    \n (63,664) \n (54,125) \n (5,078) \n (738)\n\n Accretion on redeemable non-controlling interests to redemption value \n 18  \n (766) \n (841) \n (509) \n (74)\n\nNet loss attributable to Boqii Holding Limited’s ordinary shareholders \n    \n (64,430) \n (54,966) \n (5,587) \n (812)\n\nNet loss \n    \n (68,898) \n (58,596) \n (1,884) \n (274)\n\nOther comprehensive income (loss): \n    \n    \n    \n    \n   \n\nForeign currency translation adjustment, net of tax \n    \n 1,258  \n 840  \n 506  \n 73 \n\nUnrealized securities holding losses/(gains) \n    \n (3,547) \n 869  \n (12,669) \n (1,837)\n\nTotal comprehensive loss \n    \n (71,187) \n (56,887) \n (14,047) \n (2,038)\n\nLess: Total comprehensive loss attributable to non- controlling interests shareholders \n    \n (5,234) \n (4,471) \n 3,194  \n 464 \n\nTotal comprehensive loss attributable to Boqii Holding Limited \n    \n (65,953) \n (52,416) \n (17,241) \n (2,502)\n\nNet loss per share attributable to Boqii Holding Limited’s ordinary shareholders \n    \n    \n    \n    \n   \n\n— basic \n    \n (102.4) \n (45.6) \n (1.47) \n (0.21)\n\n— diluted \n    \n (102.4) \n (45.6) \n (1.47) \n (0.21)\n\nWeighted average number of ordinary shares \n    \n    \n    \n    \n   \n\n— basic \n    \n 628,986  \n 1,205,493  \n 3,790,573  \n 3,790,573 \n\n— diluted \n    \n 628,986  \n 1,205,493  \n 3,790,573  \n 3,790,573 \n\n** **\n\nThe accompanying notes are an integral part of\nthese consolidated financial statements.\n\n \n\nF-6\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’\nEQUITY**\n\n**FOR THE YEARS ENDED MARCH 31, 2024, 2025\nAND 2026**\n\n**(All amounts in thousands, except for share\nand per share data, unless otherwise noted)**\n\n \n\n  \nClass A\nOrdinary Shares\n(US$0.16 per value)\n \n \nClass B\n\nOrdinary Shares\n\n(US$0.16 per value)  \nAdditional   \n   \nAccumulated other   \n   \nNon-  \nReceivable for issuance of   \nTotal \n\n  \nNumber of Shares  \nAmount  \nNumber of Shares  \nAmount  \n**Paid-in Capital**  \n**Statutory\nreserves**  \n**comprehensive loss**  \n**Accumulated\ndeficit**  \n** controlling\ninterests**  \n**ordinary shares**  \n**Shareholders’ Equity** \n\n** **** **\n** **** **** **\n**RMB**** **** **\n** **** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **\n\n  \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\nBalances as of March 31, 2023 \n 348,520  \n 373  \n 81,486  \n 82  \n 3,287,696  \n 3,876  \n (37,189) \n (2,993,150) \n 39,471  \n (83,405) \n 217,754 \n\nChange in Accounting Policy* \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n (2,825) \n \n-\n  \n \n-\n  \n (2,825)\n\nBalances as of March 31, 2023 （adjusted） \n 348,520  \n 373  \n 81,486  \n 82  \n 3,287,696  \n 3,876  \n (37,189) \n (2,995,975) \n 39,471  \n (83,405) \n 214,929 \n\nForeign currency translation adjustment \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n 1,258  \n \n-\n  \n \n-\n  \n \n-\n  \n 1,258 \n\nAccretion on redeemable non-controlling interests to redemption value \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n (766) \n \n-\n  \n \n-\n  \n (766)\n\nReceivable for issuance of ordinary shares (Note 20) \n -  \n \n-\n  \n -  \n \n-\n  \n 75,276  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n (7,902) \n 67,374 \n\nUnrealized securities holding losses, net of tax \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n (3,547) \n \n-\n  \n \n-\n  \n \n-\n  \n (3,547)\n\nIssuance of ordinary shares for the exercise of stock options \n 58,929  \n \n-\n  \n \n-\n  \n \n-\n  \n 27  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n 27 \n\nShare-based compensation \n -  \n \n-\n  \n -  \n \n-\n  \n 679  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n 679 \n\nDebt waive of Chong Li \n -  \n \n-\n  \n -  \n \n-\n  \n (75,276) \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n 75,276  \n \n-\n \n\nIssuance of ordinary shares for the public offering and private placement \n 515,625  \n 589  \n \n-\n  \n \n-\n  \n 41,273  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n 41,862 \n\nNet loss \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n (63,664) \n (5,234) \n \n-\n  \n (68,898)\n\nBalances as of March 31, 2024 \n 923,074  \n 962  \n 81,486  \n 82  \n 3,329,675  \n 3,876  \n (39,478) \n (3,060,405) \n 34,237  \n (16,031) \n 252,918 \n\n \n\n* The Company used a modified retrospective approach to adopt ASC Topic 326, and the cumulative-effect to retained earnings was RMB2.8 million\n\n \n\nThe accompanying notes are\nan integral part of these consolidated financial statements.\n\n \n\nF-7\n\n \n\n \n\n**BOQII HOLDING LIMITED** \n\n**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’\nEQUITY (CONTINUED)**\n\n**FOR THE YEARS ENDED MARCH 31, 2024, 2025\nAND 2026**\n\n**(All amounts in thousands, except for share\nand per share data, unless otherwise noted)**\n\n \n\n  \nClass A\n\nOrdinary Shares\n\n(US$0.16 per value)  \nClass B\n\nOrdinary Shares\n\n(US$0.16 per value)  \nAdditional   \n   \nAccumulated other   \n   \nNon-  \nReceivable for issuance of  \nTotal  \n\n  \nNumber of Shares  \nAmount  \nNumber of Shares  \nAmount  \n**Paid-in Capital**  \n**Statutory reserves**  \n**comprehensive loss**  \n**Accumulated deficit**  \n**controlling interests**  \n**ordinary shares**  \n**Shareholders’ Equity** \n\n** **** **\n** **** **** **\n**RMB**** **** **\n** **** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **\n\n  \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\nBalances as of March 31, 2024 \n 923,074  \n 962  \n 81,486  \n 82  \n 3,329,675  \n 3,876  \n (39,478) \n (3,060,405) \n 34,237  \n (16,031) \n 252,918 \n\nForeign currency translation adjustment \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n 840  \n \n-\n  \n \n-\n  \n \n-\n  \n 840 \n\nAccretion on redeemable non-controlling interests to redemption value \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n (841) \n \n-\n  \n \n-\n  \n (841)\n\nReceivable for issuance of ordinary shares (Note 20) \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n 9,783  \n 9,783 \n\nUnrealized securities holding gains, net of tax \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n 869  \n \n-\n  \n \n-\n  \n \n-\n  \n 869 \n\nShare-based compensation \n -  \n \n-\n  \n -  \n \n-\n  \n 81  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n 81 \n\nIssuance of ordinary shares for the private placement (Note 17) \n 1,875,000  \n 2,152  \n -  \n \n-\n  \n 12,365  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n 14,517 \n\nNet loss \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n (54,125) \n (4,471) \n \n-\n  \n (58,596)\n\nBalances as of March 31, 2025 \n 2,798,074  \n 3,114  \n 81,486  \n 82  \n 3,342,121  \n 3,876  \n (37,769) \n (3,115,371) \n 29,766  \n (6,248) \n 219,571 \n\n \n\nF-8\n\n \n\n** **\n\n**BOQII HOLDING LIMITED **\n\n**CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’\nEQUITY (CONTINUED)**\n\n**FOR THE YEARS ENDED MARCH 31, 2024, 2025\nAND 2026**\n\n**(All amounts in thousands, except for share\nand per share data, unless otherwise noted)**\n\n \n\n  \nClass A\nOrdinary Shares\n(US$0.16 per value)  \nClass B\nOrdinary Shares\n(US$0.16 per value)  \nClass C\nOrdinary Shares\n(US$0.16 per value)  \nAdditional  \n   \nAccumulated other  \n   \nNon-  \nReceivable for issuance of  \nTotal \n\n  \nNumber of Shares  \nAmount  \nNumber of Shares  \nAmount  \nNumber of Shares  \nAmount  \nPaid-in Capital  \nStatutory reserves  \ncomprehensive loss  \nAccumulated deficit  \ncontrolling interests  \nordinary shares  \nShareholders’ Equity \n\n** **** **\n** **** **** **\n**RMB**** **** **\n** **** **** **\n**RMB**** **** **\n** **** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **\n\n  \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n  \n\nBalances as of March 31, 2025 \n 2,798,074  \n 3,114  \n 81,486  \n 82  \n \n-\n  \n \n-\n  \n 3,342,121  \n 3,876  \n (37,769) \n (3,115,371) \n 29,766  \n (6,248) \n 219,571 \n\nFractional share settlement** \n 54  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n \n\nForeign currency translation adjustment \n -  \n \n-\n  \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n 506  \n \n-\n  \n \n-\n  \n \n-\n  \n 506 \n\nAccretion on redeemable non-controlling interests to redemption value \n -  \n \n-\n  \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n (509) \n \n-\n  \n \n-\n  \n (509)\n\nDisposal of a subsidiary \n -  \n \n-\n  \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n (1,501) \n \n-\n  \n \n-\n  \n (41,173) \n \n-\n  \n (42,674)\n\nUnrealized securities holding gains, net of tax \n -  \n \n-\n  \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n (12,669) \n \n-\n  \n \n-\n  \n \n-\n  \n (12,669)\n\nReclassification adjustment for net gains on available-for-sale investments  included in net income \n -  \n \n-\n  \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n (6,892) \n \n-\n  \n \n-\n  \n \n-\n  \n (6,892)\n\nShare-based compensation \n -  \n \n-\n  \n -  \n \n-\n  \n -  \n \n-\n  \n 5  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n 5 \n\nIssuance of ordinary shares for the private placement (Note 17) \n 1,500,000  \n 1,698  \n    \n \n \n  \n 500,000  \n 571  \n 22,065  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n 24,334 \n\nNet loss \n -  \n \n-\n  \n -  \n \n-\n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n  \n (5,078) \n 3,194 \n \n-\n  \n (1,884)\n\nBalances as of March 31, 2026 \n 4,298,128  \n 4,812  \n 81,486  \n 82  \n 500,000  \n 571  \n 3,364,191  \n 2,375  \n (56,824) \n (3,120,958) \n (8,213) \n (6,248) \n 179,788 \n\n \n\n**The Company approved a 160-for-1 reverse share split on June\n26, 2025, and any fractional shares resulting from the split were rounded up to the nearest whole share.\n\nF-9\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**CONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n**FOR THE YEARS ENDED March 31, 2024, 2025\nAND 2026**\n\n**(All amounts in thousands, except for share\nand per share data, unless otherwise noted)**\n\n** **\n\n  \n   \nYear Ended March 31, \n\n  \nNote  \n2024  \n2025  \n2026 \n\n  \n   \nRMB  \nRMB  \nRMB  \n\n**US$**\n\n**(Note 2(f))**\n \n\nCash flows from operating activities: \n   \n   \n   \n   \n  \n\nNet loss \n    \n (68,898) \n (58,596) \n (1,884) \n (274)\n\nAdjustments to reconcile net loss to net cash provided by operating activities: \n    \n    \n    \n    \n   \n\nDepreciation and amortization expense \n    \n 6,355  \n 5,227  \n 1,197  \n 174 \n\nProvision for inventories obsolescence/(reversal) \n 6  \n (223) \n 154  \n 358  \n 52 \n\nAllowance for expected credit loss/(reversal) \n 5  \n (116) \n (332) \n 137  \n 20 \n\nInterest expense of other debts \n 14  \n 5,058  \n 5,974  \n \n-\n  \n \n-\n \n\nAmortization of right-of-use assets \n 13  \n 17,948  \n 9,502  \n 2,690  \n 390 \n\nInterest of lease liabilities \n 13  \n 199  \n 318  \n 87  \n 13 \n\nInvestment loss \n    \n (1,820) \n (61) \n (5,928) \n (859)\n\nShare of results of equity investees \n    \n (50) \n 22  \n (242) \n (35)\n\nDiscount on the ordinary shares issued by public offering \n 17  \n 5,943  \n \n-\n  \n \n-\n  \n \n-\n \n\nLoss/(gain) on disposal of property and equipment and intangible assets \n    \n 46  \n (463) \n (168) \n (24)\n\nLoss on disposal of other debts \n 19  \n 1,425  \n \n-\n  \n (10,435) \n (1,513)\n\nGain/(loss) from disposal of a subsidiary \n 15  \n (49) \n \n-\n  \n (13,001) \n (1,885)\n\nShare-based compensation expense \n 21  \n 679  \n 81  \n 5  \n 1 \n\nFair value change of derivative liabilities \n 23  \n 1,034  \n (5,716) \n (5) \n (1)\n\nDeferred tax expense \n    \n (907) \n (801) \n 1,201  \n 174 \n\nChanges in operating assets and liabilities, net of effects of businesses acquired: \n    \n    \n    \n    \n   \n\nAccounts receivable \n    \n 27,179  \n 21,260  \n 2,660  \n 386 \n\nInventories \n    \n 26,540  \n 15,135  \n 8,166  \n 1,184 \n\nPrepayments and other current assets \n    \n 11,491  \n (26,650) \n (2,053) \n (297)\n\nAmounts due from related parties \n    \n 2,413  \n (13,253) \n 1,409  \n 204 \n\nOperating lease liabilities \n 13  \n (17,977) \n (10,114) \n (2,702) \n (392)\n\nAccounts payable \n    \n (31,501) \n (4,635) \n (11,254) \n (1,631)\n\nSalary and welfare payable \n    \n (3,893) \n (1,056) \n (458) \n (66)\n\nAccrued liabilities and other current liabilities \n    \n (4,766) \n (4,272) \n (320) \n (46)\n\nAmounts due to related parties \n    \n (471) \n \n-\n  \n \n-\n  \n \n-\n \n\nContract liabilities \n    \n (2,892) \n 189  \n 1,062  \n 154 \n\nOther non-current assets \n    \n 1,825  \n 1,255  \n 186  \n 27 \n\nNet cash used in operating activities \n    \n (25,428) \n (66,832) \n (29,292) \n (4,244)\n\nCash flows from investing activities: \n    \n    \n    \n    \n   \n\nLoan advanced to third parties \n    \n (3,194) \n (701) \n (2,066) \n (300)\n\nRepayments on loan receivables from third parties \n    \n 4,206  \n 2,898  \n 1,214  \n 176 \n\nLoan advanced to related parties \n    \n (4,779) \n (1,989) \n (680) \n (99)\n\nRepayments on loan receivables from related parties \n    \n 3,196  \n 1,952  \n 230  \n 33 \n\nDisposal of subsidiaries, net of cash and cash equivalents acquired \n    \n (37) \n \n-\n  \n 10,190  \n 1,477 \n\nDecrease/(increase) in short-term investments, net \n    \n 69,797  \n (4,000) \n \n-\n  \n \n-\n \n\nPurchase of intangible assets \n    \n (36) \n (9) \n \n-\n  \n \n-\n \n\nPurchase of property and equipment \n    \n (527) \n (3,299) \n (1,060) \n (154)\n\nProceeds from disposal of property and equipment \n    \n 213  \n 357  \n 211  \n 31 \n\nDeposits to be used in connection with future acquisitions \n 7e \n (29,090) \n 29,090  \n \n-\n  \n \n-\n \n\nDisposal of long-term investments \n 10  \n 8,065  \n 300  \n 15,687  \n 2,274 \n\nNet cash generated from investing activities \n    \n 47,814  \n 24,599  \n 23,726  \n 3,438 \n\n** **\n\nF-10\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)**\n\n**FOR THE YEARS ENDED March 31, 2024, 2025\nAND 2026**\n\n**(All amounts in thousands, except for share\nand per share data, unless otherwise noted)**\n\n \n\n  \n   \nYear Ended March 31, \n\n  \nNote  \n2024  \n2025  \n2026 \n\n  \n   \nRMB  \nRMB  \nRMB  \n\n**US$**\n\n**(Note 2(f))**\n \n\n  \n   \n   \n   \n   \n  \n\nCash flows from financing activities: \n   \n   \n   \n   \n  \n\nProceeds from short-term and long-term borrowings \n    \n 15,000  \n 31,510  \n 19,000  \n 2,754 \n\nRepayments of short-term and long-term borrowings \n    \n (86,049) \n (37,660) \n (12,000) \n (1,740)\n\nProceeds from issuance of other debts, net of issuance costs \n    \n 8,786  \n 9,783  \n \n-\n  \n \n-\n \n\nRepayments of other debts \n    \n (6,818) \n (10,000) \n (15,000) \n (2,175)\n\nProceeds from exercise of share option \n    \n 29  \n \n-\n  \n \n-\n  \n \n-\n \n\nProceeds from issuance of ordinary shares, net of issuance costs \n 17  \n 35,920  \n 14,517  \n 24,334  \n 3,528 \n\nNet cash flows (used in) /generated from financing activities \n    \n (33,132) \n 8,150  \n 16,334  \n 2,367 \n\nNet (decrease)/ increase in cash and cash equivalents \n    \n (10,746) \n (34,083) \n 10,768  \n 1,561 \n\nCash and cash equivalents at beginning of year \n    \n 89,850  \n 72,722  \n 38,659  \n 5,604 \n\nEffects of exchange rate changes on cash and cash equivalents \n    \n (6,382) \n 20  \n \n-\n  \n \n-\n \n\nCash and cash equivalents at end of year \n    \n 72,722  \n 38,659  \n 49,427  \n 7,165 \n\nSupplemental schedule of non-cash investing and financing activities: \n    \n    \n    \n    \n   \n\nAccretion on redeemable non-controlling interests \n    \n (766) \n (841) \n (509) \n (74)\n\nUnpaid cash consideration for business acquisitions \n    \n (2,938) \n (2,938) \n (2,938) \n (426)\n\nAdditional ASC 842 supplemental disclosure: \n    \n    \n    \n    \n   \n\nCash paid for fixed operating lease costs included in the measurement of lease obligations in operating activities \n    \n 17,977  \n 10,114  \n 2,702  \n 392 \n\nRight-of-use assets obtained in exchange for operating lease obligations \n    \n 4,545  \n 3,635  \n 4,369  \n 633 \n\n \n\nThe accompanying notes\nare an integral part of these consolidated financial statements.\n\n \n\nF-11\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED\nFINANCIAL STATEMENTS**\n\n**(All amounts in thousands,\nexcept for share and per share data, unless otherwise noted)**\n\n \n\n1.Organization and principal activities\n\n** **\n\n**(a)****Principal activities**\n\n \n\nBoqii Holding Limited (“Boqii\nHolding”, or the “Company”), was incorporated under the laws of the Cayman Islands in June 2012, as an exempted company\nwith limited liability. In these consolidated financial statements, where appropriate, the term “Company” also refers to its\nsubsidiaries, the VIEs and the VIEs’ subsidiaries as a whole.\n\n \n\nThe Company operates as an online\none-stop destination for users to shop for a variety of pet products and interact with other users in its online pet community in the\nPeople's Republic of China (the \"PRC\"), through its online platforms (Boqii.com and Boqii application, collectively “Boqii\nMarketplace”), branded stores on third-party online platforms (the \"Online Branded Stores\") and its online pet community\n(“Boqii Community”). In addition to online business, the Company provides pet products to offline pet stores and hospitals.\n\n \n\nThe Company’s consolidated financial\nstatements include the financial statements of the Company, its subsidiaries, consolidated VIEs and VIEs’ subsidiaries.\n\n \n\nAs of March 31, 2026, the Company’s\nprincipal subsidiaries, consolidated VIEs and major VIEs’ subsidiaries are as follows:\n\n \n\nName of subsidiaries and VIE  Place of\nincorporation  Date of\nincorporation\nor acquisition  Percentage\nof direct\nor indirect   Principal activities\n\nSubsidiaries:             \n\nBoqii Corporation Limited (“Boqii Corporation”)  Hong Kong  July 2012   100%  Investment holding\n\nBoqii International Limited  Hong Kong  August 2016   100%  Investment holding\n\nXincheng (Shanghai) Information Technology Co., Ltd. (“Shanghai Xincheng”)  Shanghai, the PRC  November 2012   100%  Technology development and sales of merchandise\n\nShanghai Yiqin Pets Products Co., Ltd.  Shanghai, the PRC  February 2013   100%  Technology development and sales of merchandise\n\n               \n\nConsolidated VIEs              \n\nGuangcheng (Shanghai) Information Technology Co., Ltd. (“Shanghai Guangcheng”)  Shanghai, the PRC  November 2012   100%  Operates the Company’s own online e-commerce platform\n\nSuzhou Taicheng Supply Chain Co., Ltd. (“Suzhou Taicheng”)  Suzhou, the PRC  June 2021   100%  Sales of merchandise\n\nSuzhou Xingyun Yueming Supply Chain Co., Ltd. (“Suzhou Xingyun”)  Suzhou, the PRC  April 2022   100%  Sales of merchandise\n\n               \n\nSubsidiaries of VIEs              \n\nBoqii (Shanghai) Information Technology Co., Ltd.  Shanghai, the PRC  August 2014   90%  Technology development\n\n** **\n\nF-12\n\n \n\n \n\n**BOQII\nHOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**1.****Organization and principal activities (continued)**\n\n \n\n \n**(b)****Consolidated variable interest entities**\n\n** **\n\nIn order to comply with the PRC laws\nand regulations which prohibit or restrict foreign investments into companies involved in restricted businesses, the Company operates\nonline platforms that provide internet information services and engages in other foreign-ownership-restricted businesses through certain\nPRC domestic companies (the PRC Domestic Companies, or the “VIEs”). The equity interests of the PRC Domestic Companies are\nheld by certain management members of the Company or onshore nominees of certain investors of the Company (“Nominee Shareholders”),\nwho act as nominee equity holders of the PRC Domestic Companies on behalf of Shanghai Xincheng WFOE, the Company’s wholly owned\nsubsidiaries in the PRC (the “WFOEs”). The WFOEs entered into a series of contractual arrangements with the PRC Domestic Companies\nand their respective Nominee Shareholders (the “Contractual Arrangements”). These Contractual Agreements cannot be unilaterally\nterminated by the Nominee Shareholders or the PRC Domestic Companies. Through the Contractual Arrangements, the Nominee Shareholders have\ngranted all their legal rights including voting rights and disposition rights of their equity interests in the PRC Domestic Companies\nto the WFOEs. The Nominee Shareholders do not have the power to direct the activities of the PRC Domestic Companies that most significantly\nimpact their economic performance. The Nominee Shareholders do not have the obligation to absorb losses of the PRC Domestic Companies\nthat could potentially be significant to them or the right to receive benefits from the PRC Domestic Companies that could potentially\nbe significant to them. Accordingly, the PRC Domestic Companies are considered as variable interest entities of the Company, through the\nWFOEs.\n\n \n\nIn accordance with Accounting Standards\nCodification (“ASC”) 810-10-25-38A, the Company, through its WFOEs, has a controlling financial interest in the\nVIEs because the WFOEs have the power to direct activities of the VIEs that most significantly impact the economic performance of the\nVIEs. In addition, under the terms of the Contractual Arrangements, the WFOEs have (i) the right to receive economic benefits that\ncould potentially be significant to the VIEs in the form of service fees under the Exclusive Consultation and Service Agreements; (ii) the\nright to receive all dividends declared by the VIEs and the right to all undistributed earnings of the VIEs; and (iii) the obligation\nto absorb the substantially expected losses and the right to receive the residual benefits of the VIEs through its exclusive option to\nacquire 100% of the equity interests in the VIEs, to the extent permitted under PRC law. Thus, the Company, through the WFOEs, has the\nobligation to absorb the expected losses and the right to receive expected residual return of the VIEs that could potentially be significant\nto the VIEs.\n\n \n\nBased on the above, the Company, through\nthe WFOEs, is the ultimate primary beneficiary of the VIEs. Accordingly, the financial statements of the VIEs and their subsidiaries are\nconsolidated in the Company’s consolidated financial statements.\n\n* *\n\n*Loan Agreements*\n\n* *\n\nPursuant to the relevant loan agreements,\nthe WFOEs have granted interest-free loans to the relevant Nominee Shareholders of the relevant VIEs with the sole purpose of providing\nfunds necessary for the capital injection to the relevant VIEs.\n\n \n\nThe loans can only be repaid by transfer\nof the equity interests of the relevant VIEs held by the Nominee Shareholders, and shall be repaid upon the occurrence of, among other\nevents, the WFOEs exercise of their options to purchase the relevant VIEs’ equity interests under the Exclusive Option Agreements\n(refer to following section for further details). Any proceeds received by the Nominee Shareholders from transfer of the equity interests\nshall also be repaid to the WFOEs as part of the loan repayments.\n\n \n\nOther events that will lead to loan\nrepayments include: the Nominee Shareholders receiving a written notice from the relevant PRC subsidiaries requesting loan repayments;\nthe death or loss of capacity for civil conduct of the Nominee Shareholders; the Nominee Shareholders no longer acting as shareholders\nof the relevant VIEs or employees of the relevant VIEs, PRC subsidiaries or their related parties; the Nominee Shareholders being involved\nin criminal activities; or, any third party making a claim in an amount over RMB 500,000 against the Nominee Shareholders.\n\n \n\nThe loans shall be considered fully\nrepaid when the Nominee Shareholders have transferred all equity interests held by them to the WFOEs or a party designated by the WFOEs.\nThe Loan Agreements shall remain valid until the Nominee Shareholders repaid the relevant loans to the WFOEs.\n\n** **\n\nF-13\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n** **\n\n**1.****Organization and principal activities (continued)**\n\n** **\n\n**(b)****Consolidated variable interest entities (continued)**\n\n* *\n\n*Exclusive Option Agreements*\n\n \n\nThe Nominee Shareholders of the VIEs\nhave granted the WFOEs the exclusive and irrevocable right to purchase or to designate one or more person(s) at their discretion to purchase\npart or all of the equity interests in the VIEs from the Nominee Shareholders for a purchase price at any time, subject to the lowest\nprice permitted by PRC laws and regulations. The VIEs and their Nominee Shareholders have agreed that without prior written consent of\nthe WFOEs, their respective Nominee Shareholders cannot sell, transfer, pledge or dispose their equity interests, and the VIEs cannot\nsell, transfer, pledge or dispose, but not limit to, the equity interests, significant assets, significant revenue and significant business.\nAlso as agreed, the VIEs cannot declare any dividend or change capitalization structure of the VIEs and cannot enter into any loan or\ninvestment agreements. Furthermore, the Nominee Shareholders have agreed that any proceeds but not limited to the sales of the Nominee\nShareholders' equity interest in relevant VIEs should be gratuitously paid to the WFOEs or one or more person(s) at their discretion.\nThe Exclusive Option Agreement will remain effective until all equity options in VIEs held by such Nominee Shareholders are transferred\nor assigned to the WFOEs or their designated representatives.\n\n* *\n\n*Proxy Agreement and Power of Attorney*\n\n \n\nPursuant to the irrevocable power\nof attorney, each of the Nominee Shareholders appointed the WFOEs as their attorney-in-fact to exercise all shareholder rights under PRC\nlaw and the relevant articles of association, including but not limited to, attending shareholders meetings, voting on their behalf on\nall matters requiring shareholder approval, including but not limited to sale, transfer, pledge, or disposition of all or part of the\nNominee Shareholders' equity interests, and designation and appointing the legal representative, directors, supervisors, chief executive\nofficer and other senior management members of the VIEs. Each power of attorney will remain in force during the period when the Nominee\nShareholders continues to be shareholders of the VIEs. Each Nominee Shareholder has waived all the rights which have been authorized to\nthe person designated by the WFOEs under each power of attorney.\n\n** **\n\n*Exclusive Consultation and Service\nAgreements*\n\n* *\n\nPursuant to the Exclusive Consultation\nService Agreements, the WFOEs have agreed to provide to the VIEs services, including, but not limited to, design and maintenance of the\nE-Commerce platform, consulting services, technical training, research, planning and development of the market and customer support. The\nVIEs shall pay to the WFOEs service fees determined based on the complexity and difficulty of the services, title of and time consumed\nby employees, contents and value of the services, operation conditions and market price of the service provided. The Exclusive Consultation\nand Service Agreements will be in effect permanent unless terminated by the WFOEs. The WFOEs have the exclusive ownership of all the intellectual\nproperty rights created as a result of the performance of the agreements.\n\n \n\nF-14\n\n \n\n* *\n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n* *\n\n**1.****Organization and principal activities (continued)**\n\n** **\n\n**(b)****Consolidated variable interest entities (continued)**\n\n \n\n*Intellectual Property License Agreements*\n\n \n\nPursuant to the intellectual property\nlicense agreements, the WFOEs have granted a non-exclusive and non-transferable license, without sublicensing rights, to the VIEs to use\nits intellectual property. The VIEs may only use the licenses in its own business operations. The VIEs agree to pay the WFOEs a quarterly\nservice fee at an amount that is equal to the VIEs’ revenue for the relevant quarter with a certain percentage or an amount adjusted\nat the WFOEs’ sole discretion for the relevant quarter, which should be paid within 15 business days after the VIEs confirm in writing\nthe amount and breakdown of the service fee for the relevant quarter. The agreement has a term of 10 years and shall automatically renew\nat the end of each term for a further term of 10 years, unless otherwise terminated by the WFOEs in its sole discretion with 90 days’\nprior written notice.\n\n* *\n\n*Equity Interest Pledge Agreements*\n\n* *\n\nPursuant to the relevant equity interest\npledge agreements, the Nominee Shareholders of the VIEs have pledged 100% equity interests in relevant VIEs to the WFOEs to guarantee\nperformance by the Nominee Shareholders of their obligations under the Exclusive Option Agreements, the Proxy Agreement and Power of Attorney\nand the Loan Agreements, as well as the performance by the VIEs of their obligations under the Exclusive Option Agreements, the Exclusive\nConsultation and Service Agreements and Intellectual Property License Agreements. In the event of a breach by the VIEs or any of their\nNominee Shareholders of contractual obligations under the Contractual Agreements, as the case may be, the WFOEs, as pledgee, will have\nthe right to dispose of the pledged equity interests in the relevant VIEs and will have priority in receiving the proceeds from such disposal.\nThe Nominee Shareholders of the VIEs also covenant that, without the prior written consent of the WFOEs, they will not dispose of, create\nor allow any encumbrance on the pledged equity interests. The Equity Interest Pledge Agreements will remain in effect so long as any of\nthe Loan Agreements, the Exclusive Consultation Service Agreements, the Exclusive Option Agreements, the Proxy Agreement and Power of\nAttorney, or the Intellectual Property License Agreements, as mentioned above, remains in effect or any guaranteed obligations of the\nVIEs, or, to the extent applicable, its Nominee Shareholders, remains outstanding under the Contractual Agreements. The pledge was registered\nwith the relevant local administration and will remain binding until the VIEs and their Nominee Shareholders discharge all their obligations\nunder the Contractual Arrangements. The registration of the equity pledge enables the WFOEs to enforce the equity pledge against third\nparties who acquire the equity interests of the VIEs in good faith.\n\n \n\nOne set of existing Contractual Agreements\nwere initially entered into in September 2012 by Shanghai Xincheng (one of the Company’s WFOEs), Shanghai Guangcheng (one\nof the Company’s VIEs) and its nominee shareholders, was subsequently amended and restated on substantially similar terms in September\n2017, October 2019, August 2020 and September 2022, respectively.  One set of Contractual Agreements were entered into in June 2021\nby Shanghai Xincheng (one of the Company’s WFOEs), Suzhou Taicheng (one of the Company’s VIEs) and its Nominee Shareholders,\nwas subsequently amended and restated on substantially similar terms in February 2023. A new set of Contractual Agreements were entered\ninto in April 2022 by Shanghai Meiyizhi Supply Chain Co,Ltd (one of the Company’s WFOEs), Suzhou Xingyun (one of the Company’s\nVIEs) and its Nominee Shareholders. The Loan Agreements, Exclusive Option Agreements, Proxy Agreement and Power of Attorney, Exclusive\nConsultation and Service Agreements, Intellectual Property License Agreements and Equity Interest Pledge Agreements were amended to reflect\nthe changes of shareholders’ holding in the VIE in their respective dates. No other material terms or conditions of these agreements\nwere changed or altered. There was no impact to the Company’s control over the VIEs and the Company continues to consolidate the\nVIEs.\n\n \n\n**(c)****Risks in relations to the VIE structure**\n\n** **\n\nUnder the Contractual Agreements with\nthe consolidated VIEs, the Company has the power to direct activities of the consolidated VIEs and VIEs’ subsidiaries through the\nCompany’s relevant PRC subsidiaries, and can have assets transferred freely out of the consolidated VIEs and VIEs’ subsidiaries\nwithout restrictions. Therefore, the Company considers that there is no asset of the consolidated VIEs that can only be used to settle\nobligations of the respective consolidated VIEs, except for the registered capital of the consolidated VIEs amounting to RMB52 million\nand RMB 52 million as of March 31, 2025 and 2026. Since the consolidated VIEs and VIEs’ subsidiaries are incorporated as limited\nliability companies under the PRC Law, creditors of the consolidated VIEs and VIEs’ subsidiaries do not have recourse to the general\ncredit of the Company.\n\n \n\nF-15\n\n \n\n \n\n**BOQII\nHOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**1.****Organization and principal activities (continued)**\n\n** **\n\n**(c)****Risks in relations to the VIE structure (continued)**\n\n \n\nThe Company believes that the Company’s\nrelevant PRC subsidiaries’ Contractual Arrangements with the consolidated VIEs and the Nominee Shareholders are in compliance with\nPRC laws and regulations, as applicable, and are legally binding and enforceable. However, uncertainties in the PRC legal system could\nlimit the Company’s ability to enforce these contractual arrangements.\n\n \n\nIn addition, if\nthe current structure or any of the contractual arrangements were found to be in violation of any existing or future PRC law, the Company\nmay be subject to penalties, which may include but not be limited to, the cancellation or revocation of the Company’s business and\noperating licenses, being required to restructure the Company’s operations or terminate the Company’s operating activities.\nThe imposition of any of these or other penalties may result in a material and adverse effect on the Company’s ability to conduct\nits operations. In such case, the Company may not be able to operate or control the VIEs, which may result in deconsolidation of the VIEs.\n\n \n\nThe following table set forth the\nassets, liabilities, results of operations and changes in cash, cash equivalents and restricted cash of the consolidated VIEs and their\nsubsidiaries taken as a whole, which were included in the Company’s consolidated financial statements with intercompany transactions\neliminated (RMB in thousands):\n\n \n\n  \nAs of March 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nCash and cash equivalents \n 14,308  \n 11,673 \n\nShort-term investments \n 4,000  \n \n-\n \n\nAccounts receivable, net \n 20,551  \n 4,543 \n\nAmounts due from related parties \n 6,069  \n 6,531 \n\nInventories, net \n 6,057  \n 569 \n\nPrepayments and other current assets \n 33,197  \n 23,702 \n\nInter-company receivables \n 12,579  \n 31,856 \n\nProperty and equipment, net \n 3,461  \n 873 \n\nIntangible assets \n 15  \n 7 \n\nOperating lease right-of-use assets \n 2,050  \n 3,098 \n\nLong-term investments \n 64,975  \n 35,907 \n\nOther non-current asset \n 529  \n 363 \n\nTotal assets \n 167,791  \n 119,122 \n\n** **\n\n  \nAs of March 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nShort-term borrowings \n 63  \n 8,000 \n\nAccounts payable \n 421  \n 438 \n\nSalary and welfare payable \n 57  \n 535 \n\nAccrued liabilities and other current liabilities \n 3,563  \n 468 \n\nContract liabilities \n 1,768  \n 1,466 \n\nOperating lease liabilities, current \n 1,284  \n 873 \n\nInter-company payables \n 1,011,916  \n 992,092 \n\nOperating lease liabilities, non-current \n 538  \n 2,021 \n\nOther debts, non-current \n 200  \n 200 \n\n**Total liabilities** \n 1,019,810  \n 1,006,093 \n\n \n\nF-16\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**1.****Organization and principal activities (continued)**\n\n** **\n\n**(c)****Risks in relations to the VIE structure (continued)**\n\n \n\n  \nYear Ended March 31, \n\n  \n2024  \n2025  \n2026 \n\n  \nRMB  \nRMB  \nRMB \n\nNet revenues: \n   \n   \n  \n\nThird-party revenues \n 463,457  \n 232,187  \n 114,793 \n\nInter-company revenues \n 41,335  \n 27,336  \n 24,601 \n\nTotal revenues \n 504,792  \n 259,523  \n 139,394 \n\nCost of revenues: \n    \n    \n   \n\nThird-party cost of revenues \n (92,297) \n (61,726) \n (7,922)\n\nInter-company cost of revenues \n (266,823) \n (121,990) \n (74,187)\n\nTotal cost of revenues \n (359,120) \n (183,716) \n (82,109)\n\nGross profit \n 145,672  \n 75,807  \n 57,285 \n\nOperating expenses: \n    \n    \n   \n\nThird-party operating expenses \n (138,799) \n (81,627) \n (58,794)\n\nInter-company operating expenses \n 286  \n \n-\n  \n \n-\n \n\nTotal operating expenses \n (138,513) \n (81,627) \n (58,794)\n\nOther income, net \n 961  \n 592  \n 298 \n\nProfit/(Loss) from operations \n 8,120  \n (5,228) \n (1,211)\n\nNon-operating expense \n (15,744) \n (419) \n (11,304)\n\nLoss before income tax expenses \n (7,624) \n (5,647) \n (12,515)\n\nIncome tax benefits \n 38  \n \n-\n  \n (1,227)\n\nShare of results of equity investees \n 50  \n (22) \n 242 \n\nNet loss \n (7,536) \n (5,669) \n (13,500)\n\n  \n    \n    \n   \n\nCash flows from operating activities: \n    \n    \n   \n\nNet cash provided by transactions with external parties \n 244,798  \n 116,914  \n 72,165 \n\nNet cash used in transactions with the Company’s entities \n (717,589) \n (175,936) \n (124,905)\n\nNet cash used in operating activities \n (472,791) \n (59,022) \n (52,740)\n\nCash flows from investing activities: \n    \n    \n   \n\nOther investing activities \n 5,219  \n (1,672) \n 23,717 \n\nCash flows of loan funding provided to the Group’s entities, net of repayments received \n \n-\n  \n \n-\n  \n (17,068)\n\nNet cash generated from/ (used in) investing activities \n 5,219  \n (1,672) \n 6,649 \n\nCash flows from financing activities: \n    \n    \n   \n\nOther financing activities \n 3,032  \n (20,150) \n 8,000 \n\nCash flows of loan funding received from the Company's entities, net of repayments made \n 468,214  \n 75,955  \n 35,456 \n\nNet cash generated from financing activities \n 471,246  \n 55,805  \n 43,456 \n\n \n\nF-17\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies**\n\n \n\n**(a)****Basis of preparation**\n\n \n\nThe accompanying consolidated financial\nstatements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).\nSignificant accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are summarized\nbelow.\n\n \n\n**(b)****Basis of consolidation**\n\n \n\nThe Company’s consolidated financial\nstatements include the financial statements of the Company, its subsidiaries, the consolidated VIEs and VIEs’ subsidiaries for which\nthe Company is the primary beneficiary.\n\n \n\nA subsidiary is an entity in which\nthe Company, directly or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority\nof the members of the board of directors, to cast a majority of votes at the meeting of the board of directors or to govern the financial\nand operating policies of the investee under a statute or agreement among the shareholders or equity holders.\n\n \n\nA consolidated VIE is an entity in\nwhich the Company, or its subsidiaries, through Contractual Agreements, bears the risks of, and enjoys the rewards normally associated\nwith, ownership of the entity, and therefore the Company or its subsidiaries are the primary beneficiary of the entity.\n\n \n\nAll transactions and balances among\nthe Company, its subsidiaries, the consolidated VIEs and VIEs’ subsidiaries have been eliminated upon consolidation*.*\n\n \n\n**(c)****Business combination and non-controlling interests**\n\n \n\nThe Company accounts for its business\ncombinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805,\n*Business Combinations*. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets\ntransferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable\nto the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their\nfair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs\nof acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in\nthe acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition\nis less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statements\nof operations and comprehensive loss as a bargain purchase gain. During the measurement period, which can be up to one year from the acquisition\ndate, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill or bargain\npurchase gain. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed,\nwhichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations and comprehensive loss.\n\n \n\nIn a business combination achieved\nin stages, the Company re-measures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date\nfair value and the re-measurement gain or loss, if any, is recognized in the consolidated statements of operations and comprehensive loss.\n\n \n\nWhen there is a change in ownership\ninterests or a change in contractual arrangements that results in a loss of control of a subsidiary or consolidated VIE, the Company deconsolidates\nthe subsidiary or consolidated VIE from the date control is lost. Any retained non-controlling investment in the former subsidiary or\nconsolidated VIE is measured at fair value and is included in the calculation of the gain or loss upon deconsolidation of the subsidiary\nor consolidated VIE.\n\n \n\nFor the Company’s consolidated\nsubsidiaries, VIEs and VIEs’ subsidiaries, non-controlling interests are recognized to reflect the portion of their equity that\nis not attributable, directly or indirectly, to the Company as the controlling shareholder. Non-controlling interests are classified as\na separate line item in the equity section of the Company’s consolidated balance sheets and have been separately disclosed in the\nCompany’s consolidated statements of operations and comprehensive loss to distinguish the interests from that of the Company.\n\n \n\nF-18\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies (continued)**\n\n** **\n\n**(d)****Use of estimates**\n\n \n\nThe preparation of the Company’s\nconsolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the\nreported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements\nand the reported amounts of revenues and expenses during the reporting period.\n\n \n\nThe Company believes that assessment\nfor impairment of long-lived assets, valuation of available-for-sale investment, useful lives of property and equipment, useful lives\nof intangible assets, inventory valuation, valuation allowance of deferred tax asset, incremental borrowing rate of operating lease and\nallowance for expected credit loss require significant judgments and estimates used in the preparation of its consolidated financial statements.\n\n \n\nManagement bases\nthe estimates on historical experience and on various other assumptions as discussed elsewhere to the consolidated financial statements\nthat are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.\nOn an ongoing basis, management evaluates its estimates based on information that is currently available. Changes in circumstances, facts\nand experience may cause the Company to revise its estimates. Changes in estimates are recorded in the period in which they become known.\nActual results could materially differ from these estimates.\n\n \n\n**(e)****Functional currency and foreign currency translation**\n\n \n\nThe Company’s reporting currency\nis Renminbi (“RMB”). The functional currency of the Company’s entities incorporated in Cayman Islands, British Virgin\nIslands and Hong Kong is the United States dollars (“US$”). The Company’s PRC subsidiaries, consolidated VIEs and VIEs’\nsubsidiaries determined their functional currency to be RMB. The determination of the respective functional currency is based on the criteria\nof ASC 830, *Foreign Currency Matters*.\n\n \n\nTransactions denominated in other\nthan the functional currencies are translated into the functional currency of the entity at the exchange rates prevailing on the transaction\ndates. Financial assets and liabilities denominated in other than the functional currency are translated at the balance sheet date exchange\nrate. The resulting exchange differences are included in the consolidated statements of operations and comprehensive loss as other gains,\nnet.\n\n \n\nThe financial statements of the Company\nare translated from the functional currency into RMB. Assets and liabilities denominated in foreign currencies are translated into RMB\nusing the applicable exchange rates at the balance sheet date. Equity accounts other than earnings generated in current period are translated\ninto RMB at the appropriate historical rates. Revenues, expenses, gains and losses are translated into RMB using the periodic average\nexchange rates. The resulting foreign currency translation adjustments are recorded in accumulated other comprehensive loss as a component\nof shareholders’ equity.\n\n \n\nThe exchange rates used for translation\non March 31, 2025 and 2026 were US$1.00= RMB 7.1782 and RMB 6.9194, respectively, representing the index rates stipulated by the People's\nBank of China.\n\n** **\n\n**(f)****Convenience translation**\n\n \n\nTranslations of the consolidated balance\nsheets, the consolidated statements of operations and comprehensive loss and the consolidated statements of cash flows from RMB into US$\nas of and for the year ended March 31, 2026 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB\n6.8980, representing the certificated exchange rate published by the Federal Reserve Board. No representation is made that the RMB amounts\ncould have been, or could be, converted, realized or settled into US$ at that rate on March 31, 2026, or at any other rate.\n\n \n\n**(g)****Fair value of financial instruments**\n\n \n\nAccounting guidance defines fair value\nas the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants\nat the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded\nat fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions\nthat market participants would use when pricing the asset or liability.\n\n \n\nF-19\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies (continued)**\n\n \n\n**(g)****Fair value of financial instruments (continued)**\n\n \n\nThe established fair value hierarchy\nrequires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial\ninstrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair\nvalue measurement.\n\n \n\nThe three levels of inputs that may\nbe used to measure fair value:\n\n \n\n \nLevel 1 : \nQuoted prices (unadjusted) in active markets for identical assets or liabilities.\n\n \n \n \n\n \nLevel 2 : \nObservable, market-based inputs, other than quoted prices, in active markets for identical assets or liabilities.\n\n \n \n \n\n \nLevel 3 : \nUnobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.\n\n \n\nAccounting guidance also describes\nthree main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost\napproach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable\nassets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement\nis based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that\nwould currently be required to replace an asset.\n\n \n\nFinancial assets and liabilities of\nthe Company mainly consist of cash and cash equivalents, short-term investments, accounts\nreceivable, amounts due from related parties, prepayments and other current assets, available-for-sale investments, accounts payable,\nshort-term borrowings, derivative liabilities, accrued liabilities and other current liabilities, amounts due to related parties, and\nother debts.\n\n \n\nAs of March 31,\n2025 and 2026, except for available-for-sale investments and derivative liabilities, carrying values of cash and cash equivalents, short-term\ninvestments, accounts receivable, amounts due from related parties, certain prepayments and other\ncurrent assets, accounts payable, short-term borrowings, certain accrued liabilities and other current liabilities, amounts due\nto related parties and current portion of other debts approximated their fair values reported in the consolidated balance sheets due to\nthe short-term maturities of these instruments. The carrying value of long-term loan receivable, long-term borrowings and non-current\nportion of other debts approximated their fair values as of March 31, 2025 and 2026 as the interest rates and credit risk they bear reflect\nthe current market yield for comparable instruments. The Company reports derivative liabilities at fair value at each balance sheet date\nand change in fair value is reflected in “Fair value change of derivative liabilities” in the consolidated statements of operations\nand comprehensive loss. The Company reports available-for-sale investments at fair value at each balance sheet date with the aggregate\nunrealized gains and losses, net of tax, reflected in “Accumulated other comprehensive loss” in the consolidated balance sheets.\n\n \n\n**(h)****Cash and cash equivalents**\n\n \n\nCash and cash equivalents include\ncash on hand and time deposits placed with banks and third-party payment processors, which are unrestricted as to withdrawal or use, have\noriginal maturities of three months or less at the time of purchase and are readily convertible to known amounts of cash.\n\n \n\n**(i)****Short-term investments**\n\n \n\nShort-term investments comprise primarily\nof (i) cash deposits at fixed rates with original maturities of greater than three months, but less than 12 months and; (ii) the\ninvestments issued by commercial banks or other financial institutions with a variable interest rate indexed to the performance of underlying\nassets within one year.  \n\n** **\n\nF-20\n\n \n\n** **\n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies (continued)**\n\n \n\n**(j)****Accounts receivable, net**\n\n** **\n\nAccounts receivables are stated at\nthe amount management expects to collect from customers based on their outstanding invoices.\n\n \n\nCredit terms granted to business customers\nrange from 30 to 360 days.\n\n \n\nPrior to April 1, 2023, the Company\nmonitors the collection of its receivables and records allowance for specifically identified non-recoverable amounts, If the economic\nsituation and the financial condition of a customer deteriorate resulting in an impairment of the customer's ability to make payments,\nadditional allowances might be required. Receivable balances are written off when they are determined to be uncollectible.\n\n \n\nStarting from April 1, 2023, the Company\nadopted ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments”\n(“ASC Topic 326\"), which creates an impairment model that is based on expected losses rather than incurred losses. To estimate\nthe allowance for current expected credit losses (“CECL”). the Company has identified the relevant risk characteristics of\nits customers and the related receivables and other receivables which include but are not limited to geographic region and industry. Receivables\nwith similar risk characteristics have been grouped into pools. For each pool, the Company considers the past collection history, future\nforecasts and macroeconomic factors. Other key factors that influence the CECL, analysis include industry-specific factors and certain\nqualitative adjustments that could impact the Company's receivables. This is assessed at each period end based on the Company's specific\nfacts and circumstances.\n\n \n\nAs of April 1, 2023, the Company used\na modified retrospective approach to adopt ASC Topic 326, and the cumulative-effect to retained earnings was RMB2.8 million. CECL allowance\nat a reversal of RMB2.0 million and a reversal of RMB 0.1 million was credited to the consolidated statements of comprehensive loss\nfor the year end March 31, 2025 and 2026, respectively.\n\n** **\n\n**(k)****Inventories.net**\n\n \n\nInventories are stated at the lower\nof cost and net realizable value. Cost elements of our inventories comprise the purchase price of products, vendor rebates, shipping charges\nto receive products from the suppliers when they are embedded in the purchase price. Cost is determined using the first-in first-out method.\nProvisions are made for excessive, slow moving, expired and obsolete inventories as well as for inventories with carrying values in excess\nof market. Certain factors could impact the realizable value of inventory, so the Company continually evaluates the recoverability based\non assumptions about customer demand and market conditions. The evaluation may take into consideration historical usage, inventory aging,\nexpiration date, expected demand, anticipated sales price, new product development schedules, the effect new products might have on the\nsale of existing products, product obsolescence, customer concentrations, and other factors. The reserve or write-down is equal to the\ndifference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market\nconditions. If actual market conditions are less favorable than those projected by management, additional inventory reserves or write-downs\nmay be required that could negatively impact the Company’s gross margin and operating results. If actual market conditions are more\nfavorable, the Company may have higher gross margin when products that have been previously reserved or written down are eventually sold.\n\n** **\n\n**(l)****Property and equipment, net**\n\n \n\nProperty and equipment are carried\nat cost less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the following estimated\nuseful lives. The estimated useful lives are as follows: \n\n \n\n   Useful years\n\nWarehouse equipment  3 - 5 years\n\nFurniture, computer and office equipment  3 - 5 years\n\nVehicles  5 years\n\nMachinery and Equipment  5 years\n\nSoftware  10 years\n\nLeasehold improvements  Over the shorter of the expected life of leasehold improvements or the lease term\n\n \n\nExpenditures for maintenance and repairs\nare expensed as incurred. The gain or loss on the disposal of property and equipment is the difference between the net sales proceeds\nand the carrying amount of the relevant assets and is recognized in the consolidated statements of operations and comprehensive loss.\n\n** **\n\nF-21\n\n \n\n** **\n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies (continued)**\n\n** **\n\n**(m)****Intangible assets, net**\n\n \n\nIntangible assets purchased from third\nparties are initially recorded at cost. The Company performs valuation of the intangible assets arising from business combinations to\ndetermine the relative fair value to be assigned to each asset acquired. The intangible assets are amortized using the straight-line method\nover the estimated useful lives of the assets.\n\n \n\nThe estimated useful lives of intangible assets are as follows:\n\n \n\n   Useful years\n\nTrademark  10 years\n\nDealership   10 years\n\nLicense  4.5 years\n\n \n\nThe estimated life of amortized intangibles\nis reassessed if circumstances occur that indicate the life has changed.\n\n** **\n\n**(n)****Long-term investments**\n\n \n\nThe Company’s investments include equity method investments,\nequity securities with readily determinable fair values and available-for-sale securities.\n\n \n\nThe Company applies the equity method\nof accounting to account for an equity investment, in common stock or in-substance common stock, according to ASC 323 “Investment—Equity\nMethod and Joint Ventures”, over which it has significant influence but does not own a majority equity interest or otherwise control.\nUnder the equity method, the Company’s share of the post-acquisition profits or losses of the equity investees are recorded in share\nof results of equity investees in the consolidated statements of operations and comprehensive loss. The excess of the carrying amount\nof the investment over the underlying equity in net assets of the equity investee, if any, represents goodwill and intangible assets acquired.\nWhen the Company’s share of losses in the equity investee equals or exceeds its interest in the equity investee, the Company does\nnot recognize further losses, unless the Company has incurred obligations or made payments or guarantees on behalf of the equity investee.\n\n \n\nEquity securities with readily determinable\nfair values are measured and recorded at fair value on a recurring basis with changes in fair value, whether realized or unrealized, recorded\nthrough the income statement.\n\n \n\nDebt securities that the Company has\nthe intent to hold the security for an indefinite period or may sell the security in response to the changes in economic conditions are\nclassified as available-for-sale securities and reported at fair value. Unrealized gains and losses (other than impairment losses) are\nreported, net of the related tax effect, in other comprehensive loss. Upon sale, realized gains and losses are reported in net income\n(loss).\n\n \n\nThe Company continually reviews its\ninvestments to determine whether a decline in fair value to below the carrying value is other than temporary. The primary factors the\nCompany considers in its determination are the duration and severity of the decline in fair value; the financial condition, operating\nperformance and the prospects of the equity investee; and other company specific information such as recent financing rounds. If the decline\nin fair value is deemed to be other-than-temporary, the carrying value of the investment is written down to fair value.\n\n \n\nF-22\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies (continued)**\n\n \n\n**(o)****Impairment of long-lived assets other than goodwill**\n\n \n\nLong-lived assets are evaluated for\nimpairment whenever events or changes in circumstances (such as a significant adverse change to market conditions that will impact the\nfuture use of the assets) indicate that the carrying amount may not be fully recoverable or that the useful life is shorter than the Company\nhad originally estimated. When these events occur, the Company evaluates the impairment by comparing the carrying value of the assets\nto an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If\nthe sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Company recognizes an impairment\nloss based on the excess of the carrying value of the assets over the fair value of the assets.\n\n \n\n**(p)****Revenue recognition**\n\n \n\nIn May 2014, the FASB issued ASU No. 2014-09,\n“Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”) and subsequently, the FASB issued several\namendments which amends certain aspects of the guidance in ASC 2014-09 (ASU No. 2014-09 and the related amendments are collectively\nreferred to as “ASC 606”). According to ASC 606, revenue is recognized when control of the promised good or service is transferred\nto the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.\n\n \n\nConsistent with the criteria of Topic\n606, the Company follows five steps for its revenue recognition: (i) identify the contract(s) with a customer, (ii) identify\nthe performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the\nperformance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Revenue\narrangements with multiple performance obligations are divided into separate distinct goods or services. The Company allocates the transaction\nprice to each performance obligation based on the relative standalone selling price of the goods or services provided. The Company’s\nrevenues are primarily derived from (i) product sales and (ii) online marketing and information services and other revenue.\n\n \n\nWhen either party to a contract has\nperformed, the Company presents the contract in the statement of financial position as a contract asset or a contract liability, depending\non the relationship between the entity’s performance and the customer’s payment. A receivable is recorded when the Company\nhas an unconditional right to consideration. A right to consideration is unconditional if only the passage of time is required before\npayment of that consideration is due. A contract asset is recorded when the Company has transferred products or services to the customer\nbefore payment is received or is due, and the Company’s right to consideration is conditional on future performance or other factors\nin the contract. No contract asset was recorded as of March 31, 2024 and 2025. The Company’s contract liabilities consist of payments\nreceived or awards to customers (in the form of Boqii Beans) related to unsatisfied performance obligations at the end of the period.\nAs of April 1, 2024 and 2025, the Company’s total contract liabilities were RMB1.6 million and RMB1.8 million, respectively, of\nwhich RMB3.7 million and RMB1.0 million were recognized as revenue for the years ended March 31, 2025 and 2026. The Company’s total\nunearned revenue was RMB 1.9 million as of March 31, 2026.\n\n \n\nRevenue\nis recorded net of value-added tax.\n\n \n\nRevenue recognition\npolicies for each type of revenue stream are as follows:\n\n \n\nSales of merchandise\n\n \n\nThe\nCompany primarily sells pet products through online stores to individual online customers.\nBesides online sales, the Company also sells products through offline channels to its business customers and pet stores across the country.\nThe Company recognizes the product revenues from products sales on a gross basis as the Company is acting as a principal in these transactions.\nThe Company has obtained control of the products before they are transferred to customers. The Company is primarily obligated in these\ntransactions, is subject to inventory risk or has the ability to direct the use of inventory, and has latitude in establishing prices\nand selecting suppliers. Revenue is recognized when consumers physically accept the products after delivery, which is when the\ncontrol of products is transferred, and is recorded net of return allowances and rebates to pet stores.\n\n \n\nF-23\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies (continued)**\n\n** **\n\n**(p)****Revenue recognition (continued)**\n\n \n\nThe Company also enters into arrangements\nwith its business partners to sell their products on the Company’s online stores. The\nCompany considers the arrangements meet the indicators of consignment arrangement under ASC 606-10-55-80, because (i) the business\npartners do not relinquish control of the products, even though the Company has physical possession of the goods. The Company does\nnot control the underlying products, which are considered to be the business partners’ inventory until they are sold to the\nend consumers; (ii) the business partner retains the right to require the return of the goods held by the Company; (iii) the\nCompany has no obligation to pay for the products that are in its physical possession; and (iv) the\nCompany has no discretion in establishing prices of the products provided by its business partners. Upon successful sales, the Company\nwill charge the business partners a negotiated amount or a fixed rate commission fee based on the sales amount. Commission revenues are\nrecognized on a net basis at the point of consumers’ acceptance of products, net of return allowance.\n\n \n\nOnline marketing\nand information services and other revenue\n\n \n\nThe\nCompany provides online marketing and information services to third-party on the Company’s various channels and third-party platforms,\nincluding but not limited to advertising placements, organizing online and offline marketing campaigns featuring social media influencers\nand circulating marketing messages to end consumers. With respect to the Company’s marketing services, length of the periods over\nwhich services are provided are generally within months or less, revenue from such arrangements is recognized ratably over the service\nperiod, as the third-party simultaneously consumes the benefits when the advertisement is displayed or the campaign is ongoing.\n\n \n\nThe Company also provides warehouse\nservices. The warehouse services include warehousing, packaging, dispatching and other services. Revenue is primarily recognized when\nthe services are rendered.\n\n** **\n\n**(q)****Sales returns**\n\n** **\n\nThe Company\noffers online consumers an unconditional right of return for a period of seven days upon receipt of products. Return allowances, which\nreduce revenue and cost of sales, are estimated by categories of return policies offered to online customers, based on historical data\nthe Company has maintained, and subject to adjustments to the extent that actual returns differ or are expected to differ.\n\n** **\n\n**(r)****Sales incentives**\n\n \n\nThe Company\nadopted a customer reward program, under which the Company grants certain units (“Boqii Bean”) to its customers at its discretion\nin different situations. Boqii Beans are not redeemable for cash and can be used as a coupon for the customer’s future purchase\non the Boqii Marketplace and Boqii.com. The value of ten units of Boqii Bean is equivalent to one yuan before taking into account the\nimpact of breakage.\n\n** **\n\nF-24\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies (continued)**\n\n** **\n\n**(r)****Sales incentives (continued)**\n\n \n\nFor the Boqii\nBeans that are granted with concurrent revenue transactions, the allocated transaction price based on its relative standalone selling\nprice are recognized as reduction of the revenue and accrued for as contract liabilities. As customers redeem awards, the accrued liability\nis reduced correspondingly. For the Boqii Beans that are granted without concurrent revenue transactions, they are not accounted for when\ngranted and are recognized as a reduction of revenue when they are applied in future sales.\n\n \n\nThe Company\nalso has a coupon program, through which the Company grants coupons to online customers when they make a successful purchase order, finish\nfirst registration on Boqii Marketplace or comment on products. When a coupon is granted concurrent with a revenue transaction, the Company\naccounts for the estimated cost of future usage of the coupon as reduction of the revenue. When a coupon is not granted concurrent with\na revenue transaction, they are not accounted for when they are granted and are recognized as a reduction of revenue when they are applied\nin future sales.\n\n** **\n\n**(s)****Cost of revenue**\n\n** **\n\nCost of revenue consist of cost\nof product sales of RMB560.1 million, RMB360.1 million and RMB 299.6 million for the years ended March 31, 2024, 2025 and 2026,\nrespectively, and cost of services of RMB 8.5 million, RMB 8.2 million and RMB 10.5 million for the years ended March 31, 2024, 2025\nand 2026, respectively. Cost of product sales comprise the purchase price of products, vendor rebates and inventory write-downs.\nCost of products does not include other costs such as shipping and handling expense, payroll and benefits of logistic staff, and\nlogistic centers rental expenses. Cost of service consists of the advertising and promotion costs, employee wages and benefits in\nconnection with the Company’s provision of marketing and information services including the fees that the Company paid to\nthird party for advertising and promotion on various online and offline channels.\n\n \n\n**(t)****Vendor rebates**\n\n \n\nThe Company\nperiodically receives consideration from certain vendors, representing rebates for products sold over a period of time. The Company accounts\nfor the rebates received from its vendors as a reduction to the price it pays for the products purchased. Rebates are earned based on\nreaching minimum purchased thresholds for a specified period. When volume rebates can be reasonably estimated based on the Company’s\npast experience, current forecasts and purchase volume, a portion of the rebate is recognized as the Company makes progress towards the\npurchase threshold.\n\n** **\n\n**(u)****Fulfillment expenses**\n\n \n\nFulfillment\ncosts primarily represent warehousing, shipping and handling expenses for dispatching and delivering products to consumers, employee wages\nand benefits for the relevant personnel, customs clearance expenses and other related transaction costs.\n\n** **\n\n**(v)****Sales and marketing expenses**\n\n \n\nSales and\nmarketing expenses comprise primarily of advertising expenses, third-party platforms commission fee, employee wages, rental expenses and\nbenefits for sales and marketing staff, depreciation expenses and other daily expenses which are related to the sales and marketing functions.\n\n \n\nAdvertising\nexpenses consist primarily of customer acquisition cost and costs for the promotion of corporate image and product marketing. The Company\nexpenses all advertising costs as incurred and classifies these costs under sales and marketing expenses. For the years ended March 31,\n2024, 2025 and 2026, the advertising expenses were RMB26 million, RMB31 million and RMB 47 million, respectively.\n\n \n\nF-25\n\n \n\n** **\n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n** **\n\n**2.****Principal Accounting Policies (continued)**\n\n** **\n\n**(w)****General and administrative expenses**\n\n \n\nGeneral and administrative expenses\nconsist of employee wages and benefits for corporate employees, research and development expenses and other expenses which are related\nto the general corporate functions, including accounting, finance, tax, legal and human resources, costs associated with use by these\nfunctions of facilities and equipment, such as depreciation expenses, rental and other general corporate related expenses. For the years\nended March 31, 2024, 2025 and 2026, the research and development were RMB2.2 million, RMB 1.5 million and RMB 0.2 million, respectively.\n\n** **\n\n**(x)****Leases**\n\n \n\nThe Company applied ASC 842, “Leases”,\nby using the optional transition method at the adoption date without recasting comparative periods. The Company determines if an arrangement\nis a lease at inception. Operating leases are primarily for office and warehouse space and are included in operating lease right-of-use\n(“ROU”) assets, operating lease liabilities, current and operating lease liabilities, non-current on its consolidated balance\nsheets.\n\n \n\nROU assets represent the Company’s\nright to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments\narising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease\npayments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is\nreasonably certain that it will exercise that option, if any. As the Company’s leases do not provide an implicit rate, the Company\nuses its incremental borrowing rate, which it calculates based on the credit quality of the Company and by comparing interest rates available\nin the market for similar borrowings, and adjusting this amount based on the impact of collateral over the term of each lease. Lease expense\nfor lease payments is recognized on a straight-line basis over the lease term.\n\n \n\nFor operating leases with a term of\none year or less, the Company has elected to not recognize a lease liability or ROU asset on its consolidated balance sheet. Instead,\nit recognizes the lease payments as expense on a straight-line basis over the lease term. Short-term lease costs are immaterial to its\nconsolidated statements of operations and comprehensive loss and cash flows.\n\n** **\n\n**(y)****Government grants**\n\n \n\nThe Company’s PRC based subsidiaries\nreceived government subsidies from certain local governments. The government subsidies are granted from time to time at the discretion\nof the relevant government authorities. These subsidies are granted for general corporate purposes and to support the Company’s\nongoing operations in the region. Cash subsidies are recorded in other income, net on the consolidated statements of operations and comprehensive\nloss when received and when all conditions for their receipt have been satisfied. The Company recognized government subsidies of RMB3.0\nmillion, RMB 0.4 million and RMB 0.3 million for the years ended March 31, 2024, 2025 and 2026, respectively.\n\n** **\n\n**(z)****Income taxes**\n\n \n\nCurrent income taxes are recorded\nin accordance with the regulations of the relevant tax jurisdiction. The Company accounts for income taxes under the asset and liability\nmethod in accordance with ASC 740, *Income Tax*. Under this method, deferred tax assets and liabilities are recognized for the tax\nconsequences attributable to differences between carrying amounts of existing assets and liabilities in the financial statements and\ntheir respective tax basis, and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates\nexpected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect\non deferred taxes of a change in tax rates is recognized in the consolidated statements of operations and comprehensive loss in the period\nof change. Valuation allowances are established when necessary to reduce the amount of deferred tax assets if it is considered more likely\nthan not that amount of the deferred tax assets will not be realized.\n\n \n\nF-26\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies (continued)**\n\n** **\n\n**(z)****Income taxes (continued)**\n\n* *\n\n*Uncertain tax positions*\n\n \n\nThe Company recognizes in its consolidated\nfinancial statements the benefit of a tax position if the tax position is “more likely than not” to prevail based on the facts\nand technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured\nat the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. The Company estimates\nits liability for unrecognized tax benefits which are periodically assessed and may be affected by changing interpretations of laws, rulings\nby tax authorities, changes and/or developments with respect to tax audits, and expiration of the statute of limitations. The ultimate\noutcome for a particular tax position may not be determined with certainty prior to the conclusion of a tax audit and, in some cases,\nappeal or litigation process. The actual benefits ultimately realized may differ from the Company’s estimates. As each audit is\nconcluded, adjustments, if any, are recorded in the Company’s consolidated financial statements in the period in which the audit\nis concluded. Additionally, in future periods, changes in facts, circumstances and new information may require the Company to adjust the\nrecognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized\nin the period in which the changes occur. As of March 31, 2025 and 2026, the Company did not have any material unrecognized uncertain\ntax positions.\n\n** **\n\n**(aa)****Share-based compensation**\n\n \n\nThe Company follows ASC 718 to determine\nwhether a share option should be classified and accounted for as a liability award or equity award. All grants of share-based awards to\nemployees, management and nonemployees classified as equity awards are recognized in the financial statements based on their grant date\nfair values which are calculated using an option pricing model.\n\n \n\nEmployees’ share-based compensation\nawards are measured at the grant date fair value of the awards and recognized as expenses (a) immediately at the grant date if no vesting\nconditions are required; or (b) for share-based awards granted with only service conditions, using the graded vesting method, net of estimated\nforfeitures, over the vesting period; or (c) for share-based awards granted with service conditions and the occurrence of an initial public\noffering (“IPO”) as performance condition, cumulative share-based compensation expenses for the options that have satisfied\nthe service condition should be recorded upon the completion of the IPO, using the graded vesting method.\n\n \n\nUnder ASC 718, the Company applies\nthe Binominal option pricing model in determining the fair value of options granted. ASC 718 requires forfeiture rates to be estimated\nat the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share-based\ncompensation expense is recorded net of estimated forfeitures such that expense is recorded only for those share-based awards that are\nexpected to vest.\n\n \n\n**(ab)****Net loss per share**\n\n \n\nBasic loss per share is computed by\ndividing net loss attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the\nyear using the two-class method. Using the two-class method, net profit/loss is allocated between ordinary shares and other participating\nsecurities (i.e. preferred shares) based on their participating rights.\n\n \n\nDiluted loss per share is calculated\nby dividing net loss attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any,\nby the weighted average number of ordinary and dilutive ordinary equivalents shares outstanding during the year/period. Ordinary share\nequivalents consist of the ordinary shares issuable in connection with the Company’s convertible redeemable preferred shares using\nthe if-converted method, and ordinary shares issuable upon the conversion of the share options, using the treasury stock method. Ordinary\nequivalent shares are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would\nbe anti-dilutive.\n\n** **\n\nF-27\n\n \n\n** **\n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies (continued)**\n\n** **\n\n**(ac)****Comprehensive loss**\n\n \n\nComprehensive loss is defined as the\nchanges in shareholders’ equity of the Company during a period transactions and other events and circumstances excluding transactions\nresulting from investments from shareholders, distributions to shareholders, accretions on convertible redeemable preferred shares and\nmodification and extinguishment of convertible redeemable preferred shares. Comprehensive loss for the periods presented includes net\nloss, foreign currency translation adjustments and unrealized securities holding gain losses.\n\n** **\n\n**(ad)****Segment reporting**\n\n \n\nASC 280, Segment\nReporting, establishes standards for companies to report in their financial statement information about operating segments, products,\nservices, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial\ninformation is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing\nperformance.\n\n \n\nThe Company’s\nchief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM reviews the consolidated net loss that is\nreported on the consolidated statements of comprehensive loss to assess performance and make decisions about allocating resources for\nthe Company’s single reportable segment. This segment is engaged in pet products sales and online marketing and information services\nand other revenue, The Company derives revenue in the PRC and manages the business activities on a consolidated basis.\n\n \n\nThe primary\nmeasure of segment profitability for the Company operating segment is consolidated net loss. Consolidated net loss is used by the CODM\nto monitor budget versus actual results as well as comparation with the Company’s competitors, which are used in assessing performance\nof the segment. Significant segment expenses reviewed by the CODM on a regular basis included within net loss include cost of revenues,\nfulfillment expenses, sales and marketing expenses, and general and administrative expenses which are consistent with those presented\non the Company’s consolidated statements of comprehensive loss. Other segment items within consolidated net loss include impairment\nof goodwill, other income, net, interest income, interest expense, other gains/(loss), net and fair value change of derivative liabilities.\n\n \n\nThe Company\nmanages assets on a consolidated basis as reported on the consolidated balance sheets. The Company’s long-lived assets are substantially\nall located in the PRC and substantially all the Company’s revenues are derived from within the PRC, therefore, no geographical\nsegments are presented.\n\n** **\n\n**(ae)****Recent accounting pronouncements**\n\n \n\nThe Company qualifies as an “emerging\ngrowth company”, or EGC, pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. As an EGC, the\nCompany does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise\nrequired to comply with such new or revised accounting standards. The Company adopts the following standards based on extended transition\nperiod provided to private companies or early adopts as necessary as permitted by the respective standards.\n\n \n\nNew\nand Amended Standards Adopted by the Company: In October 2021, the FASB issued ASU 2021-08, “Business Combinations\n(Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which require that an entity\n(acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic\n606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated\nthe contracts. The amendments in this Update also provide certain practical expedients for acquirers when recognizing and measuring acquired\ncontract assets and contract liabilities from revenue contracts in a business combination. The standard is effective for interim and annual\nperiods beginning after December 15, 2022, with early adoption permitted. The Company adopted this update in the first quarter of\n2023 and the adoption of this standard did not have a material impact on the Company’s disclosures.\n\n \n\nF-28\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**2.****Principal Accounting Policies (continued)**\n\n** **\n\n**(ae)****Recent accounting pronouncements (continued)**\n\n \n\nNew and Amended Standards Adopted\nby the Company (continued):\n\n \n\nIn March 2022, the FASB issued ASU\n2022-02, Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates the accounting guidance for troubled debt restructurings\nby creditors that have adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU also enhances the disclosure\nrequirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. In addition,\nthe ASU amends the guidance on vintage disclosures to require entities to disclose current period gross write-offs by year of origination\nfor financing receivables and net investments in leases within the scope of ASC 326-20. The ASU is effective for annual periods beginning\nafter December 15, 2022, including interim periods within those fiscal years. Adoption of the ASU would be applied prospectively. The\nCompany adopted this update in the first quarter of 2023 and the adoption of this standard did not have a material impact on the Company’s\ndisclosures.\n\n \n\nIn June 2022, the FASB issued ASU\n2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The\nupdate clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the\nequity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate\nunit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity\nsecurities subject to contractual sale restrictions. For public business entities, the Board decided that the amendments in this Update\nare effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities,\nthe amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early\nadoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The\nCompany adopted this ASU from April 1, 2024, which did not have a material impact on the Company’s consolidated financial statements.\n\n \n\nIn November 2023, the FASB issued\nASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements\nby requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker\n(“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure\nof the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a\nsegment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual\nperiods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the\nASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. This\nASU will likely result in the Company including the additional required disclosures when adopted. The Company adopted this ASU beginning\nApril 1, 2024 on a retrospective basis for all periods presented, which did not have a material impact on the Company’s consolidated\nfinancial statements.\n\n \n\nIn December 2023, the FASB issued ASU\n2023-09, *Income Taxes (Topic 740): Improvements to Income Tax Disclosures*, which enhances the transparency of income tax disclosures\nby requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes\npaid disaggregated by jurisdiction. Early adoption is permitted in any annual period in which financial statements have not yet been issued\n(or made available for issuance), either prospectively or retrospectively. The standard is effective for the Company for year ending March\n31, 2026. This ASU is currently not expected to have a material impact on the Company’s consolidated financial statements.\n\nF-29\n\n \n\n \n\n**BOQII\nHOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**3.****Risks and Concentration**\n\n** **\n\n**(a)****Foreign currency exchange rate risk**\n\n \n\nThe Company may experience economic\nlosses and negative impacts on earnings and equity as a result of fluctuations in the exchange rate between the US$ and the RMB. The depreciation\nof RMB against US$ was approximately 1.7% in 2024. The depreciation of RMB against US$ was approximately 1.5% in 2025. The appreciation\nof RMB against US$ was approximately 3.6% in 2026. It is difficult to predict how market forces or the PRC or the U.S. government policy\nmay impact the exchange rate between RMB and US$ in the future.\n\n** **\n\n**(b)****Interest rate risk**\n\n \n\nInterest rate risk is the risk that\nthe fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s\ninterest rate risk arises primarily from long-term borrowings. Borrowings issued at variable rates and fixed rates expose the Company\nto cash flow interest rate risk and fair value interest rate risk respectively. \n\n \n\n**(c)****Concentration of credit risk**\n\n \n\nFinancial instruments that potentially\nsubject the Company to the concentration of credit risks consist of cash and cash equivalents, short-term investment, accounts receivable\nand amounts due from related parties. The maximum exposures of such assets to credit risk are their carrying amounts as of the balance\nsheet dates. The Company deposits its cash and cash equivalents and short-term investment with financial institutions located in jurisdictions\nwhere the subsidiaries are located. The Company believes that no significant credit risk exists as these financial institutions have high\ncredit quality.\n\n \n\nAccounts receivables are typically\nunsecured and are derived from revenue earned through third-party consumers. The Company conducts credit evaluations of third-party customers\nand related parties, and generally does not require collateral or other security from its third-party customers and related parties. The\nCompany establishes an allowance for expected credit loss primarily based upon the age of the receivables and factors surrounding the\ncredit risk of specific third-party customers and related parties.\n\n** **\n\n**(d)****Concentration of customers and suppliers**\n\n \n\nSubstantially all revenue was derived\nfrom customers located in China. Revenues from Zhejiang HaoChao Network Technology Co., Ltd accounted for 11.4%, 28.0% and 47.5% of the\ntotal revenues of the Company for the years ended March 31, 2024, 2025, and 2026 respectively.\n\n \n\nThe information of the supplier with\ngreater than 10% of the total purchases of the Company for the years ended March 31, 2024, 2025 and 2026 was as follows:\n\n \n\n  \nYear Ended\n\nMarch 31,\n\n2024  \nYear Ended\n\nMarch 31,\n\n2025  \nYear Ended\n\nMarch 31,\n\n2026 \n\n  \nRMB  \nRMB  \nRMB \n\nRoyal Canin China Co., Ltd. \n 26% \n 33% \n 44%\n\n \n\nThere are no customers from whom accounts\nreceivable individually represent greater than 10% of the total accounts receivable of the Company as of March 31,2024 and 2025 respectively.\nRoyal Canin Pet Food (Shanghai) Co., Ltd. represent 12.6% of the Company's total accounts receivable as of March 31, 2026.\n\n \n\nAs of March 31, 2024, accounts payable\nto Heze Jianuojia Pet Products Co., Ltd accounted for 10% of the Company's aggregate accounts payable; As of March 31, 2025, accounts\npayable to Heze Jianuojia Pet Products Co., Ltd and Royal Canin China Co., Ltd accounted for 10% and 17% of the Company's aggregate accounts\npayable, respectively. As of March 31, 2026, accounts payable to Heze Jianuojia Pet Products Co., Ltd accounted for 14.3% of the Company's\naggregate accounts payable.\n\n \n\nF-30\n\n \n\n \n\n**BOQII\nHOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**4.****Cash and cash equivalents**\n\n \n\nCash and cash equivalents represent\ncash on hand and demand deposits placed with banks and third party-payment processors, which are unrestricted as to withdrawal or use.\nCash and cash equivalents balance as of March 31, 2025 and March 31, 2026 primarily consist of the following currencies:\n\n** **\n\n  \nAs of March 31, 2025  \nAs of March 31, 2026 \n\n  \n   \nRMB  \n   \nRMB \n\n  \nAmount  \nequivalent  \nAmount  \nequivalent \n\nRMB \n25,373  \n25,373  \n28,962  \n28,962 \n\nHong Kong dollars \n \n-\n  \n \n-\n  \n 11  \n 10 \n\nUS$ \n 1,851  \n 13,286  \n 2,956  \n 20,455 \n\nTotal \n    \n 38,659  \n    \n 49,427 \n\n** **\n\n**5.****Accounts receivable, net**\n\n \n\nAccounts receivable consist of the\nfollowing:\n\n \n\n  \nAs of\nMarch 31,  \nAs of\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nAccounts receivable - Product sales \n 26,739  \n 7,663 \n\nAccounts receivable - Online marketing and information service and other service \n 2,733  \n 4,467 \n\nAllowance of expected credit loss \n (154) \n (206)\n\nTotal \n 29,318  \n 11,924 \n\n \n\nMovement of allowance for expected\ncredit loss:\n\n \n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2024  \n2025  \n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nAt beginning of year \n 602  \n 486  \n 154 \n\nDisposal of a subsidiary \n \n-\n  \n \n-\n  \n (85)\n\nAddition/(reversal) \n (116) \n (332) \n 137 \n\nAt end of year \n 486  \n 154  \n 206 \n\n \n\nF-31\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**6.****Inventories, net**\n\n  \n\nInventories, net of inventory reserves\nconsist of the following：\n\n \n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nProducts \n 39,913  \n 26,174 \n\nPackaging materials and others \n 163  \n 33 \n\nTotal inventories, net of inventory reserves \n 40,076  \n 26,207 \n\n \n\nMovement of inventory provision /(reversal):\n\n** **\n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2024  \n2025  \n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nAt beginning of year \n 612  \n 389  \n 543 \n\nProvision/(reversal) \n (223) \n 154  \n 358 \n\nDisposal of a subsidiary \n \n-\n  \n \n-\n  \n (190)\n\nAt end of year \n 389  \n 543  \n 711 \n\n** **\n\nThe total amounts charged to the consolidated\nstatements of operations and comprehensive loss for provision/(reversal) of inventory reserves amounted to approximately RMB (0.22) million,\nRMB0.15 million and RMB 0.36 million, for the years ended March 31, 2024, 2025 and 2026, respectively.\n\n \n\n**7.****Prepayments and other current assets**\n\n \n\nThe prepayments and other current assets consist\nof the following:\n\n \n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nPrepayments for purchases of products (a) \n 60,581  \n 56,209 \n\nVendor rebate receivables (b) \n 6,446  \n 10,615 \n\nValue-added tax (“VAT”) deductible (c) \n 872  \n 903 \n\nLoan receivables (d) \n 4,532  \n 4,826 \n\nSales return assets \n 1,911  \n 20 \n\nDeposits (e) \n 1,152  \n 346 \n\nOthers \n 14,971  \n 14,717 \n\nTotal \n 90,465  \n 87,636 \n\n \n\n(a)Prepayments for purchases of products represent cash prepaid\nto the Company’s third-party brand partners for the procurement of products.\n\n \n\nF-32\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**7.****Prepayments and other current assets (continued)**\n\n** **\n\n(b)Vendor rebate receivables represent the rebates to be received\nby the Company from its suppliers after certain levels of purchases are achieved.\n\n \n\n(c)VAT recoverable represents the balances that the Company can\nutilize to deduct its value-added tax liabilities within the next 12 months.\n\n \n\n(d)The balance represents loan receivables due from certain third-party\ncompanies and individuals. From April 2022 to March 2025, the Company entered into several loan agreements with aggregate principal amount\nof RMB16.2 million. The maturity dates of these loans are from July 2023 to January 2027. The interest rates ranged from 0% to 4% per\nannum. As of March 31, 2025 and 2026, the balances of loan receivables were RMB4.5 million and RMB 4.8 million, respectively.\n\n \n\n(e)Between September and November 2023, the Company’s Hong\nKong subsidiary wired to a financial advisor an aggregate of approximately US$4.1 million as a deposit pursuant to an agreement entered\ninto with this financial advisor for the Company’s future mergers and acquisitions. The full amount of the deposit has been returned\nto the Company in June 2024.\n\n \n\n**8.****Property and equipment, net**\n\n \n\nProperty and equipment consist of the following:\n\n \n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nCost: \n    \n   \n\nWarehouse equipment \n 1,894  \n 603 \n\nFurniture, computer and office equipment \n 5,060  \n 3,197 \n\nVehicles \n 3,579  \n 2,556 \n\nLeasehold improvement \n 12,463  \n 905 \n\nSoftware \n 3,012  \n 2,938 \n\nMachinery and equipment \n 1,487  \n \n-\n \n\nTotal cost \n 27,495  \n 10,199 \n\nLess: Accumulated depreciation \n (23,246) \n (8,860)\n\nProperty and equipment, net \n 4,249  \n 1,339 \n\n \n\nThe total amounts charged to the consolidated\nstatements of operations and comprehensive loss for depreciation expenses amounted to approximately RMB2.7 million, RMB2.0 million and\nRMB 1.16 million for the years ended March 31, 2024, 2025 and 2026, respectively.\n\n \n\n**9.****Intangible assets, net**\n\n \n\nIntangible\nassets of the Company were mainly as follows:\n\n \n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nCost: \n    \n   \n\nTrademark \n 482  \n 469 \n\nLicense \n 3,530  \n \n-\n \n\nDealership \n 31,717  \n \n-\n \n\nTotal cost \n 35,729  \n 469 \n\nLess: Accumulated amortization \n (21,058) \n (375)\n\nIntangible assets, net \n 14,671  \n 94 \n\n \n\nF-33\n\n \n\n \n\n**BOQII\nHOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**9.****Intangible assets,\nnet (continued)**\n\n \n\nLicense\nand dealership resulting from the business combinations completed during the year ended March 31,2021 have\nbeen allocated to the single reporting unit of the Company. The total carrying amount of intangible assets resulting from the business\ncombinations were RMB14.7 million and RMB 0.1 million as of March 31, 2025 and 2026, respectively. The decrease was primarily due to the\ndeconsolidation of Nanjing Xingmu Biotechnology Co., Ltd. (“Nanjing Xingmu”) (see Note 15(a)). The license and dealership were\noriginally recognized from the business combination with Nanjing Xingmu and were derecognized upon the deconsolidation.\n\n \n\nThe total amortization expenses of\nthe intangible assets charged to the consolidated statements of operations and comprehensive loss amounted to approximately RMB3.7 million,\nRMB3.2 million and RMB 0.04 million for the years ended March 31, 2024, 2025 and 2026, respectively.\n\n \n\nThe\nannual estimated amortization expense for intangible assets subject to amortization for the succeeding five years is as follows:\n\n \n\n  \nAs of March 31, \n\n  \n2027  \n2028  \n2029  \n2030  \n2031 \n\nAmortization expenses \n 37  \n 22  \n 7  \n 7  \n 7 \n\n \n\n**10.****Long-term investments**\n\n \n\nThe\nCompany’s long-term investments consist of the following:\n\n \n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nEquity method investments \n 5,350  \n 5,417 \n\nAvailable-for-sale investments \n 59,624  \n 30,490 \n\nEquity securities with readily determinable fair values \n 12  \n 1 \n\nTotal \n 64,986  \n 35,908 \n\n \n\n**Equity\nmethod investments**\n\n \n\nThe Company applies\nequity method in accounting for its investments in entities in which the Company has the ability to exercise significant influence but\ndoes not have control. As of March 31, 2025 and 2026, the carrying value of the equity method\ninvestments were RMB5.4 million and RMB 5.4 million respectively, the change of which\nprimarily relates to the equity gain recognized and the following investment which was accounted for as equity method investment:\n\n \n\nThe\nCompany had 24.6% equity interest in Wuhan Chunzhijin Information Technology Co., Ltd. (“Chunzhijin”),\nwhich was accounted using equity method. The Company also provided loan to Chunzhijin (Note 25). In\nMarch 2023, the Company further invested in Chunzhijin to purchase 13.3%\nof the equity interest by waiving a loan receivable of RMB 3.4 million from Chunzhijin. After\nthis transaction, together with the previously held equity interest in Chunzhijin, the total equity interest held by the Company increased\nto 34.65%. The Company continues to have significant influence over Chunzhijin and accounts for this investment under equity method.\n\n** **\n\n**Available-for-sale\ninvestments**\n\n* *\n\nThe\nfollowing table summarizes the Company’s available-for-sale investments as of March 31, 2025:\n\n \n\n** **** **\n**Cost**** **** **\n**Gross\nunrealized\ngains**** **** **\n**Gross\nunrealized\nlosses**** **** **\n**Disposal of\nLong-term\ninvestments**** **** **\n**Fair value**** **\n\n  \n   \n   \n   \n  \n  \n\nUnlisted debt securities \n 69,572  \n \n    -\n  \n  (9,948) \n \n     -\n  \n 59,624 \n\n \n\nF-34\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**10.****Long-term\ninvestments (continued)**\n\n \n\n**Available-for-sale investments (continued)**\n\n \n\nThe\nfollowing table summarizes the Company’s available-for-sale investments as of March 31, 2026:\n\n \n\n** **** **\n**Cost**** **** **\n**Gross\nunrealized\ngains**** **** **\n**Gross\nunrealized\nlosses**** **** **\n**Disposal of\nLong-term\ninvestments**** **** **\n**Fair value**\n\n  \n    \n         \n    \n   \n\nUnlisted debt securities \n 69,572  \n \n-\n  \n (22,617) \n (16,465) \n30,490\n\n \n\nThe Company held\n6.2% shareholding of Qingdao Shuangan Biotechnology Co., Ltd (“Qingdao Shuangan”). According to the investment agreement,\nthe Company is entitled to redemption right after 48 months from the investment closing date. In April 2022, the Company transferred 0.31%\nshareholding of Qingdao Shuangan to a third-party investor with a cash consideration of RMB0.8 million. The Company recognized a\nRMB0.37 million investment gain in other gains, net. After the completion of the transaction, the shareholding of Qingdao Shuangan held\nby the Company was 5.9%. As of March 31, 2025, based on the valuation results, the Company re-measured the investment in Qingdao Shuangan\nat fair value of RMB16.5 million and the unrealized securities holding losses (net of tax) of RMB 1.3 million was recorded as other comprehensive\nloss. In February 2026, Shanghai Guangcheng, together with Guangdong Wens Investment Co., Ltd. (\"Wens\") and Qingdao Shuangan,\njointly entered into a Share Transfer Agreement, pursuant to which the Company agreed to transfer\nits equity interest in Qingdao Shuangan to Wens for a total consideration of RMB15.5 million. As a result, the Company derecognized\nthe long-term equity investment and recognized an investment gain of RMB5.9 million.\n\n \n\nIn\nOctober 2019, the Company purchased 23.64% shareholding of Beijing Petdog Technology Development Co., Ltd. (“Beijing Petdog”)\nwith a cash consideration of RMB50 million. According to the investment agreement, the Company is entitled to redemption right after 60\nmonths from the investment closing date. As of March 31, 2025 and 2026, based on the valuation results, the Company re-measured the investment\nat fair value of RMB31.3 million and RMB 17.8 million, respectively. For year ended March 31, 2025 and 2026, the unrealized securities\nholding losses (net of tax) of RMB1.6 million and RMB 13.5 million was recorded as other comprehensive loss, respectively.\n\n \n\nIn\nJuly and November 2021, the Company entered into investment agreements with Nanjing Animal Pharmaceutical. The Company provided Nanjing\nAnimal Pharmaceutical one-year loans amounting to RMB16 million carrying a simple interest of 8% per annum. Together with the loan, the\nCompany was also entitled a conversion right to convert all or part of the loan into 3.33% equity interest of Nanjing Animal Pharmaceutical\nduring the loan term. As of March 31, 2025, RMB 2.0 million was unpaid and recorded in accrued liabilities and other current liabilities.\nThe Company recognized the investment under available-for-sale securities. It was measured and recognized at fair value on a recurring\nbasis with changes in fair value recorded in other comprehensive loss. In April 2023, Nanjing Animal Pharmaceutical entered into an agreement\nwith the Company to repay principal loan of RMB6 million with interest of RMB0.8 million. In addition, Nanjing Animal Pharmaceutical paid\nadditional RMB1.06 million to the Company as compensation. The Company recorded the compensation income as other gains, net. As of March\n31, 2025 and 2026, based on the valuation results, the Company re-measured the investment at fair value of RMB11.9 million and RMB 12.7\nmillion, respectively. For year ended March 31, 2025 and 2026, the unrealized securities holding gains (net of tax) of RMB1.5 million\nand RMB 0.8 million was recorded as other comprehensive loss, respectively.\n\n \n\n**Equity\nsecurities with readily determinable fair values**\n\n \n\nThe\nfollowing table summarizes the Company’s equity securities with readily determinable fair values as of March 31, 2025:\n\n \n\n** **** **\n**Cost**** **** **\n**Gross\nunrealized\ngains**** **** **\n**Gross\nunrealized\nlosses**** **** **\n**Fair value**** **\n\n  \n   \n  \n   \n  \n\nListed company \n 1,292  \n \n        -\n  \n (1,280) \n 12 \n\n** **\n\nF-35\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n** **\n\n**10.****Long-term\ninvestments (continued)**\n\n \n\n**Equity securities with readily determinable fair values (continued)**\n\n \n\nThe\nfollowing table summarizes the Company’s equity securities with readily determinable fair values as of March 31, 2026:\n\n \n\n** **** **\n**Cost**** **** **\n**Gross unrealized gains**** **** **\n**Gross unrealized losses**** **** **\n**Fair value**** **\n\n  \n   \n   \n  \n  \n\nListed company \n 1,292  \n \n     -\n  \n (1,291) \n 1 \n\n** **\n\nIn\nJune 2021, the Company purchased 40,000 ordinary shares of Better Choice Company Inc. (“BTTR”), a company registered on NYSE\nAmerican and engaging in selling pet products with a total cash consideration of US$200,000. In March 2024, BTTR effected a 1-for-44 reverse\nstock split, pursuant to which the Company's shareholding was reduced from 40,000 to 910 shares. The Company measured and recorded\nthe investment at fair value on a recurring basis with changes in fair value, whether realized or unrealized, recorded through the income\nstatement. The change of fair value is reported in other losses, net.\n\n \n\n**11.****Other non-current assets**\n\n** **\n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nDeposits (a) \n 1,865  \n 1,660 \n\nLong-term loan receivables \n 54  \n \n-\n \n\n  \n 1,919  \n 1,660 \n\n** **\n\n(a)Deposits mainly consisted\nof rental deposits and deposit for online stores operated on third party platforms, which will be collected after one year.\n\n \n\n**12.****Accrued liabilities and other current liabilities**\n\n \n\nAccrued liabilities and other current liabilities consist\nof the following:\n\n \n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nLogistics expenses payables \n 2,919  \n 857 \n\nAdvances from customers \n 2,139  \n \n-\n \n\nPayable for investment \n 2,063  \n 2,063 \n\nRefund obligation of sales returns \n 2,282  \n \n-\n \n\nBonds payable-preferred shares (Note 18) \n \n-\n  \n 9,732 \n\nLoan for Yoken Series A-1 Warrant (Note 19) \n \n-\n  \n 13,000 \n\nProfessional service fee accruals \n 1,141  \n 1,405 \n\nTaxes Payable \n 577  \n 1,273 \n\nDeposit \n 282  \n 227 \n\nOthers \n 453  \n 2,800 \n\nTotal \n 11,856  \n 31,357 \n\n \n\nF-36\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**13.****Leases**\n\n** **\n\nAs\nof March 31, 2025 and 2026, the Company has operating leases recorded on its consolidated\nbalance sheet for certain office spaces and facilities that expire on various dates through 2029. The Company does not plan to cancel\nthe existing lease agreements for its existing facilities prior to their respective expiration dates. When determining the lease term,\nthe Company considers options to extend or terminate the lease when it is reasonably certain that it will exercise or not exercise that\noption. All of the Company’s leases qualify as operating leases.\n\n \n\n   As of\nMarch 31,   As of\n\nMarch 31, \n\n   2025   2026 \n\n   RMB   RMB \n\n         \n\nAssets        \n\nOperating lease right-of-use assets   3,084    3,739 \n\n           \n\nLiabilities          \n\nOperating lease liabilities, current   1,714    1,070 \n\nOperating lease liabilities, non-current   851    2,273 \n\nTotal operating lease liabilities   2,565    3,343 \n\nWeighted average remaining lease term (years)   1.42    2.91 \n\nWeighted average discount rate   4.59%   3.35%\n\n \n\nInformation\nrelated to operating lease activity during the years ended March 31, 2024, 2025 and 2026 are as follows:\n\n \n\n  \nYear ended\n\nMarch 31,\n\n2024  \nYear ended\n\nMarch 31,\n\n2025  \nYear ended\n\nMarch 31,\n\n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nOperating lease right-of-use assets obtained in exchange for lease obligations \n4,545  \n3,635  \n4,369 \n\n  \n    \n    \n   \n\nOperating lease related expenses \n    \n    \n   \n\nAmortization of right-of-use assets \n 17,948  \n 9,502  \n 2,690 \n\nInterest of lease liabilities \n 199  \n 318  \n 87 \n\n  \n 18,147  \n 9,820  \n 2,777 \n\n \n\n  \nYear ended\n\nMarch 31,\n\n2024  \nYear ended\n\nMarch 31,\n\n2025  \nYear ended\n\nMarch 31,\n\n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n      \n  \n\nOperating lease payments (included in measurement of lease liabilities) \n 17,977  \n 10,114  \n 2,702 \n\n \n\nF-37\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**13.****Leases (continued)**\n\n \n\nMaturities\nof lease liabilities were as follows:\n\n  \nYear ended\n\nMarch 31,\n\n2026 \n\n  \nRMB \n\nFor the year ending March 31, \n  \n\n2027 \n 1,441 \n\n2028 \n 1,147 \n\n2029 \n 1,055 \n\n2030 and thereafter \n 154 \n\nTotal lease payments \n 3,797 \n\nLess: imputed interest \n (454)\n\nTotal \n 3,343 \n\n \n\n**14.****Interest expense**\n\n \n\n  \nYear ended\n\nMarch 31,\n\n2024  \nYear ended\n\nMarch 31,\n\n2025  \nYear ended\n\nMarch 31,\n\n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nAmortization charges on promissory notes \n 5,058  \n 5,974  \n \n-\n \n\nInterest expense on bonds payable-preferred shares (Note 18) \n \n-\n  \n \n-\n  \n 419 \n\nInterest expense on borrowings \n 2,268  \n 532  \n 406 \n\nTotal \n 7,326  \n 6,506  \n 825 \n\n** **\n\n**15.****Other (loss)/gain net**\n\n** **\n\n  \nYear ended\n\nMarch 31,\n\n2024  \nYear ended\n\nMarch 31,\n\n2025  \nYear ended\n\nMarch 31,\n\n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nForeign exchange gains/(losses), net \n 1,089  \n (93) \n 2 \n\n(Loss)/ gain on disposal of other debts (Note 19) \n (1,425) \n \n-\n  \n 10,435 \n\nInvestment gain \n 1,820  \n 61  \n 5,928 \n\nGain on disposal of a subsidiary (a) \n 49  \n \n-\n  \n 13,001 \n\nDiscount on the ordinary shares issued by public offering (Note 17) \n (5,943) \n \n-\n  \n \n-\n \n\nOthers \n 416  \n (204) \n 137 \n\nTotal \n (3,994) \n (236) \n 29,503 \n\n \n\n(a)In November 2023, the Company disposed a subsidiary and recognized\nan investment gain of RMB 0.05 million.\n\n \n\nIn December 2025, Shanghai Guangcheng\nentered into an equity interest repurchase agreement (the “Repurchase Agreement”) with Nanjing Xingmu, two founders of Nanjing\nXingmu, and certain other parties. Under the Repurchase Agreement, the two founders of Nanjing Xingmu agreed to repurchase the 14.5% equity\ninterest in Nanjing Xingmu currently held by Shanghai Guangcheng for an aggregate cash consideration of RMB 12.5 million.\n\n \n\nIn addition, Shanghai Guangcheng and\nthe two founders of Nanjing Xingmu also entered into an agreement confirming that Shanghai Guangcheng ceased involvement in Nanjing Xingmu’s\nbusiness operations as a shareholder as of April 1, 2025. Accordingly, the assets, liabilities, and results of operations of Nanjing Xingmu\nare excluded from the Company’s financial results and the Company recognized an investment gain of RMB 13.0 million.\n\n \n\nF-38\n\n \n\n** **\n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted) **\n\n** **\n\n**16.****Income taxes**\n\n \n\n**Cayman Islands**\n\n \n\nUnder the current tax laws of Cayman\nIslands, the Company and its subsidiaries incorporated in the Cayman Islands are not subject to tax on income or capital gain. Additionally,\nthe Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.\n\n \n\n**Hong Kong**\n\n \n\nUnder the current Hong Kong Inland\nRevenue Ordinance, the Company’s subsidiaries incorporated in Hong Kong are subject to a two-tiered profits tax rate of 8.25% and\n16.5% on its taxable income generated from operations in Hong Kong. Additionally, payments of dividends by the subsidiaries incorporated\nin Hong Kong to the Company are not subject to income tax.\n\n** **\n\n **China**\n\n \n\nOn July 25, 2018, Boqii (Shanghai)\nInformation Technology Co., Ltd. (“Shanghai Boqii”) was entitled to be “Software Enterprises”. According to the\nEnterprise Income Tax (“EIT”) Law and relevant regulations in the PRC, from the year of 2018, Shanghai Boqii could enjoy a\ntax holiday of 2-year EIT exemption and subsequently 3-year 12.5% preferential tax rate and the certificate expired in October 2023.\n\n \n\nThe Company’s other subsidiaries,\nVIEs and VIEs’ subsidiaries established in the PRC are subject to the PRC general income tax rate of 25%.\n\n \n\n*The components of loss before tax are as follows:*\n\n \n\n  \nYear ended\n\nMarch 31,\n\n2024  \nYear ended\n\nMarch 31,\n\n2025  \nYear ended\n\nMarch 31,\n\n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nLoss before tax \n   \n   \n  \n\n(Loss) /gain from PRC entities \n (61,306) \n (45,345) \n 7,567 \n\nLoss from Cayman Islands and Hong Kong entities \n (8,569) \n (14,030) \n (8,419)\n\nTotal loss before tax \n (69,875) \n (59,375) \n (852)\n\n \n\nReconciliations of the differences\nbetween the income tax expenses of the Company and the PRC statutory EIT rate applicable to losses of the consolidated entities are as\nfollows:\n\n \n\n  \nYear ended\n\nMarch 31,\n\n2024  \nYear ended\n\nMarch 31,\n\n2025  \nYear ended\n\nMarch 31,\n\n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\n  \n   \n   \n  \n\nLoss before income taxes \n (69,875) \n (59,375) \n (852)\n\nIncome tax computed at respective applicable tax rates \n (17,469) \n (14,844) \n (213)\n\nEffect of different tax jurisdiction \n 6,976  \n 1,590  \n (4,167)\n\nSuper deduction for research and development expenses (a) \n (547) \n (363) \n (55)\n\nNon-deductible expenses \n 115  \n 112  \n (46)\n\nChange in valuation allowance \n 11,852  \n 14,306  \n 3,207 \n\nTotal \n 927  \n 801  \n (1,274)\n\n** **\n\n(a)According to the relevant laws and regulations promulgated\nby the State Administration of Tax of the PRC, from 2013 onwards, enterprises engaging in research and development activities are entitled\nto claim 200% of their qualified research and development expenses so incurred as tax deductible expenses. The additional deduction of\n100% of qualified research and development expenses (the “Super Deduction”) can be directly claimed in the annual EIT filing.\nFor the years end March 31, 2024, 2025 and 2026, the Super Deduction for research and development expenses available to the Company amounted\nto RMB0.5 million, RMB0.4 million and RMB 0.06 million, respectively.\n\n \n\nF-39\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n** **\n\n**16.****Income taxes (continued)**\n\n** **\n\n**China (continued)**\n\n** **\n\nThe provisions for income taxes for\nthe years ended March 31, 2024, 2025 and 2026 differ from the amounts computed by applying the EIT primarily due to change in valuation\nallowance provided and tax differential from certain subsidiaries with preferential tax rates of the Company.\n\n \n\nThe following table sets forth the\neffect of tax holiday effect on China operations:\n\n \n\n  \nYear ended\nMarch 31,\n2024  \nYear ended\nMarch 31,\n2025  \nYear ended\nMarch 31,\n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\n  \n    \n    \n   \n\nTax holiday effect \n 1,882  \n 2,649  \n 1,744 \n\nBasic and diluted net loss per share effect \n 3.2  \n 1.6  \n 0.5 \n\n \n\nReconciliations between the effective income tax\nrate and the PRC statutory income tax rates are as follows:\n\n \n\n  \nYear ended\nMarch 31,\n2024  \nYear ended\nMarch 31,\n2025  \nYear ended\nMarch 31,\n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\n  \n   \n   \n  \n\nPRC statutory income tax rates \n 25% \n 25% \n 25%\n\nTax holiday effect \n (3)% \n (4)% \n (204)%\n\nDifference in tax rates of subsidiaries outside PRC \n (5)% \n (4)% \n 395%\n\nSuper deduction for research and development expenses \n 1% \n 1% \n 6%\n\nNon-deductible expenses \n 0% \n 0% \n 5%\n\nChange in valuation allowance \n (17)% \n (16)% \n (377)%\n\nEffective income tax rate \n 1% \n 1% \n (150)%\n\n* *\n\nF-40\n\n \n\n* *\n\n**BOQII\nHOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n* *\n\n**16.****Income taxes (continued)**\n\n* *\n\n***China (continued)***\n\n* *\n\n*Deferred tax assets and deferred tax liabilities*\n\n \n\n*Composition of income tax expenses*\n\n  \n\nThe current and deferred portions of\nincome tax expenses included in the consolidated statements of operations and comprehensive loss are as follows:\n\n \n\n  \nYear ended\nMarch 31,\n2024  \nYear ended\nMarch 31,\n2025  \nYear ended\nMarch 31,\n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\n  \n   \n   \n  \n\nCurrent income tax (benefit)/expense \n (20) \n \n-\n  \n 73 \n\nDeferred tax (benefit)/expense \n (907) \n (801) \n 1,201 \n\nIncome tax (benefit)/expense, net \n (927) \n (801) \n 1,274 \n\n \n\nFor the years ended March 31, 2024,\n2025 and 2026, income taxes paid by the Company amounted to RMB nil, RMB nil and RMB 0.03 million in Hong Kong entities, respectively.\n\n \n\nDeferred taxes were measured using\nthe enacted tax rates for the periods in which they are expected to be reversed. The tax effects of temporary differences that give rise\nto the deferred tax asset and liabilities balances as of March 31, 2025 and 2026 are as follows:\n\n \n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\nDeferred tax assets: \n   \n  \n\nNet accumulated loss-carry forward \n 153,111  \n 117,560 \n\nDeferred deductible advertising expense \n 83  \n 1,055 \n\nAllowance \n 1,087  \n 1,021 \n\nContract liabilities \n 7  \n 7 \n\nAccruals \n 261  \n 352 \n\nFair Value Change \n \n-\n  \n \n-\n \n\nTotal \n 154,549  \n 119,995 \n\n  \n    \n   \n\nLess: Valuation allowance \n (154,549) \n (119,995)\n\nNet deferred tax asset \n \n-\n  \n \n-\n \n\n  \n    \n   \n\nDeferred tax liabilities: \n    \n   \n\nRecognition of intangible assets arising from asset acquisition and business combination \n (2,433) \n \n-\n \n\nNet deferred tax liabilities \n (2,433) \n \n-\n \n\n \n\nAs of March 31, 2025 and 2026,\nthe PRC entities of the Company had tax loss carryforwards of approximately RMB 612 million and RMB 470 million respectively, which can\nbe carried forward to offset taxable income. The carryforwards period for net operating losses under the EIT Law is five years. The net\noperating loss carry forward of the Company will expire in varying amounts between 2026 and 2030. Other than the expiration, there are\nno other limitations or restrictions upon the Company’s ability to use these operating loss carryforwards.\n\n \n\nF-41\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**16.****Income taxes (continued)**\n\n* *\n\n***China (continued)***\n\n* *\n\n*Deferred tax assets and\ndeferred tax liabilities (continued):*\n\n \n\nValuation allowance is provided against\ndeferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the\nfuture. In making such determination, the Company considered factors including future taxable income exclusive of reversing temporary\ndifferences and tax loss carry forwards. If events occur in the future that allow the Company to realize part or all of its deferred income\ntax, an adjustment to the valuation allowances will result in a decrease in tax expense when those events occur. As of March 31,\n2025 and 2026, valuation allowances of RMB154.5 million and RMB 120.0 million were provided because it was more likely than not that the\nCompany will not be able to utilize these tax losses carry forwards and other deferred tax assets generated by its subsidiaries and VIEs.\n\n \n\n*Movement of valuation allowance is as follows:*\n\n \n\n  \nYear ended March 31, 2024  \nYear ended March 31, 2025  \nYear ended March 31, 2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nBeginning balance \n166,669  \n155,255  \n154,549 \n\nChange of valuation allowance \n 11,852  \n 14,306  \n 3,207 \n\nWritten-off for expiration of net operating losses \n (23,266) \n (15,012) \n (37,761)\n\nDecrease of valuation allowances related to the disposal of a subsidiary \n \n-\n  \n \n-\n  \n \n-\n \n\nEnding balance \n 155,255  \n 154,549  \n 119,995 \n\n** **\n\n*Uncertain Tax Position*\n\n \n\nThe Company did not identify any significant unrecognized\ntax benefits for each of the periods presented. The Company did not incur any interest related to unrecognized tax benefits and did not\nrecognize any penalties as income tax expense.\n\n \n\n**17.****Ordinary Share**\n\n \n\nAs of March\n31, 2025, the Company had 2,798,074 Class A ordinary shares and 81,486 Class B ordinary shares and Nil Class C ordinary shares issued\nand outstanding, respectively. As of March 31, 2026, the Company had 4,298,128 Class A ordinary shares, 81,486 Class B ordinary shares\nand 500,000 Class C ordinary shares issued and outstanding, respectively.\n\n \n\nThe Class\nA Ordinary Shares, Class B Ordinary Shares and Class C Ordinary Shares have the same rights, preferences, privileges and restrictions,\nexcept for voting rights, conversion rights and dividend rights as described below.\n\n* *\n\n*Voting\nrights.* Each Class A Ordinary Share is entitled to one vote, each Class B Ordinary Share is entitled to twenty votes and each\nClass C Ordinary Share is entitled to one hundred votes on all matters submitted to a vote by the shareholders.\n\n* *\n\n*Conversion\nrights*. Class C Ordinary Shares are not convertible into Class A Ordinary Shares or Class B Ordinary Shares under any circumstances.\n\n* *\n\n*Dividend\nrights*. Holders of Class C Ordinary Shares are not entitled to receive any dividends, whether in cash, shares or otherwise. No\ndividend shall be declared or paid in respect of the Class C Ordinary Shares.\n\n \n\nSave and except\nfor the special voting rights, conversion rights and dividend rights as set out above, the Class A Ordinary Shares, the Class B Ordinary\nShares and the Class C Ordinary Shares rank pari passu with one another and have the same rights, preferences, privileges and restrictions.\n\n \n\nF-42\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**17.****Ordinary Share (continued)**\n\n** **\n\n**Initial public offering**\n\n \n\nIn October\n2020, the Company completed its IPO on the New York Stock Exchange of 7,000,000 American Depositary Shares (“ADSs”)\n(including 1,050,000 ADSs sold upon the full exercise of the underwriters’ over-allotment option) (each representing 0.75\nof one Class A ordinary share), for total ordinary shares offering of 5,250,000 shares at a price of US$10.00 per ADS.\nThe net proceeds raised from the IPO amounted to approximately US$61 million after deducting underwriting discounts and commissions\nand other offering expenses. The number of the ordinary shares are those prior to the 160-for-1 reverse share split approved by shareholders\non June 26, 2025.\n\n \n\nUpon the completion\nof the IPO, all series of redeemable convertible preferred shares of the Company were converted and designated as Class A ordinary\nshares with a par value of US$0.001 each on a one-for-one basis except for (i)10,340,000 shares of Series A preferred shares were automatic\nconverted into 7,844,137 ordinary shares on a 1: 0.76 basis, (ii) 9,067,384 shares of Series B preferred shares were automatic converted\ninto 8,557,980 ordinary shares on a 1:0.94 basis, (iii) 6,734,459 shares of Series C+ preferred shares were automatic converted into 6,883,520\nordinary shares on a 1:1.02 basis and (iv) 833,125 shares of Series C preferred shares were converted and designated as Class B ordinary\nshares with a par value of US$0.001 each on a one-for-one basis. 12,204,604 ordinary shares were designated as Class B ordinary share\non a one-for-one basis. The remaining ordinary shares were designated as Class A ordinary shares on a one-for-one basis. The number of\nthe ordinary shares are those prior to the 160-for-1 reverse share split approved by shareholders on June 26, 2025.\n\n \n\nIn February\n2021, the Company repurchased 521,924 shares of Class A ordinary shares from one of its shareholders with a consideration amounting to\nUS$4.8 million, the repurchased shares were cancelled thereafter. The number of the ordinary shares are those prior to the 160-for-1 reverse\nshare split approved by shareholders on June 26, 2025.\n\n \n\n**Public offering**\n\n** **\n\nOn\nJuly 28, 2023, the Company entered into a securities purchase agreement, as amended on August 16, 2023 with VG Master Fund SPC (“VG”),\nunder which, subject to specified terms and conditions, the Company may sell and issue in its discretion, (i) up to $7,000,000 of our\nAmerican depository shares and (ii) up to $35,000 of our ADSs being issued to VG as commitment shares, from time to time during the period\ncommencing on July 28, 2023 and ending on the earlier of (i) the date on which VG shall have purchased a number of shares pursuant to\nthe Purchase Agreement equal to $7,000,000 or (ii) July 28, 2024.The purchase price for ADS for each purchase will be equal to eighty\npercent (80%) of the lowest daily closing price of ADSs as reported on NYSE (as adjusted for any reorganization, recapitalization, non-cash\ndividend, share subdivision, share consolidation or other similar transaction) during the five business days beginning on and including\nthe date that the third-party receives the written Purchase Notice. As of March 31, 2024, the Company has sold a total of 4,500,000 of\nthe Company’s ADS with gross proceeds of US$3.3 million pursuant to the agreement. As of March 31, 2024, the Company has received\ngross proceeds of US$3.3 million. Accordingly, the Company recorded the discounted portion in other losses totaling RMB5.9 million. The\nnumber of the shares are those prior to the 160-for-1 reverse share split approved by shareholders on June 26, 2025.\n\n** **\n\nF-43\n\n \n\n \n\n**BOQII HOLDING LIMITED\nNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS\n(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**17.****Ordinary Share (continued)**\n\n \n\n**Private placement**\n\n \n\nIn September\n2023, the Company entered into an agreement with certain non-U.S. investors to sell an aggregate of 15,000,000 shares of\nClass A ordinary shares at a price of $0.233 with a total consideration amounting to US$3.5 million. As of March 31,2024, the Company\nissued a total of 15,000,000 shares of Class A ordinary shares to the investors and received full consideration from them.\n\n \n\nOn February,\n2025, the Company entered into securities purchase agreements with multiple unrelated third parties to sell an aggregate of 300,000,000\nshares of Class A ordinary shares at a price of $1.2 with a total consideration amounting to US$2.4 million. As of March 31, 2025, the\nCompany issued a total of 300,000,000 shares of Class A ordinary shares to the investors and received full consideration from them. The\nnumber of aforementioned ordinary shares are those prior to the 160-for-1 reverse share split approved by shareholders on June 26, 2025.\n\n \n\n**Reverse Split and ADS Termination**\n\n** **\n\nIn July, 2025,\nthe Company effected a reverse share split of its ordinary shares (the \"Reverse Split\") and terminated its ADS program (the\n\"ADS Termination\"), following shareholder approval on June 26, 2025. In connection with the ADS Termination, each outstanding\nADS was automatically cancelled and exchanged for 0.9375 of a Class A ordinary share, with fractional shares rounded up to the nearest\nwhole number. Concurrently, the par value of the ordinary shares was increased from $0.001 to $0.16 per share. Trading of the ADSs was\nsuspended, and the Class A ordinary shares commenced trading on the NYSE American on a post-Reverse Split basis under the same ticker\nsymbol \"BQ\".\n\n \n\n**Issuance of Class C Ordinary Shares**\n\n \n\nIn August,\n2025, the Company entered into a subscription agreement with certain non-U.S. investors, to sell an aggregate of 500,000 Class\nC ordinary shares at a price of $0.16 per share with a total consideration amounting to US$0.08 million. As of March 31, 2026, the Company\nissued the Class C shares to the investors and received full consideration from them.\n\n \n\n**Registered Direct Offering**\n\n \n\nIn November\n2025, the Company entered into securities purchase agreements with multiple unrelated third-party investors to sell an aggregate of 1,500,000\nClass A ordinary shares at a price of $2.80 per share, with a total consideration amounting to US$4.2 million. The transactions were structured\nas the sale of 698,000 shares and pre-funded warrants to purchase 802,000 shares, which were exercised immediately upon issuance. As of\nMarch 31, 2026, the Company issued a total of 1,500,000 Class A ordinary shares to the investors and received full consideration from\nthem.\n\n \n\nF-44\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**18.****Redeemable non-controlling interests**\n\n \n\nYoken Holding Limited (“Yoken”),\na wholly owned subsidiary of the Company issued 120,000 redeemable preferred shares amounting to RMB 6 million to a third-party investor\nin October, 2020. The preferred shares are redeemable at the holder’s option if Yoken fails to complete a qualified IPO in a pre-agreed\nperiod of time since its issuance with a redemption price measured by 10% interest per year. The preferred shares are therefore accounted\nfor as redeemable non-controlling interests in mezzanine equity and are accreted to the redemption value over the period starting from\nthe issuance date. The contract terms are the same as the Preferred Shares of the Company.\n\n \n\nFor the years ended March 31, 2024,\n2025 and 2026, the Company recognized accretion of RMB0.8 million, RMB0.8 million and RMB 0.5 million, respectively, to the respective\nredemption value of the redeemable non-controlling interest over the period starting from issuance date with a corresponding increase\nto the accumulated deficit. As of March 31, 2025 and 2026, the redeemable non-controlling interests was RMB8.8 million and Nil, respectively.\n\n \n\nThe preferred shares matured in October\n2025, as Yoken failed to complete a qualified IPO within the pre-agreed period. Upon maturity, the Company reclassified the redeemable\nnon-controlling interests totaling RMB9.3 million to bonds payable. Interest accrued from the maturity date through March 31, 2026,\namounting to RMB0.42 million, was recognized as interest expense and concurrently recorded as bonds payable, as of March 31,2026,\nthe amount of bonds payable is 9.7 million (Note 12).\n\n \n\nThe following tables provides details\nof the redeemable non-controlling interests activity for the years ended March 31, 2024, 2025 and 2026:\n\n \n\n  \n\n**Year Ended**\n\n**March 31, 2024**\n  \n\n**Year Ended**\n\n**March 31, 2025**\n  \n\n**Year Ended**\n\n**March 31, 2026**\n \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nBeginning balance \n 7,197  \n 7,963  \n 8,804 \n\nAccretion of redeemable non-controlling interests \n 766  \n 841  \n 509 \n\nThe maturity of redeemable non-controlling interests \n \n-\n  \n \n-\n  \n (9,313)\n\nEnding balance \n 7,963  \n 8,804  \n \n-\n \n\n \n\nF-45\n\n \n\n** **\n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n** **\n\n**19.****Borrowings, other debts and derivative liabilities**\n\n \n\n**Short-term borrowings**\n\n \n\nThe following table presents short-term\nborrowings from commercial banks, other institutions and individuals as of March 31, 2025 and 2026. Short-term borrowings include borrowings\nwith maturity terms shorter than one year:\n\n \n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \n **RMB**  \n **RMB** \n\n  \n    \n   \n\nBank borrowings \n 9,063  \n 16,000 \n\n \n\n*Bank borrowings*\n\n \n\nAs of March 31, 2025 and 2026, the\nCompany obtained short-term bank borrowings of RMB9.1 million and RMB 16.0 million in aggregate, and none of them were collateralized\nby short-term investments. The weighted average interest rate for the outstanding borrowings were approximately 3.4% and 3.3%, respectively. These short-term\nbank borrowings did not include any restrictive covenants.\n\n \n\nFuture principal maturities of short-term\nborrowings as of March 31, 2025 and 2026 are as followings:\n\n \n\n  \n\n**Year ended**\n\n**March 31,\n2025**\n  \n\n**Year ended**\n\n**March 31,\n2026**\n \n\n  \nRMB  \nRMB \n\nFor the year ending March 31, \n   \n  \n\n- Within 1 year \n 9,063  \n 16,000 \n\nTotal \n 9,063  \n 16,000 \n\n \n\nThe\nRMB5.0 million in short-term borrowings outstanding as of March 31, 2026, has been settled as of the date of this report.\n\n \n\nF-46\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**19.****Borrowings, other debts and derivative liabilities (continued)**\n\n \n\n**Other debts**\n\n** **\n\nOther debts – non-current consist of the following:\n\n** **\n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nLoan from Chong Li (a) \n \n-\n  \n \n-\n \n\nLoan for Yoken Series A-1 Warrant (b) \n 38,435  \n \n-\n \n\nPayable for investment \n 200  \n 200 \n\nTotal \n 38,635  \n 200 \n\n \n\n*(a)*Loan from Chong Li\n\n \n\nShanghai Guangcheng signed loan agreement\nwith Chong Li in March 2020 (“Loan from Chong Li”). The loan was interest-free with a principal amount of RMB128 million.\nThe term is 5 years and can be extended if agreed by both Chong Li and Shanghai Guangcheng. The Company accounted for Loan from Chong\nLi as a long-term debt initially recognized in the amount of RMB95 million (which is the present value of the principal amount of RMB128\nmillion) and subsequently measured at amortized cost. During the years ended March 31, 2025, the Company repaid the principal of Loan\nfrom Chong Li of RMB10.0 million. For the years ended March 31, 2025 and 2026, the Company recorded no interests for both periods.\n\n \n\nThe Company issued preferred shares\nto be settled by Superb Origin International Limited (“Superb Origin”, Chong Li is the 100% equity owner of Superb Origin)\nafter Shanghai Guangcheng repaid the Loan from Chong Li. The Company recorded a receivable for issuance of preferred shares in the amount\nof RMB95 million (which is the present value of the principal amount of RMB128 million) in mezzanine equity for the consideration of the\npreferred shares not yet received from Superb Origin. After the completion of the IPO in October 2020, preferred shares were automatically\nconverted into Class A ordinary shares. The Company then recorded the unreceived consideration from Superb Origin as receivable for issuance\nof ordinary shares under shareholders’ equity (Note 20).\n\n \n\nIn September 2023, Shanghai Guangcheng\nentered into a debt waiver agreement with Chong Li, which provided that Chong Li waivered RMB75.28 million of the borrowings payable not\nyet paid by Shanghai Guangcheng. At the same time, the Company entered into a debt waiver agreement with Superb Origin, which provided\nthat the Company would waive the outstanding investment amount of USD11.25 million payable by Superb Origin to it. Accordingly, the Company\noffset the waiver amount against “other debts” and “receivable for issuance of ordinary shares” accordingly. The\nCompany recorded an investment loss of RMB1.4 million on this transaction (Note 15).\n\n \n\nF-47\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**19.****Borrowings, other debts and derivative liabilities (continued)**\n\n* *\n\n**Other debts (continued)**\n\n \n\n*(b) Yoken Series A-1 Warrant*\n\n* *\n\nOn March 2, 2020, Yoken Holding\nLimited (“Yoken”), a wholly owned subsidiary of the Company, entered into a share purchase agreement with three\ninvestors (“Yoken Series A-1 SPA”). According to the Yoken Series A-1 SPA, Yoken will issue each investor a warrant\n(“Yoken Series A-1 Warrant”) to purchase certain quantity of Yoken’s Series A-1 Preferred Shares (“Yoken\nSeries A-1 Preferred Shares”). As the consideration for each Yoken Series A-1 Warrant, the respective investor shall provide a\nloan (“Loan for Yoken Series A-1 Warrant”) carrying a simple interest of 10% per annum to Chengdu Chongaita Information\nTechnology Co., Ltd. (“Chongaita”), a wholly owned PRC subsidiary of Yoken. Yoken will only issue the Yoken Series A-1\nWarrants after Chongaita has received all loan proceeds. Both the issuance of the Yoken Series A-1 Warrants and the receipt of the\nloan proceeds are closing conditions of the transactions in the Yoken Series A-1 SPA. The Company accounted for the loan as a term\nloan carrying an annual simple interest of 10%. As of March 31, 2020, the carrying value of the loan proceeds of Yoken Series A-1\nWarrant was RMB18 million.\n\n \n\nOn October 23, 2020, one of the investors\nterminated and entered into a new share purchase agreement with Yoken, pursuant to which 120,000 Yoken Series A-1 Preferred Shares were\nissued on October 23, 2020 for an aggregated consideration of RMB6 million. On the same day, the Company issued the remaining two investors\ntwo warrants to purchase up to 360,000 and 200,000 Yoken Series A-1 Preferred Shares at an exercise price per share of US$ 7.14 in connection\nwith a loan of RMB18 million (equivalent to US$2.5 million) and RMB10 million (equivalent to US$1.4 million) granted to Chongaita (“Loan\nfor Yoken Series A-1 Warrant”). As a debt modification, the Company reversed RMB1.4 million interest expense as other gains, net.\nThe Company recognized the Yoken Series A-1 Warrant and bifurcated the conversion feature as derivative liability out of the total consideration\nreceived. As of March 31, 2025 and 2026, the carrying value of Yoken Series A-1 Warrant were RMB38.4 million and RMB Nil million, respectively,\nand fair value of conversion feature were RMB0.005 million and RMB Nil million, respectively.\n\n \n\nOn November 24, 2025, Yoken and Chongaita\nentered into a redemption agreement. According to the redemption agreement, Yoken and Chongaita repurchased Yoken Series A-1 Warrant with\nan aggregate cash consideration of RMB 28.0 million. As of March 31, 2026, the Company had paid RMB15.0 million of such consideration.\nThe remaining unpaid balance of RMB13.0 million was recorded as Loan for Yoken Series A-1 Warrant (Note12), which was paid as of the annual\nreport. In connection with the redemption, the Company recognized an investment gain of RMB10.4 million**.**\n\n** **\n\n**Derivative liabilities**\n\n** **\n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2025  \n2026 \n\n  \nRMB  \nRMB \n\n  \n   \n  \n\nConversion feature of Yoken Series A-1 Warrant (a) \n 5  \n \n-\n \n\nTotal \n 5  \n \n-\n \n\n \n\nF-48\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**19.****Borrowings, other debts and derivative liabilities (continued)**\n\n* *\n\n**Derivative liabilities (continued)**\n\n \n\nFor the initial recognition of each\ndebt instrument that has a bifurcated derivative liability (i.e., embedded warrant or conversion feature), out of the total consideration\nreceived, the derivative liability is recognized at fair value and the remaining consideration (net of issuance costs) is then allocated\nto the host debt instrument. The derivative liability is subsequently carried at fair value with any changes in fair value recognized\ncurrently in the income statement. The host debt instrument is subsequently amortized using the effective interest rate method. Upon conversion\nof the host debt instrument into the Preferred Shares or debt repayment, both the host debt instrument and the respective derivative liability\nare subject to extinguishment accounting with a gain or loss recognized from the difference between the recoded values of both liabilities\nand the fair value of consideration given by the Company (i.e., the Preferred Shares or cash).\n\n \n\n(a) The warrant issued in connection\nwith Yoken Series A-1 Warrant is embedded instead of freestanding because it is (1) issued in connection with the instrument and (2) not\nseparately exercisable without terminating the debt instruments. Therefore, each combined instrument (loan with embedded warrant) is substantially\nsimilar to a convertible debt where the embedded warrant is similar to a conversion feature able to convert the debt instrument into the\nPreferred Shares.\n\n \n\nThe Company assessed the embedded warrant\nalong with the conversion features in Yoken Series A-1 Warrant and concluded that it is required to be bifurcated and accounted for separately\nas derivative liabilities. This is because (1) the embedded warrant or conversion feature, as an equity-linked feature, is not considered\nclearly and closely related to its debt host instrument, and (2) the redemption rights of the convertible Preferred Shares could give\nrise to net settlement of the conversion feature of the Preferred Shares.\n\n \n\n**20.****Receivable for issuance of ordinary shares**\n\n \n\nThe Company\nissued preferred shares to investors, which to be settled by the investors after Shanghai Guangcheng repaid the Loan from CMB and Loan\nfrom Chong Li to the investors. The Company recorded a receivable for issuance of preferred shares in mezzanine equity for the consideration\nof the preferred shares not yet received from the investors. After the completion of the IPO in October 2020, the preferred shares were\nautomatically converted into Class A ordinary shares. The Company accounted for the consideration of such-converted ordinary shares as\nreceivable for issuance of ordinary shares under shareholders’ equity.\n\n \n\nIn September\n2023, Shanghai Guangcheng entered into a debt waiver agreement with Chong Li, which provided that Chong Li waivered RMB75.28 million of\nthe borrowings payable not yet paid by Shanghai Guangcheng (Note 19). At the same time, the Company entered into a debt waiver agreement\nwith Superb Origin, which provided that the Company would waive the outstanding investment amount of USD11.25 million payable by Superb\nOrigin to it. Accordingly, the Company offset the waiver amount against “other debts” and “receivable for issuance of\nordinary shares” accordingly.\n\n \n\nDuring the\nyears ended March 31, 2025 and 2026, the Company received RMB 9.8 and RMB Nil million from the receivable for issuance of ordinary shares.\nFor the years ended March 31, 2025 and 2026, the Company recorded no interest income for both periods. As of March 31, 2025 and 2026,\nthe balances of receivable for issuance of ordinary shares were RMB6.2 million and RMB 6.2 million, respectively.\n\n \n\nF-49\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**21.****Share-based compensation**\n\n \n\nOn\nSeptember 27, 2012, the Company adopted 2012 Global Share Plan (the “2012 Plan”) and reserved 6,635 ordinary shares for share\noptions to be granted to certain of the Company’s employees and non-employees (the “Participants”). On August 1, 2018,\nthe Company adopted 2018 Global Share Plan (the “2018 Plan”) to replace the 2012 Plan and increased the reserved ordinary\nshares to 37,424 in total for future grants of share options. On September 1, 2020, the Company amended the 2018 Plan and increased\nthe authorized reserved shares from 37,424 to 56,174. In May 2022, the Company amended the 2018 Plan and increased 25,000 authorized reserved\nshares from 56,174 to 81,174.\n\n \n\nExcept\nfor share options granted to certain senior management personnel during the years ended March 31, 2015 and 2016, which were immediately\nfully vested and exercisable once granted, other share options granted to employees and non-employees under the 2012 and 2018 Plans would\ngenerally be exercisable upon the Company’s completion of a Qualified IPO or a defined\ncorporate transactions (i.e. change of control, etc.) and the employees render services to the Company in accordance with the stipulated\nservice schedules. The employee participants are generally subject to a four-year service schedule, under which the employees earn an\nentitlement to vest in 25% of their option grants at the end of each year of completed service.\n\n \n\nFor\nthe years ended March 31, 2025 and 2026, Nil and Nil share options were granted to the Participants\nrespectively.\n\n \n\nThe\nfollowing table sets forth the share options activity for the years ended March 31, 2025 and 2026:\n\n \n\n  \n**Number of**\n\n**shares**\n  \n**Weighted average**\n\n**exercise price**\n  \n**Weighted average**\n\n**remaining**\n\n**contractual term**\n  \n**Aggregate**\n\n**intrinsic**\n\n**value**\n  \n**Weighted average**\n\n**fair value**\n \n\nOutstanding as of March 31, 2024   64,923    56.0    8.95    0.09    19.2 \n\nExercisable as of March 31, 2024   \n-\n    \n-\n    -    \n-\n    \n-\n \n\nGranted   \n-\n    \n-\n    -    \n-\n    \n-\n \n\nExercised   \n-\n    \n-\n    -    \n-\n    \n-\n \n\nForfeited   (111)   179.2    -    \n-\n    128.0 \n\nOutstanding as of March 31, 2025   64,812    56.0    8.01    0.07    19.2 \n\nExercisable as of March 31, 2025   \n-\n    \n-\n    -    \n-\n    \n-\n \n\nGranted   \n-\n    \n-\n    -    \n-\n    \n-\n \n\nExercised   \n-\n    \n-\n    -    \n-\n    \n-\n \n\nForfeited   (3,344)   108.8    -    \n-\n    89.6 \n\nOutstanding as of March 31, 2026   61,468    52.8    7.42    0.02    16.0 \n\nExercisable as of March 31, 2026   \n-\n    \n-\n    -    \n-\n    \n-\n \n\n \n\nThe\naggregate intrinsic value is calculated as the difference between the exercise price of the options and the estimated fair value of the\nunderlying shares of US$86, US$70 and US$23 at March 31, 2024, 2025 and 2026, respectively.\n\n \n\nF-50\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**21.****Share-based compensation (continued)**\n\n \n\nAs\nof March 31, 2025 and 2026, there were US$659 and Nil of unrecognized share-based compensation expenses related to share options\ngranted by the Company, which were expected to be recognized over a weighted-average period of 8.0 years and 7.4 years, respectively.\n\n \n\nDuring\nthe year ended March 31, 2026, the Company did not grant any share-based compensation awards. The fair value of options granted in\nprior periods was estimated using the Binomial Option Pricing Model based on the following assumptions.\n\n \n\nThe\nexpected volatility was estimated based on the historical volatility of comparable peer public companies with a time horizon close to\nthe expected term of the Company's options. The risk-free interest rate was estimated based on the yield to maturity of U.S. treasury\nbonds denominated in US$ for a term consistent with the expected term of the Company's options in effect at the option valuation date.\nThe expected exercise multiple was estimated as the average ratio of the stock price to the exercise price of when employees would decide\nto voluntarily exercise their vested options. As the Company did not have sufficient information of past employee exercise history, it\nwas estimated by referencing to a widely-accepted academic research publication. The expected dividend yield is zero as the Company has\nnever declared or paid any cash dividends on its shares, and the Company does not anticipate any dividend payments in the foreseeable\nfuture. The expected term is the contract life of the option.\n\n \n\nFor the Company's share options granted\nto the Participants, the completion of a Qualified IPO is considered to be a performance condition of the awards. A Qualified IPO is not\nconsidered to be probable until it is completed. Under ASC 718, compensation cost should be accrued if it is probable that the performance\ncondition will be achieved. As a result, no compensation expense will be recognized related to these options until the completion of a\nQualified IPO, and hence no share-based compensation expense was recognized for the year ended March 31, 2020. For the year ended March\n31, 2021, upon the completion of the IPO in October 2020, the Company recorded RMB 55 million of share-based compensation expense. For\nthe year ended March 31, 2025 and 2026, RMB0.08 million and RMB 0.004 million of share-based compensation expense was recorded, respectively.\n\n \n\n**22.****Employee benefits**\n\n \n\nThe full-time employees of the Company’s\nsubsidiaries and VIEs that are incorporated in the PRC are entitled to staff welfare benefits including medical insurance, basic pensions,\nunemployment insurance, work injury insurance, maternity insurance and housing funds. These companies are required to contribute to these\nbenefits based on certain percentages of the employees’ salaries in accordance with the relevant regulations and charge the amount\ncontributed to these benefits to the consolidated statements of operations and comprehensive loss. The Company has no legal obligation\nfor the benefits beyond the contribution made. The PRC government is responsible for the welfare and medical benefits and ultimate pension\nliability to these employees. The total amounts charged to the consolidated statements of operations and comprehensive loss for such employee\nbenefits amounted to RMB8 million, RMB6 million and RMB 4 million for the years ended March 31, 2024, 2025 and 2026, respectively.\n\n \n\nF-51\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**23.****Fair value measurements**\n\n \n\nThe Company measured its short-term\ninvestments, available-for-sale investments, equity securities with readily determinable fair values and derivative liabilities at fair\nvalue on a recurring basis. Equity securities classified within Level 1 are valued using quoted\nmarket prices that currently available on a securities exchange registered on NYSE American. Short-term investments classified within\nLevel 2 are valued using directly or indirectly observable inputs in the marketplace. As the Company's available-for-sale\ninvestments and derivative liabilities are not traded in an active market with readily observable prices, the Company uses significant\nunobservable inputs to measure the fair value of available-for-sale investments and derivative liabilities. These instruments are categorized\nin the Level 3 valuation hierarchy based on the significance of unobservable factors in the overall fair value measurement. The Company\ndid not transfer any assets or liabilities in or out of level 3 during the years ended March 31, 2024, 2025, and 2026.\n\n \n\nThe following table summarizes the Company's financial\nassets and liabilities measured and recorded at fair value on recurring basis as of March 31, 2025 and 2026:\n\n \n\n** **** **\n** **** **** **\n**Fair value measurement at reporting date using**** **\n\n**Description**** **\n**Fair value\nas of\nMarch 31,\n2025**** **** **\n**Quoted price\nin active\nmarkets\nfor identical\nassets\n\n(Level 1)**** **** **\n**Significant other\nobservable\nInputs\n(Level 2)**** **** **\n**Significant\nunobservable\nInputs\n(Level 3)**** **\n\n** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **\n\n  \n   \n   \n   \n  \n\nAssets: \n   \n   \n   \n  \n\nShort-term investments \n 4,000  \n \n\n-\n\n  \n 4,000  \n \n\n-\n\n \n\nAvailable-for-sale investments \n 59,624  \n \n-\n  \n \n-\n  \n 59,624 \n\nEquity securities with readily determinable fair values \n 12  \n 12  \n \n-\n  \n \n-\n \n\nTotal assets \n 63,636  \n 12  \n 4,000  \n 59,624 \n\n  \n    \n    \n    \n   \n\nLiabilities: \n    \n    \n    \n   \n\nDerivative liabilities \n 5  \n \n-\n  \n \n-\n  \n 5 \n\n \n\n** **** **\n**Fair value measurement at reporting date using**** **\n\n**Description**** **\n**Fair value\nas of\nMarch 31,\n2026**** **** **\n**Quoted price\nin active\nmarkets\nfor identical\nassets\n\n(Level 1)**** **** **\n**Significant other\nobservable\nInputs\n(Level 2)**** **** **\n**Significant\nunobservable\nInputs\n(Level 3)**** **\n\n** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **** **\n**RMB**** **\n\n  \n   \n   \n   \n  \n\nAssets: \n   \n   \n   \n  \n\nAvailable-for-sale investments \n 30,490  \n \n    -\n  \n \n          -\n  \n 30,490 \n\nEquity securities with readily determinable fair values \n 1  \n 1  \n \n-\n  \n \n-\n \n\nTotal assets \n 30,491  \n 1  \n \n-\n  \n 30,490 \n\n  \n\nF-52\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**23.****Fair value measurements (continued)**\n\n \n\nThe\nroll forward of major Level 3 investments are as following:\n\n \n\n  \nDerivative liabilities  \nAvailable-for-sale\ninvestments \n\nFair value of Level 3 investments as at March 31, 2023 \n 10,701  \n 68,011 \n\nReclassification of forward exchange contracts \n (6,014) \n \n-\n \n\nUnrealized fair value change of the derivative liabilities \n 1,034  \n \n-\n \n\nUnrealized fair value change of the available-for-sale investments \n \n-\n  \n (3,546)\n\nDisposal of available-for-sale investments \n \n-\n  \n (6,000)\n\nFair value of Level 3 investments as at March 31, 2024 \n 5,721  \n 58,465 \n\nReclassification of forward exchange contracts \n \n \n  \n \n \n \n\nUnrealized fair value change of the derivative liabilities \n (5,716) \n \n-\n \n\nUnrealized fair value change of the available-for-sale investments \n \n-\n  \n 1,159 \n\nDisposal of available-for-sale investments \n \n-\n  \n \n-\n \n\nFair value of Level 3 investments as at March 31, 2025 \n 5  \n 59,624 \n\nDisposal of the derivative liabilities \n (5) \n \n-\n \n\nUnrealized fair value change of the available-for-sale investments \n \n-\n  \n (12,669)\n\nDisposal of available-for-sale investments \n \n-\n  \n (16,465)\n\nFair value of Level 3 investments as at March 31, 2026 \n \n-\n  \n 30,490 \n\n \n\nThe Company determined the fair value\nof its investments by using equity allocation model, market approach and binomial model. The determination of the fair value was based\non estimates, judgments and information of other comparable public companies. The significant unobservable inputs adopted in the valuation\nas of March 31, 2025 and 2026:\n\n \n\n  \nAs of\n\nMarch 31, \nAs of\n\nMarch 31,\n\n  \n2025 \n2026\n\n  \n  \n \n\nImplied price to sales after discount for lack of marketability \n0.77x \n0.69x\n\nWeighted average cost of capital \n\nn.a.\n \n\nn.a.\n\nLack of marketability discount \n20%, 24%, 31% \n20%, 29%\n\nRisk-free rate \n1.56%, 1.60%, 1.65% \n1.26%, 1.54%\n\nExpected volatility \n43.70%, 40.97%, 42.40% \n35.88%, 39.03%\n\nProbability \nLiquidation scenario: 40%, 35%\nRedemption scenario: 40%, 35%\nIPO scenario: 20%, 30% \nLiquidation scenario: 45%\nRedemption scenario: 45%\nIPO scenario: 10%\n\n \n\nThe significant unobservable inputs\nused in the fair value measurement of the fair value of the investments include weighted average cost of capital, implied price to sales\nafter discount for lack of marketability, lack of marketability discount, risk-free rate, expected volatility and probabilities of different\nscenarios. Significant increases in lack of marketability discount and risk-free rate would result in a significantly lower fair value\nmeasurement. Significant decreases in expected volatility would result in a significantly lower fair value measurement. If the probabilities\nof redemption and liquidation scenarios are assumed to keep equal, significant increases in the probability of IPO scenario would result\nin a significantly lower fair value measurement.\n\n \n\nThe Company determined the fair value\nof their derivative liabilities by using binominal model. The determination of the fair value was based on estimates, judgments and information\nof other comparable public companies. The significant unobservable inputs adopted in the valuation as of March 31, 2025 and 2026 are as\nfollows:\n\n \n\n  \nAs of\n\nMarch 31, \nAs of\n\nMarch 31,\n\n  \n2025 \n2026\n\n  \n  \n \n\nSpot price (US$) \n1.64 \n\nn.a.\n\nRisk-free rate \n4.03% \n\nn.a.\n\nExpected volatility \n69.30% \n\nn.a.\n\nExpected expiry years (in years) \n0.56 \n\nn.a.\n\n \n\nThe significant unobservable inputs\nused in the fair value measurement of the derivative liabilities include spot price, risk-free rate, expected volatility and expected\nexpiry years. Significant decreases in spot price, risk-free rate, expected volatility and expected expiry years would result in a significantly\nlower fair value measurement.\n\n \n\nF-53\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**24.****Net Loss per share**\n\n \n\nBasic loss per share and diluted loss per share have been\ncalculated in accordance with ASC 260 on computation of earnings per share for the years ended March 31, 2024, 2025 and 2026, respectively,\nas follows:\n\n \n\n  \n\n**Year Ended**\n\n**March 31,\n2024**\n\n  \n\n**Year Ended**\n\n**March 31,\n2025**\n  \n\n**Year Ended**\n\n**March 31,\n2026**\n \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nNumerator: \n   \n   \n  \n\nNet loss attributable to Boqii Holding Limited \n (63,664) \n (54,125) \n (5,078)\n\nAccretion on the Redeemable non-controlling interests to redemption value (Note 18) \n (766) \n (841) \n (509)\n\nNet loss attributable to ordinary shareholders \n (64,430) \n (54,966) \n (5,587)\n\nDenominator: \n    \n    \n   \n\nBasic and diluted (Note (a)) \n 628,986  \n 1,205,493  \n 3,790,573 \n\nNet loss per share attributable to ordinary shareholders: \n    \n    \n   \n\nBasic and diluted \n (102.4) \n (45.6) \n (1.47)\n\n \n\nNote (a): Options exercisable for a\nminimal exercise price (the “Penny Stock”) are included in the denominator of basic loss per share calculation once there\nare no further vesting conditions or contingencies associated with them, as they are considered issuable shares. Basic net loss per share\nis computed using the weighted average number of ordinary shares outstanding and the Penny Stock during the reporting periods. Diluted\nnet loss per share is computed using the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding\nand the Penny Stock during the reporting periods.\n\n \n\nFor the years ended March 31, 2025\nand 2026, assumed share options have not been reflected in the dilutive calculations pursuant to ASC 260, “Earnings Per Share,”\ndue to the anti-dilutive effect.\n\n** **\n\nThe following ordinary shares equivalent\nwere excluded from the computation of diluted loss per ordinary share for the periods presented because including them would have had\nan anti-dilutive effect:\n\n \n\n  \n\n**Year Ended**\n\n**March 31,\n2024**\n\n  \n\n**Year Ended**\n\n**March 31,\n2025**\n  \n\n**Year Ended**\n\n**March 31,\n2026**\n \n\n  \n    \n    \n   \n\nShare options - weighted average \n 6,240  \n 6,129  \n 5,405 \n\n** **\n\nF-54\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**25.****Related party transactions**\n\n \n\nThe table below sets forth the major related parties and\ntheir relationships with the Company as of March 31, 2024, 2025 and 2026:\n\n \n\n**Name of related parties**   **Relationship with the Company**\n\nNanjing Animal Pharmaceutical   An equity investee of the Company until December, 2022\n\nWuhan Chunzhijin   An equity investee of the Company\n\nWeishi Network   An equity investee of the Company\n\nBeijing Petdog   An available-for-sale investee that the Company has significant influence\n\nShanghai Chelin Information Technology Center (limited partnership) (“Shanghai Chalin Information”)   A company with a common director of the Company \n\nMERCHANT TYCOON LIMITED   A shareholder of the Company\n\nSUPERB ORIGIN INTERNATIONAL LIMITED   A shareholder of the Company\n\nYingzhi (Lisa) Tang   Senior management of the Company\n\nYan Jiang   Senior management of the Company\n\n \n\nDetails of related party transactions are as follows:\n\n* *\n\n  \n\n**Year Ended**\n\n**March 31,\n2024**\n  \n\n**Year Ended**\n\n**March 31,\n2025**\n  \n\n**Year Ended**\n\n**March 31,\n2026**\n \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nPurchase of merchandise \n   \n   \n  \n\n  \n    \n    \n   \n\nNanjing Animal Pharmaceutical \n 3,891  \n \n-\n  \n \n-\n \n\n  \n 3,891  \n \n-\n  \n \n-\n \n\n** **\n\nF-55\n\n \n\n** **\n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n** **\n\n**25.****Related party transactions (continued)**\n\n** **\n\n  \n\n**Year Ended**\n\n**March 31,\n2024**\n  \n\n**Year Ended**\n\n**March 31,\n2025**\n  \n\n**Year Ended**\n\n**March 31,\n2026**\n \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nLoans granted to related parties \n   \n   \n  \n\n  \n    \n    \n   \n\nWuhan Chunzhijin (a) \n 4,761  \n 1,989  \n 680 \n\n  \n 4,761  \n 1,989  \n 680 \n\n** **\n\n(a)The Company entered into a loan agreement with Wuhan Chunzhijin\nto provide Wuhan Chunzhijin with an interest-free loan of up to RMB10 million, which will be repaid on demand. In March 2023, the Company\nconverted RMB3.4 million loan to Wuhan Chunzhijin into equity interest. (Detail refer to Note 10).\n\n** **\n\n  \n\n**Year Ended**\n\n**March 31, 2024**\n  \n\n**Year Ended**\n\n**March 31, 2025**\n  \n\n**Year Ended**\n\n**March 31, 2026**\n \n\n  \nRMB  \nRMB  \nRMB \n\nAdvances provided to related parties \n   \n   \n  \n\n  \n    \n    \n   \n\nSUPERB ORIGIN INTERNATIONAL LIMITED (a) \n \n-\n  \n 14,433  \n \n-\n \n\nNanjing Animal Pharmaceutical (b) \n 5,413  \n \n-\n  \n \n-\n \n\nWeishi Network (c) \n \n-\n  \n \n-\n  \n 980 \n\n  \n 5,413  \n 14,433  \n 980 \n\n* *\n\n(a)In January 2023 and June 2024, the Company made an advance\npayment of RMB 5.5 million and RMB 14.4 million, respectively, to SUPERB ORIGIN INTERNATIONAL LIMITED for the purchase of goods. As of\nMarch 31, 2025 and 2026, the balance of the advance payment was RMB18.7 million and RMB 17.1 million respectively, both of which are\nrecorded as *Prepayments to related parties.*\n\n \n\n(b)During the years ended March 31, 2024, 2025 and 2026, the\nCompany made advance payments totaling RMB 5.4 million, Nil and Nil, respectively, to Nanjing Animal Pharmaceutical for the purchase\nof goods*.*\n\n \n\n(c)During the years ended March 31, 2026, the Company made advance\npayments totaling RMB0.98 million to Weishi Network for the purchase of goods*.*\n\n \n\nF-56\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**25.****Related party transactions (continued)**\n\n \n\nDetails of related party balances are as follows:\n\n \n\n*Amounts due from related parties*\n\n* *\n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2024  \n2025  \n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nPrepayments to related parties \n   \n   \n  \n\n  \n    \n    \n   \n\nSUPERB ORIGIN INTERNATIONAL LIMITED \n 4,065  \n 18,670  \n 17,077 \n\nWeishi Network \n 1,401  \n 1,134  \n 1,362 \n\n  \n 5,466  \n 19,804  \n 18,439 \n\n  \n    \n    \n   \n\nOther receivables from related parties \n    \n    \n   \n\n  \n    \n    \n   \n\nWuhan Chunzhijin \n 5,658  \n 4,935  \n 5,394 \n\n  \n    \n    \n   \n\nLoans to related parties \n    \n    \n   \n\nYan Jiang \n 211  \n \n-\n  \n \n-\n \n\nShanghai Guangcheng Information \n 27  \n \n-\n  \n \n-\n \n\n  \n 238  \n \n-\n  \n \n-\n \n\n \n\n*Amounts due to related parties*\n\n* *\n\n  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31,  \nAs of\n\nMarch 31, \n\n  \n2024  \n2025  \n2026 \n\n  \nRMB  \nRMB  \nRMB \n\n  \n   \n   \n  \n\nTrade payables to related parties \n    \n    \n   \n\n  \n    \n    \n   \n\nNanjing Animal Pharmaceutical \n 471  \n \n-\n  \n \n-\n \n\n \n\nF-57\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**26.****Commitments and contingencies**\n\n** **\n\n**(a)****Capital commitments**\n\n \n\nAs of March 31, 2025 and 2026, no capital\ncommitment was related to leasehold improvement and purchase of equipment.\n\n \n\n**(b)****Contingencies**\n\n \n\nThe Company is subject to legal proceedings\nand regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the\nCompany does not anticipate that the final outcome arising out of any such matter will have a material adverse effect on our consolidated\nfinancial position, cash flows or results of operations on an individual basis or in the aggregate. As of March 31, 2025 and 2026, the\nCompany is not a party to any material legal or administrative proceedings.\n\n** **\n\n**27.****Subsequent events**\n\n \n\nAt the Annual General Meeting of Shareholders\nheld on May 6, 2026, the Company’s shareholders approved a special resolution to reconfigure and restructure the Company’s\nauthorized share capital. In connection with such approval, the Company adopted its Fifteenth Amended and Restated Memorandum and Articles\nof Association (the “M&AA”) to effect a capital reduction and share sub-division.\n\n \n\nPursuant to the capital reduction,\nthe par value of each authorized and issued share was reduced from US$0.16 per share to US$0.0000001 per share by cancelling paid-up capital\nto the extent of US$0.1599999 on each issued share. Immediately following the capital reduction, each authorized but unissued share was\nsubdivided into 1,600,000 shares with a par value of US$0.0000001 each.\n\n \n\nFollowing the restructuring, the Company’s\nauthorized share capital became divided into 20,000,000,000 shares with a par value of US$0.0000001 each, comprising (i) 15,000,000,000\nClass A ordinary shares, (ii) 1,000,000,000 Class B ordinary shares, (iii) 1,000,000,000 Class C Ordinary Shares, and (iv) 3,000,000,000\nshares of such class or classes as the Company’s board of directors may determine in accordance with the M&AA.\n\n \n\nF-58\n\n \n\n \n\n**BOQII HOLDING LIMITED**\n\n**NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(All amounts in thousands, except for share and per share data, unless otherwise noted)**\n\n \n\n**28.****Restricted net assets**\n\n \n\nThe Company’s ability to pay\ndividends may depend on the Company receiving distributions of funds from the Company’s subsidiaries\nand the VIEs incorporated in the PRC. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s\nPRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations.\nThe results of operations reflected in the consolidated financial statements prepared in accordance with US GAAP differ from those reflected\nin the statutory financial statements of the Company’s PRC subsidiary.\n\n \n\nIn accordance with the Company law\nof the PRC, a domestic enterprise is required to provide statutory reserves of at least 10% of its annual after-tax profit until such\nreserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. A domestic enterprise\nis also required to provide discretionary surplus reserve, at the discretion of the Board of Directors, from the profits determined in\naccordance with the enterprise’s PRC statutory accounts. The aforementioned reserves can only be used for specific purposes and\nare not distributable as cash dividends. The Company’s PRC subsidiaries were established as domestic invested enterprises and therefore\nare subject to the above-mentioned restrictions on distributable profits.\n\n \n\nFor the years ended March 31, 2024,\n2025 and 2026, appropriation to statutory reserves was made because two PRC subsidiaries had generated profits for these periods.\n\n \n\nAs a result of these PRC laws and regulations\nsubject to the limit discussed above that require annual appropriations of 10% of after-tax income to be set aside, prior to payment of\ndividends, as general reserve fund, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their\nnet assets to the Company.\n\n \n\nForeign exchange and other regulations\nin the PRC further restrict the Company’s PRC subsidiaries from transferring funds to the Company in the form of dividends, loans\nand advances.\n\n \n\nAs of March 31, 2026, the total\nrestricted net assets of the Company’s subsidiaries and the VIEs incorporated in the PRC and subjected to restriction amounted to\nNil.\n\n \n\nRules 12-04(a) and 4-08(e)(3) of Regulation\nS-X require condensed financial information as to the financial position, cash flows and results of operations of a parent company as\nof and for the same periods for which the audited consolidated financial statements have been presented when the restricted net assets\nof the consolidated and unconsolidated subsidiaries together exceed 25% of consolidated net assets as of the end of the most recently\ncompleted fiscal year. The Company performed a test on the restricted net assets of consolidated subsidiaries in accordance S-X Rule4-08\n(e)(3) and concluded that it was not applicable for the Company to disclose the financial statements for the parent company since the\n25% threshold was not met for the year ended March 31, 2026.\n\n \n\nF-59"}