{"url_path":"/sec/bq/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 KEY INFORMATION**","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":47236,"has_tables":true,"body_markdown":"**ITEM 3. KEY INFORMATION**\n\n** **\n\n**Holding Company Structure and Contractual Arrangements with the\nVIEs**\n\n** **\n\nBoqii is a Cayman Islands\nholding company with no business operations. The Company conducts its operations in China through its PRC subsidiaries and the consolidated\nvariable interest entities, or the VIEs, and the VIEs’ subsidiaries. The Company, its shareholders who are non-PRC residents and\nits subsidiaries do not and are not legally permitted to have any equity interests in the VIEs as current PRC laws and regulations restrict\nforeign investment in companies that engage in value-added telecommunication services and certain other restricted services related to\nour businesses. As a result, the Company operates relevant businesses in China through certain contractual arrangements by and among the\nWFOEs, the VIEs and the respective shareholders of the VIEs. This structure allows the WFOEs to be considered the primary beneficiary\nof the VIEs for accounting purposes and are able to consolidate the VIEs’ operating results in the Company’s financial statements\nunder the U.S. GAAP. This structure also provides contractual exposure to foreign investment in such companies. As of the date of this\nannual report, to our knowledge, the VIE agreements have not been tested in a court of law in the PRC. Our corporate structure involves\nunique risks to investors in the Class A ordinary shares. Investors in the Company’s Class A ordinary shares are purchasing equity\nsecurities of a Cayman Islands holding company rather than equity securities issued by the Company’s subsidiaries and the VIEs.\nInvestors who are non-PRC residents may not directly hold equity interests in the VIEs under current PRC laws and regulations.\n\n \n\nFor the years ended March\n31, 2024, 2025 and 2026, the amount of revenues generated by the VIEs accounted for approximately 71.2%, 55.3% and 33.2%, respectively,\nof our total net revenues. As of March 31, 2024, 2025 and 2026, total assets of the VIEs, excluding amounts due from other companies in\nour Company, equaled to approximately 44.8%, 49.1% and 36.1% of our consolidated total assets as of the same dates, respectively. If the\nPRC government deems that our contractual arrangements with the VIEs do not comply with PRC regulatory restrictions on foreign investment\nin the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject\nto material penalties or be forced to relinquish our interests in those operations or otherwise significantly change our corporate structure.\nWe and our investors face significant uncertainty about potential future actions by the PRC government that could affect the legality\nand enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect the financial performance of\nour company as a whole. Our Class A ordinary shares may decline in value or become worthless, if we are unable to claim our contractual\ncontrol rights over the assets of the VIEs that conduct substantially all of our operations in China. For detailed discussion, see “*Item\n3. Key Information-3.D. Risk Factors-Risks Related to Our Corporate Structure and Contractual Arrangements*.”\n\n \n\n1\n\n \n\n \n\nThe following diagram illustrates\nour corporate structure, including our principal subsidiaries and VIEs, as of the date of this annual report.\n\n \n\n \n\nNotes:\n\n \n\n \n \nEquity interest\n\n \n \n\n \n \nContractual arrangements, including the exclusive technical consulting and service agreement, intellectual property license agreement, equity pledge agreement, exclusive call option agreement, shareholders’ voting rights proxy agreement and loan agreement. See “*Item 3. Key Information*-*Contractual Arrangements with the VIEs and Their Respective Shareholders*.”\n\n \n\n2\n\n \n\n \n\n**Contractual Arrangements with the VIEs and Their Respective Shareholders**\n\n \n\nCurrent PRC laws and regulations\nimpose certain restrictions or prohibitions on foreign ownership of companies that engage in value-added telecommunication services. Boqii\nis an exempted company with limited liability incorporated in the Cayman Islands and our wholly owned PRC subsidiaries are currently considered\nforeign-invested enterprise. Accordingly, our PRC subsidiaries are not eligible to provide value-added telecommunication services in China\nor import veterinary drugs. To ensure strict compliance with the PRC laws and regulations, we conduct such business activities through\nthe VIEs, Suzhou Taicheng, Shanghai Guangcheng and Suzhou Xingyun. Shanghai Xincheng and Meiyizhi WFOE, our wholly owned subsidiaries\nin China, have entered into a series of contractual arrangements with the VIEs and their respective shareholders, which enable us to (i)\ndirect the activities of the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive option\nto purchase all or part of the equity interests in the VIEs when and to the extent permitted by PRC law. These contractual arrangements\ninclude the exclusive consultation and technical service agreement, loan agreements, equity pledge agreement, exclusive purchase option\nagreement, shareholder voting right trust agreement, and spousal consents, as the case may be.\n\n \n\nAs a result of these contractual\narrangements, we are considered the primary beneficiary of the VIEs for accounting purposes and are able to consolidate their operating\nresults in our financial statements under U.S. GAAP.\n\n \n\nThe following is a summary\nof the major terms of the contractual arrangements by and among Shanghai Xincheng, Shanghai Guangcheng and the shareholders of Shanghai\nGuangcheng. The contractual arrangements by and among Shanghai Xincheng, Suzhou Taicheng and the shareholders of Suzhou Taicheng, and\nthe contractual arrangements by and among Meiyizhi WFOE, Suzhou Xingyun and the shareholders of Suzhou Xingyun are substantially similar\nto the corresponding contractual arrangements discussed below, unless otherwise indicated.\n\n* *\n\n*Exclusive Technical Consulting and Service Agreement*\n\n \n\nPursuant to an exclusive\ntechnical consulting and service agreement entered into on August 4, 2020 by and between Shanghai Xincheng and Shanghai Guangcheng, Shanghai\nGuangcheng agreed to appoint Shanghai Xincheng as its exclusive provider of consulting and services related to, among other things, e-commerce\nplatform design and maintenance, business consulting, internal training, labor support, market research and development, strategic planning\nand customer support and development. In exchange, Shanghai Guangcheng agrees to pay Shanghai Xincheng an annual service fee, at an amount\nthat is agreed by both parties. This agreement will remain effective unless Shanghai Xincheng and Shanghai Guangcheng terminate this agreement\nin writing.\n\n* *\n\n*Intellectual Property License Agreement*\n\n \n\nPursuant to an intellectual\nproperty license agreement entered into on August 4, 2020 by and between Shanghai Xincheng and Shanghai Guangcheng, Shanghai Xincheng\nagreed to grant to Shanghai Guangcheng a nonsublicensable, nontransferable and nonexclusive license of certain intellectual properties\nsolely for Shanghai Guangcheng’s use. In exchange, Shanghai Guangcheng agrees to pay a royalty, at an amount that is agreed by both\nparties. The term of this agreement is ten years from the date of such agreement and will be automatically extended for another ten-year\nterm unless it is terminated by three months’ written notice by the licensor.\n\n* *\n\n*Shareholders’ Voting Rights Proxy Agreement*\n\n \n\nPursuant to the shareholders’\nvoting rights proxy agreement entered into on August 4, 2020, by and among Shanghai Xincheng, Shanghai Guangcheng, and then shareholders\nof Shanghai Guangcheng, as supplemented from time to time, such shareholders of Shanghai Guangcheng irrevocably authorized the person\nthen designated by Shanghai Xincheng to exercise such shareholders’ rights in Shanghai Guangcheng, including without limitation,\nthe power to participate in and vote at shareholders’ meetings, the power to nominate and appoint the directors, senior management,\nthe power to propose to convene a shareholders’ meeting, and other shareholders’ voting rights permitted by the Articles of\nAssociation of Shanghai Guangcheng.\n\n \n\n*Equity Pledge Agreement*\n\n \n\nPursuant to an equity pledge\nagreement entered on October 16, 2019, by and between Shanghai Xincheng, Shanghai Guangcheng, and then shareholders of Shanghai Guangcheng,\nas supplemented by an equity pledge agreement entered into on August 4, 2020 and an equity pledge agreement entered into on September\n25, 2022, by and between Shanghai Xincheng, Shanghai Guangcheng, and Shanghai Chelin Information Technology Center (Limited Partnership),\na then shareholder of Shanghai Guangcheng, such shareholders of Shanghai Guangcheng pledged all of their equity interests in Shanghai\nGuangcheng to Shanghai Xincheng, to guarantee the performance of Shanghai Guangcheng, and, to the extent applicable, such shareholders\nof Shanghai Guangcheng, or their obligations under the contractual arrangements of the VIEs. If Shanghai Guangcheng or such shareholders\nfail to perform their obligations under the contractual arrangement of the VIEs, Shanghai Xincheng will be entitled to, among other things,\nthe right to sell the pledged equity interests in Shanghai Guangcheng. The shareholders of Shanghai Guangcheng also undertake that, during\nthe term of the equity pledge agreement, they will not dispose of the pledged equity interests or create or allow any encumbrance on the\npledged equity interests without prior written consent of Shanghai Xincheng. As of the date of this annual report, the equity pledges\nunder the share pledge agreements have been registered with the relevant PRC legal authority pursuant to PRC laws and regulations.\n\n \n\nAs of the date of this annual\nreport, all equity pledges under the share pledge agreements by and between the shareholders of Suzhou Xingyun and Meiyizhi WFOE, as well\nas by and between the shareholders of Suzhou Taicheng and Shanghai Xincheng have been registered with the relevant PRC legal authority\npursuant to PRC laws and regulations.\n\n* *\n\n3\n\n \n\n* *\n\n*Exclusive Call Option Agreement*\n\n \n\nPursuant to an exclusive\ncall option agreement entered on August 4, 2020, by and between Shanghai Xincheng, Shanghai Guangcheng and then shareholders of Shanghai\nGuangcheng, as supplemented from time to time, such shareholders of Shanghai Guangcheng irrevocably and unconditionally granted Shanghai\nXincheng an exclusive call option to purchase, or have its designated person(s) to purchase, at its discretion, all or part of the equity\noptions in Shanghai Guangcheng. The purchase price shall be the lowest price permitted by applicable PRC laws and regulations. The shareholders\nof Shanghai Guangcheng undertake that, without the prior written consent of Shanghai Xincheng, they may not increase or decrease the registered\ncapital or conduct any merger, transfer or dispose of their equity options and any other third-party rights thereon, dispose of, or procure\nthe management to dispose of, material assets of Shanghai Guangcheng, terminate or procure the management to terminate any material agreements\nor enter into any agreements in conflict with any existing material agreement, appoint or dismiss any director, supervisor or any other\nsenior management which should be appointed or dismissed by such shareholders, procure Shanghai Guangcheng to declare or distribute any\ndistributable profits or dividends, procure the winding-up, liquidation or dissolution of Shanghai Guangcheng, amend its articles of association\nor provide any loans to, or borrow any loans from, third parties or provide security or guarantee, or undertake any substantive obligations\nbeyond the ordinary course of business. The exclusive call option agreement will remain effective until all equity options in Shanghai\nGuangcheng held by such shareholders are transferred or assigned to Shanghai Xincheng or its designated representatives.\n\n* *\n\n*Loan Agreement*\n\n \n\nShareholders of Shanghai\nGuangcheng have entered into a loan agreement, as amended from time to time, with Shanghai Xincheng on August 4, 2020. Pursuant to the\nloan agreement, Shanghai Xincheng provided such shareholders with a long-term interest-free loan. The proceeds from the loans were used\nfor the investment in or general business development of Shanghai Guangcheng. The loans can be repaid by transferring the shareholders’\nrespective equity interests in Shanghai Guangcheng to Shanghai Xincheng or its designee.\n\n \n\nThese contractual arrangements\nmay not be as effective as direct ownership in providing us with control over the VIEs. If the VIEs or their respective shareholders fail\nto perform their respective obligations under the contractual arrangements, we could be limited in our ability to enforce the contractual\narrangements and may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to\nrely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot\nassure will be effective under PRC law, and such remedies may not be recognized, or enforced by PRC courts. As of the date of this annual\nreport, to our knowledge, the VIE agreements have not been tested in a court of law in the PRC.\n\n \n\nIn the opinion of Shanghai\nDeheHantong Law Offices, our PRC counsel:\n\n \n\n●the\nownership structures of the VIEs do not contravene any PRC laws or regulations currently in effect; and\n\n \n\n●the\nagreements under the contractual arrangements among Shanghai Xincheng, Shanghai Guangcheng and their respective shareholders, among Meiyizhi\nWFOE, Suzhou Xingyun and their respective shareholders, as well as among Shanghai Xincheng, Suzhou Taicheng and their respective shareholders\ngoverned by PRC laws are valid and binding upon each party to such agreements and enforceable against each party thereto in accordance\nwith their terms and applicable PRC laws and regulations currently in effect.\n\n \n\nIn March 2019, the National\nPeople’s Congress of the PRC adopted the PRC Foreign Investment Law, which became effective on January 1, 2020. Among other things,\nthe PRC Foreign Investment Law defines the “foreign investment” as investment activities in China by foreign investors in\na direct or indirect manner, including those circumstances explicitly listed thereunder as establishing new projects or foreign invested\nenterprises or acquiring shares of enterprises in China, and other approaches of investment as stipulated by laws, administrative regulations\nor otherwise regulated by the State Council. The PRC Foreign Investment Law does not specify whether foreign investors’ controlling\nPRC onshore variable interest entities via contractual arrangements will be recognized as “foreign investment” and thus be\nsubject to the restrictions and/or prohibitions on foreign investments. Accordingly, the PRC regulatory authorities may in the future\ntake a view that is contrary to the above opinion of our PRC counsel. If future laws and regulations specify that the VIE agreements are\nin violation of relevant PRC laws and regulations and the PRC government accordingly finds that the VIE agreements that establish the\nstructure for operating our internet content services and other internet related businesses or for importing veterinary drugs do not comply\nwith PRC government restrictions on foreign investment in certain industries, such as value-added telecommunications services business,\nClass A ordinary shares may decline in value or become worthless, we could be subject to severe penalties, including being prohibited\nfrom continuing operations. For detailed discussion, see “*Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Corporate\nStructure and Contractual Arrangements*.”\n\n \n\n4\n\n \n\n \n\n**Cash Flows through Our Organization**\n\n** **\n\n**Transfer of Funds and Other Assets**\n\n \n\nWe currently do not have\ncash management policies that dictate how funds are transferred between us, our subsidiaries and the VIEs. In practice, we estimate and\nallocate funds to our WFOE and the VIEs based on their respective available cash balances and forecasted cash requirements. Under relevant\nPRC laws and regulations, we are permitted to remit funds to the VIEs through loans rather than capital contributions. The following diagram\nsummarizes how funds were transferred among Boqii, our subsidiaries, and the VIEs as of March 31, 2026.\n\n \n\n \n\n \n\nAs of March 31, 2026, Boqii\nhad made cumulative capital contributions of approximately RMB1,220.8 million (approximately US$177.0 million) to its PRC subsidiaries\nthrough intermediate holding companies, which were accounted as long-term investments of Boqii. Furthermore, funds equivalent to approximately\nnil, nil and nil were provided to the PRC subsidiaries as loans for the years ended March 31, 2024, 2025 and 2026, respectively, which\nwere accounted as intra-Group payables due to the Group’s entities. These funds have been used by the Company’s PRC subsidiaries\nand VIEs for their operations.\n\n \n\nThe VIEs may transfer cash\nto the relevant WFOEs by paying service fees according to the exclusive business cooperation agreements. Pursuant to these agreements\nbetween each of the VIEs and its corresponding WFOEs, each of the VIEs agrees to pay the relevant WFOE for services related to design\nand maintenance of the e-commerce platform, consulting services, technical training, research, planning and development of the market\nand customer support at an amount based on 100% of the balance of the gross consolidated profits of each VIE after offsetting the accumulated\nlosses for the preceding financial years and deducting the working capital, expenses, taxes and other statutory contributions required\nfor any financial year, or the amount determined by the WFOE in accordance with the terms of the agreements. Considering the future operating\nand cash flow needs of the VIEs, for the years ended March 31, 2024, 2025, and 2026, no service fees were charged to the VIEs by the WFOEs,\nand no payments were made by the VIEs under these agreements. If there is any amount payable to relevant WFOEs under the VIE agreements,\nthe VIEs will settle the amount accordingly. For more information, see “*Item 3. Key Information-Condensed Consolidating Schedule*”\nand consolidated financial statements included elsewhere in this annual report. For any amounts owed by the VIEs to our PRC subsidiaries\nunder the VIE agreements, unless otherwise required by PRC governmental authorities in accordance with relevant PRC laws and regulations,\nwe are able to settle such amounts without limitations under the current effective PRC laws and regulations, provided that the VIEs have\nsufficient funds to do so.\n\n** **\n\n5\n\n \n\n** **\n\n**Dividend Distribution to U.S. Investors and Tax Consequences**\n\n \n\nWe have not previously declared\nor paid any cash dividend, dividend in kind or distributions, and have no plan to declare or pay any dividends or distributions in the\nnear future on our shares. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and\nexpand our business. For more information, see “*Item 8. Financial Information–8.A. Consolidated Statements and Other Financial\nInformation-Dividend Policy*.”\n\n \n\nFor purposes of illustration,\nthe following discussion reflects the hypothetical taxes that might be required to be paid within Mainland China, assuming that: (i) we\nhave taxable earnings, and (ii) we determine to pay a dividend in the future:\n\n \n\n  \nTaxation\nScenario(1)\nStatutory\nTax and\nStandard\nRates \n\nHypothetical pre-tax earnings(2) \n 100.0%\n\nTax on earnings at statutory rate of 25%(3) \n (25.0)%\n\nNet earnings available for distribution \n 75.0%\n\nWithholding tax at standard rate of 10%(4) \n (7.5)%\n\nNet distribution to Boqii Holding Limited /shareholders \n 67.5%\n\n* *\n\n*Notes:*\n\n \n\n(1)For\npurposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing\ndifferences, is assumed to equal taxable income in China.\n\n \n\n(2)Under\nthe terms of VIE agreements, our PRC subsidiaries may charge the VIEs for services provided to VIEs. These fees shall be recognized as\nexpenses of the VIEs, with a corresponding amount as service income by our PRC subsidiaries and eliminate in consolidation. For income\ntax purposes, our PRC subsidiaries and the VIEs file income tax returns on a separate company basis. The fees paid are recognized as\na tax deduction by the VIEs and as income by our PRC subsidiaries and are tax neutral.\n\n \n\n(3)Certain\nof our subsidiaries and the VIEs qualifies for a 15% preferential income tax rate in China. However, such rate is subject to qualification,\nis temporary in nature, and may not be available in a future period when distributions are paid. For purposes of this hypothetical example,\nthe table above reflects a maximum tax scenario under which the full statutory rate would be effective.\n\n \n\n(4)The\nPRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or FIE,\nto its immediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate\nholding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification\nreview at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under\nwhich the full withholding tax would be applied.\n\n \n\n6\n\n \n\n \n\nThe table above has been\nprepared under the assumption that all profits of the VIEs will be distributed as fees to our PRC subsidiaries under tax neutral contractual\narrangements. If, in the future, the accumulated earnings of the VIEs exceed the fees paid to our PRC subsidiaries (or if the current\nand contemplated fee structure between the intercompany entities is determined to be non-substantive and disallowed by Chinese tax authorities),\nthe VIEs could, as a matter of last resort, make a nondeductible transfer to our PRC subsidiaries for the amounts of the stranded cash\nin the VIEs. This would result in such transfer being nondeductible expenses for the VIEs but still taxable income for the PRC subsidiaries.\nSuch a transfer and the related tax burdens would** **reduce our after-tax income to approximately 50.6% of the pre-tax income.\nOur management believes that there is only a remote possibility that this scenario would happen.\n\n \n\nFor PRC and United States\nfederal income tax consideration of an investment in our Class A ordinary shares, see “*Item 10. Additional Information-10.E.\nTaxation.*”\n\n \n\n**Restrictions on Foreign Exchange and the Ability to Transfer\nCash between Entities, Across Borders and to U.S. Investors**\n\n \n\nBoqii ‘s ability to\npay dividends, if any, to its shareholders and to service any debt it may incur will depend upon dividends paid by our PRC subsidiaries.\nUnder PRC laws and regulations, our PRC subsidiaries are subject to certain restrictions with respect to paying dividends or otherwise\ntransferring any of their net assets offshore to Boqii. In particular, under the current effective PRC laws and regulations, dividends\nmay be paid only out of distributable profits. Distributable profits are the net profit as determined under PRC GAAP, less any recovery\nof accumulated losses and appropriations to statutory and other reserves required to be made. Each of our PRC subsidiaries is required\nto set aside at least 10% of its after-tax profits each year, after making up previous years’ accumulated losses, if any, to fund\ncertain statutory reserve funds, until the aggregate amount of such a fund reaches 50% of its registered capital. As a result, our PRC\nsubsidiaries may not have sufficient distributable profits to pay dividends to us in the near future.\n\n \n\nFurthermore, if certain procedural\nrequirements are satisfied, the payment of current account items, including profit distributions and trade and service related foreign\nexchange transactions, can be made in foreign currencies without prior approval from State Administration of Foreign Exchange (the “SAFE”)\nor its local branches. However, where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses,\nsuch as the repayment of loans denominated in foreign currencies, approval from or registration with competent government authorities\nor its authorized banks is required. If we fail to comply with such requirements and satisfy our foreign currency demands, we may not\nbe able to pay dividends in foreign currencies to our offshore intermediary holding companies or ultimate parent company, and therefore,\nour shareholders or investors in Class A ordinary shares. We cannot assure you, in light of such requirements relating to the convertibility\nof Renminbi into foreign currencies, that our current or future PRC subsidiaries will be able to satisfy their respective payment obligations\nthat are denominated in foreign currencies, including the remittance of dividends outside of the PRC. If any of our subsidiaries incurs\ndebt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to Boqii. In addition,\nour PRC subsidiaries are required to make appropriations to certain statutory reserve funds, which are not distributable as cash dividends\nexcept in the event of a solvent liquidation of the companies.\n\n \n\n**Condensed Consolidating Schedule**\n\n \n\nThe following tables present\nthe condensed consolidating schedules of financial information of Boqii, our subsidiaries that are the primary beneficiaries of VIEs and\ntheir subsidiaries, the VIEs and their subsidiaries, and other subsidiaries for the periods and as of the dates indicated.\n\n \n\n7\n\n \n\n  \n**As of March 31, 2024** \n\n  \nBoqii Holding\nLimited  \nAll\nothers  \nPrimary\nbeneficiaries of\nVIEs and their\nsubsidiaries  \nVIEs and\ntheir\nsubsidiaries  \nEliminating\nadjustments  \nConsolidated\ntotals \n\n  \n(RMB in thousands) \n\nASSETS \n   \n   \n   \n   \n   \n  \n\nCurrent assets: \n   \n   \n   \n   \n   \n  \n\nCash and cash equivalents \n 69  \n 28,769  \n 24,687  \n 19,197  \n -  \n 72,722 \n\nAccounts receivable, net \n -  \n 2,811  \n 23,576  \n 23,731  \n -  \n 50,118 \n\nInventories, net \n -  \n 2,581  \n 41,504  \n 11,104  \n -  \n 55,189 \n\nPrepayments and other current assets \n 9,693  \n 33,499  \n 18,908  \n 32,418  \n -  \n 94,518 \n\nAmounts due from related parties \n -  \n 4,064  \n -  \n 1,640  \n -  \n 5,704 \n\nIntra-Group receivables due from the Group’s entities(1) \n    \n 102,392  \n 934,134  \n 19,140  \n (1,055,666) \n - \n\nNon-current assets: \n    \n    \n    \n    \n    \n   \n\nProperty and equipment, net \n -  \n -  \n 659  \n 2,444  \n -  \n 3,103 \n\nIntangible assets \n -  \n -  \n 17,885  \n 25  \n -  \n 17,910 \n\nOperating lease right-of-use assets \n -  \n -  \n 1,605  \n 7,346  \n -  \n 8,951 \n\nGoodwill \n -  \n -  \n -  \n -  \n -  \n - \n\nLong-term investments \n 38  \n -  \n -  \n 65,849  \n -  \n 65,887 \n\nLong-term investments to the Group’s entities \n 211,476  \n    \n    \n    \n (211,476) \n   \n\nAmounts due from related parties, non-current \n -  \n -  \n -  \n 5,658  \n -  \n 5,658 \n\nOther non-current asset \n -  \n 110  \n 1,252  \n 2,093  \n -  \n 3,455 \n\nTotal assets \n 211,276  \n 174,226  \n 1,064,210  \n 190,645  \n (1,267,142) \n 383,215 \n\nLIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY \n    \n    \n    \n    \n    \n   \n\nCurrent liabilities: \n    \n    \n    \n    \n    \n   \n\nShort-term borrowings \n -  \n -  \n 5,000  \n 10,213  \n -  \n 15,213 \n\nAccounts payable \n -  \n 22  \n 21,978  \n 2,279  \n -  \n 24,279 \n\nSalary and welfare payable \n -  \n 406  \n 2,126  \n 440  \n -  \n 2,972 \n\nAccrued liabilities and other current liabilities \n (126) \n 34  \n 8,799  \n 7,960  \n -  \n 16,667 \n\nAmounts due to related parties, current \n -  \n -  \n -  \n -  \n -  \n - \n\nIntra-Group payables due to the Group’s entities(1) \n 2,721  \n 12,112  \n 42,911  \n 997,922  \n (1,055,666) \n - \n\nContract liabilities \n -  \n -  \n -  \n 1,579  \n -  \n 1,579 \n\nOperating lease liabilities, current \n -  \n -  \n 359  \n 5,254  \n -  \n 5,613 \n\nDerivative liabilities \n -  \n 5,721  \n -  \n -  \n -  \n 5,721 \n\nNon-current liabilities: \n    \n    \n    \n    \n    \n   \n\nDeferred tax liabilities \n -  \n -  \n 4,435  \n (1,201) \n -  \n 3,234 \n\nOperating lease liabilities, non-current \n -  \n -  \n 906  \n 2,209  \n -  \n 3,115 \n\nLong-term debt \n -  \n -  \n 32,441  \n 11,500  \n -  \n 43,941 \n\nInvestments deficit to the Group’s entities(2) \n -  \n (63,488) \n 851,208  \n -  \n (787,720) \n - \n\nTotal liabilities \n 2,595  \n (45,193) \n 970,163  \n 1,038,155  \n (1,843,386) \n 122,334 \n\nMezzanine equity: \n    \n    \n    \n    \n    \n   \n\nRedeemable non-controlling interests \n    \n 7,963  \n    \n    \n    \n 7,963 \n\nTotal mezzanine equity \n    \n 7,963  \n    \n    \n    \n 7,963 \n\nShareholders’ equity: \n    \n    \n    \n    \n    \n   \n\nTotal Boqii Holding Limited shareholders’ deficit \n 218,681  \n 211,476  \n 63,488  \n (851,208) \n 576,244  \n 218,681 \n\nNon-controlling interests \n -  \n (20) \n 30,559  \n 3,698  \n -  \n 34,237 \n\nTotal shareholders’ equity \n 218,681  \n 211,456  \n 94,047  \n (847,510) \n 576,244  \n 252,918 \n\nTotal liabilities, mezzanine equity and shareholders’ equity \n 221,276  \n 174,226  \n 1,064,210  \n 190,645  \n (1,267,142) \n 383,215 \n\n8\n\n \n\n \n\n  \n**As of March 31, 2025** \n\n  \nBoqii Holding\nLimited  \nAll\nothers  \nPrimary\nbeneficiaries of\nVIEs and their\nsubsidiaries  \nVIEs and\ntheir\nsubsidiaries  \nEliminating\nadjustments  \nConsolidated\ntotals \n\n  \n(RMB in thousands) \n\nASSETS \n   \n   \n   \n   \n   \n  \n\nCurrent assets: \n   \n   \n   \n   \n   \n  \n\nCash and cash equivalents \n 4,688  \n 8,528  \n 11,135  \n 14,308  \n -  \n 38,659 \n\nShort-term investments \n -  \n -  \n -  \n 4,000  \n -  \n 4,000 \n\nAccounts receivable, net \n -  \n 2,825  \n 5,942  \n 20,551  \n -  \n 29,318 \n\nInventories, net \n -  \n 2,626  \n 31,393  \n 6,057  \n -  \n 40,076 \n\nPrepayments and other current assets \n 9,565  \n 14,072  \n 33,630  \n 33,197  \n -  \n 90,465 \n\nAmounts due from related parties \n -  \n 18,670  \n -  \n 1,134  \n -  \n 19,804 \n\nIntra-Group receivables due from the Group’s entities(1) \n    \n 93,861  \n 957,477  \n 12,579  \n (1,063,917) \n - \n\nNon-current assets: \n    \n    \n    \n    \n    \n   \n\nProperty and equipment, net \n -  \n -  \n 788  \n 3,461  \n -  \n 4,249 \n\nIntangible assets \n -  \n -  \n 14,656  \n 15  \n -  \n 14,671 \n\nOperating lease right-of-use assets \n -  \n -  \n 1,034  \n 2,050  \n -  \n 3,084 \n\nGoodwill \n -  \n -  \n -  \n -  \n -  \n - \n\nLong-term investments \n 12  \n -  \n -  \n 64,975  \n -  \n 64,986 \n\nLong-term investments to the Group’s entities \n 178,150  \n    \n    \n    \n (178,150) \n   \n\nAmounts due from related parties, non-current \n -  \n -  \n -  \n 4,935  \n -  \n 4,935 \n\nOther non-current asset \n -  \n -  \n 1,390  \n 529  \n -  \n 1,919 \n\nTotal assets \n 192,415  \n 140,582  \n 1,057,445  \n 167,791  \n (1,242,067) \n 316,166 \n\nLIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY \n    \n    \n    \n    \n    \n   \n\nCurrent liabilities: \n    \n    \n    \n    \n    \n   \n\nShort-term borrowings \n -  \n -  \n 9,000  \n 63  \n -  \n 9,063 \n\nAccounts payable \n -  \n -  \n 19,137  \n 421  \n -  \n 19,558 \n\nSalary and welfare payable \n -  \n 306  \n 1,545  \n 57  \n -  \n 1,908 \n\nAccrued liabilities and other current liabilities \n (125) \n 61  \n 7,156  \n 4,764  \n -  \n 11,856 \n\nAmounts due to related parties, current \n -  \n -  \n -  \n -  \n -  \n - \n\nIntra-Group payables due to the Group’s entities(1) \n 2,735  \n 113  \n 49,153  \n 1,011,916  \n (1,063,917) \n - \n\nContract liabilities \n -  \n -  \n -  \n 1,768  \n -  \n 1,768 \n\nOperating lease liabilities, current \n -  \n -  \n 430  \n 1,284  \n -  \n 1,714 \n\nDerivative liabilities \n -  \n 5  \n -  \n -  \n -  \n 5 \n\nNon-current liabilities: \n    \n    \n    \n    \n    \n   \n\nDeferred tax liabilities \n -  \n -  \n 3,634  \n (1,201) \n -  \n 2,433 \n\nOperating lease liabilities, non-current \n -  \n -  \n 313  \n 538  \n -  \n 851 \n\nLong-term debt \n -  \n -  \n 38,435  \n 200  \n -  \n 38,635 \n\nInvestments deficit to the Group’s entities(2) \n -  \n (46,857) \n 853,014  \n -  \n (806,157) \n - \n\nTotal liabilities \n 2,610  \n (46,372) \n 981,817  \n 1,019,810  \n (1,870,074) \n 87,791 \n\nMezzanine equity: \n    \n    \n    \n    \n    \n   \n\nRedeemable non-controlling interests \n -  \n 8,804  \n -  \n -  \n -  \n 8,804 \n\nTotal mezzanine equity \n -  \n 8,804  \n -  \n -  \n -  \n 8,804 \n\nShareholders’ equity: \n    \n    \n    \n    \n    \n   \n\nTotal Boqii Holding Limited shareholders’ deficit \n 189,805  \n 178,150  \n 46,857  \n (853,014) \n 628,007  \n 189,805 \n\nNon-controlling interests \n -  \n -  \n 28,771  \n 995  \n -  \n 29,766 \n\nTotal shareholders’ equity \n 189,805  \n 178,150  \n 75,628  \n (852,019) \n 628,007  \n 219,571 \n\nTotal liabilities, mezzanine equity and shareholders’ equity \n 192,415  \n 140,582  \n 1,057,445  \n 167,791  \n (1,242,067) \n 316,166 \n\n \n\n9\n\n \n\n  \nAs of March 31, 2026 \n\n  \nBoqii Holding\nLimited  \nAll\nothers  \nPrimary\nbeneficiaries of\nVIEs and their\nsubsidiaries  \nVIEs and\ntheir\nsubsidiaries  \nEliminating\nadjustments  \nConsolidated\ntotals \n\n  \n(RMB in thousands) \n\nASSETS \n   \n   \n   \n   \n   \n  \n\nCurrent assets: \n   \n   \n   \n   \n   \n  \n\nCash and cash equivalents \n 11  \n 20,481  \n 17,262  \n 11,673  \n -  \n 49,427 \n\nShort-term investments \n -  \n -  \n -  \n -  \n -  \n - \n\nAccounts receivable, net \n -  \n 2,611  \n 4,770  \n 4,543  \n -  \n 11,924 \n\nInventories, net \n -  \n 1,112  \n 24,526  \n 569  \n -  \n 26,207 \n\nPrepayments and other current assets \n 9,576  \n 16,593  \n 37,765  \n 23,702  \n -  \n 87,636 \n\nAmounts due from related parties \n -  \n 17,076  \n 226  \n 1,137  \n -  \n 18,439 \n\nIntra-Group receivables due from the Group’s entities(1) \n -  \n 128,164  \n 937,414  \n 31,856  \n (1,097,434) \n - \n\nNon-current assets: \n    \n    \n    \n    \n    \n   \n\nProperty and equipment, net \n -  \n -  \n 466  \n 873  \n -  \n 1,339 \n\nIntangible assets \n -  \n -  \n 87  \n 7  \n -  \n 94 \n\nOperating lease right-of-use assets \n -  \n -  \n 641  \n 3,098  \n -  \n 3,739 \n\nGoodwill \n -  \n -  \n    \n -  \n -  \n - \n\nLong-term investments \n 1  \n -  \n -  \n 35,907  \n -  \n 35,908 \n\nLong-term investments to the Group’s entities \n 180,978  \n -  \n -  \n -  \n (180,978) \n - \n\nAmounts due from related parties, non-current \n -  \n -  \n -  \n 5,394  \n -  \n 5,394 \n\nOther non-current asset \n -  \n 14  \n 1,283  \n 363  \n -  \n 1,660 \n\nTotal assets \n 190,566  \n 186,051  \n 1,024,440  \n \n**119,122**\n** ** \n (1,278,412) \n 241,767 \n\nLIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY \n    \n    \n    \n    \n    \n   \n\nCurrent liabilities: \n    \n    \n    \n    \n    \n   \n\nShort-term borrowings \n -  \n -  \n 8,000  \n 8,000  \n -  \n 16,000 \n\nAccounts payable \n -  \n -  \n 7,718  \n 438  \n -  \n 8,156 \n\nSalary and welfare payable \n -  \n 249  \n 243  \n 535 \n -  \n 1,027 \n\nAccrued liabilities and other current liabilities \n (126) \n 23,049  \n \n7,966\n  \n \n468\n  \n -  \n 31,357 \n\nAmounts due to related parties, current \n -  \n -  \n -  \n -  \n -  \n - \n\nIntra-Group payables due to the Group’s entities(1) \n 2,691  \n 14  \n \n102,637\n  \n 992,092  \n (1,097,434) \n - \n\nContract liabilities \n -  \n -  \n 430  \n 1,466  \n -  \n 1,896 \n\nOperating lease liabilities, current \n -  \n -  \n 197  \n 873  \n -  \n 1,070 \n\nDerivative liabilities \n -  \n -  \n -  \n -  \n -  \n - \n\nNon-current liabilities: \n    \n    \n    \n    \n    \n   \n\nDeferred tax liabilities \n -  \n -  \n -  \n -  \n -  \n - \n\nOperating lease liabilities, non-current \n -  \n -  \n 252  \n 2,021  \n -  \n 2,273 \n\nLong-term debt \n -  \n -  \n    \n 200  \n -  \n 200 \n\nInvestments deficit to the Group’s entities(2) \n -  \n (18,239) \n 890,307  \n -  \n (872,068) \n - \n\nTotal liabilities \n 2,565  \n 5,073  \n 1,017,750  \n 1,006,093  \n (1,969,502) \n 61,979 \n\nMezzanine equity: \n    \n    \n    \n    \n    \n   \n\nRedeemable non-controlling interests \n -  \n -  \n -  \n -  \n -  \n - \n\nTotal mezzanine equity \n -  \n -  \n -  \n -  \n -  \n - \n\nShareholders’ equity: \n    \n    \n    \n    \n    \n   \n\nTotal Boqii Holding Limited shareholders’ deficit \n 188,001  \n 180,978  \n 18,239  \n (890,307) \n 691,090  \n 188,001 \n\nNon-controlling interests \n -  \n -  \n (11,549) \n 3,336  \n -  \n (8,213)\n\nTotal shareholders’ equity \n 188,001  \n 180,978  \n 6,690  \n (886,971) \n 691,090  \n 179,788 \n\nTotal liabilities, mezzanine equity and shareholders’ equity \n 190,566  \n 186,051  \n 1,024,440  \n 119,122  \n (1,278,412) \n 241,767 \n\n \n\n*Notes:*\n\n \n\n(1)Represents\nthe elimination of intercompany balances among Boqii, the primary beneficiaries of VIEs and their subsidiaries, the other subsidiaries,\nand the VIEs and their subsidiaries that we consolidate.\n\n(2)Represents\nthe elimination of investments among Boqii, the primary beneficiaries of VIEs and their subsidiaries, the other subsidiaries, and the\nVIEs and their subsidiaries that we consolidate.\n\n10\n\n \n\n \n\n  \nYear Ended March 31, 2024 \n\n  \nBoqii Holding\nLimited  \nAll\nothers  \nPrimary\nBeneficiaries of\nVIEs and their\nsubsidiaries  \nVIEs and their\nsubsidiaries  \nEliminating\nadjustments  \nConsolidated\ntotals \n\n  \n(RMB in thousands) \n\nNet revenues: \n   \n   \n   \n   \n   \n  \n\nThird-party revenues \n -  \n 5,386  \n 240,509  \n 463,457  \n -  \n 709,352 \n\nIntra-Group revenues(1) \n -  \n -  \n 266,536  \n 41,335  \n (307,871) \n - \n\nTotal revenues \n -  \n 5,386  \n 507,045  \n 504,792  \n (307,871) \n 709,352 \n\nCost of revenues: \n    \n    \n    \n    \n    \n   \n\nThird-party cost of revenues \n -  \n (4,747) \n (471,571) \n (92,297) \n -  \n (568,615)\n\nIntra-Group cost of revenues(1) \n -  \n -  \n (918) \n (266,823) \n 267,741  \n - \n\nTotal cost of revenues \n -  \n (4,747) \n (472,489) \n (359,120) \n 267,741  \n (568,615)\n\nGross profit \n -  \n 639  \n 34,556  \n 145,672  \n (40,130) \n 140,737 \n\nOperating expenses: \n    \n    \n    \n    \n    \n   \n\nThird-party operating expenses \n (9,900) \n (12,467) \n (42,696) \n (138,799) \n -  \n (203,862)\n\nIntra-Group operating expenses(1) \n -  \n -  \n (40,416) \n 286  \n 40,130  \n - \n\nTotal operating expenses \n (9,900) \n (12,467) \n (83,112) \n (138,513) \n 40,130  \n (203,862)\n\nOther income/(expense), net \n -  \n -  \n 2,005  \n 961  \n -  \n 2,966 \n\nLoss from operations \n (9,900) \n (11,828) \n (46,551) \n 8,120  \n -  \n (60,159)\n\nEquity in loss of the Group’s entities(2) \n (64,439) \n (55,107) \n (4,834) \n -  \n 124,380  \n - \n\nNon-operating income/(expense) \n 10,677  \n 2,483  \n (7,132) \n (15,744) \n -  \n (9,716)\n\nLoss before income tax expenses \n (63,662) \n (64,452) \n (58,517) \n (7,624) \n 124,380  \n (69,875)\n\nIncome tax benefits \n -  \n -  \n 889  \n 38  \n -  \n 927 \n\nShare of results of equity investees \n -  \n -  \n -  \n 50  \n -  \n 50 \n\nNet loss \n (63,662) \n (64,452) \n (57,628) \n (7,536) \n 124,380  \n (68,898)\n\nLess: Net income attributable to the non-controlling interest shareholders \n -  \n (13) \n (2,521) \n (2,700) \n -  \n (5,234)\n\nNet loss attributable to Boqii Holding Limited \n (63,662) \n (64,439) \n (55,107) \n (4,836) \n 124,380  \n (63,664)\n\n \n\n11\n\n \n\n \n\n  \nYear Ended March 31, 2025 \n\n  \nBoqii Holding\nLimited  \nAll\nothers  \nPrimary\nBeneficiaries of\nVIEs and their\nsubsidiaries  \nVIEs and their\nsubsidiaries  \nEliminating\nadjustments  \nConsolidated\ntotals \n\n  \n(RMB in thousands) \n\nNet revenues: \n   \n   \n   \n   \n   \n  \n\nThird-party revenues \n    \n 1,487  \n 235,220  \n 232,187  \n -  \n 468,894 \n\nIntra-Group revenues(1) \n    \n -  \n 122,368  \n 27,336  \n (149,704) \n - \n\nTotal revenues \n    \n 1,487  \n 357,588  \n 259,523  \n (149,704) \n 468,894 \n\nCost of revenues: \n    \n    \n    \n    \n    \n   \n\nThird-party cost of revenues \n -  \n (1,125) \n (305,389) \n (61,726) \n -  \n (368,240)\n\nIntra-Group cost of revenues(1) \n -  \n -  \n (307) \n (121,990) \n 122,297  \n - \n\nTotal cost of revenues \n -  \n (1,125) \n (305,696) \n (183,716) \n 122,297  \n (368,240)\n\nGross profit \n -  \n 362  \n 51,892  \n 75,807  \n (27,407) \n 100,654 \n\nOperating expenses: \n    \n    \n    \n    \n    \n   \n\nThird-party operating expenses \n (7,562) \n (13,218) \n (58,304) \n (81,627) \n -  \n (160,711)\n\nIntra-Group operating expenses(1) \n -  \n -  \n (27,406) \n -  \n 27,406  \n - \n\nTotal operating expenses \n (7,562) \n (13,218) \n (85,710) \n (81,627) \n 27,406  \n (160,711)\n\nOther income/(expense), net \n -  \n -  \n 144  \n 592  \n -  \n 736 \n\nLoss from operations \n (7,562) \n (12,856) \n (33,674) \n (5,228) \n (1) \n (59,321)\n\nEquity in loss of the Group’s entities(2) \n (46,578) \n (40,073) \n (2,966) \n -  \n 89,617  \n - \n\nNon-operating income/(expense) \n 15  \n 6,373  \n (6,023) \n (419) \n -  \n (54)\n\nLoss before income tax expenses \n (54,125) \n (46,556) \n (42,663) \n (5,647) \n 89,616  \n (59,375)\n\nIncome tax benefits \n -  \n -  \n 801  \n -  \n -  \n 801 \n\nShare of results of equity investees \n -  \n -  \n -  \n (22) \n -  \n (22)\n\nNet loss \n (54,125) \n (46,556) \n (41,862) \n (5,669) \n 89,616  \n (58,596)\n\nLess: Net income attributable to the non-controlling interest shareholders \n -  \n 22  \n (1,790) \n (2,703) \n -  \n (4,471)\n\nNet loss attributable to Boqii Holding Limited \n (54,125) \n (46,578) \n (40,072) \n (2,966) \n 89,616  \n (54,125)\n\n* *\n\n12\n\n \n\n* *\n\n  \nYear Ended March 31, 2026 \n\n  \nBoqii Holding\nLimited  \nAll\nothers  \nPrimary\nBeneficiaries of\nVIEs and their\nsubsidiaries  \nVIEs and their\nsubsidiaries  \nEliminating\nadjustments  \nConsolidated\ntotals \n\n  \n(RMB in thousands) \n\nNet revenues: \n   \n   \n   \n   \n   \n  \n\nThird-party revenues \n -  \n 40  \n 305,634  \n 114,793  \n -  \n 420,467 \n\nIntra-Group revenues(1) \n -  \n -  \n 74,187  \n 24,601  \n (98,788) \n - \n\nTotal revenues \n -  \n 40  \n 379,821  \n 139,394  \n (98,788) \n 420,467 \n\nCost of revenues: \n    \n    \n    \n    \n    \n   \n\nThird-party cost of revenues \n -  \n (662) \n (301,444) \n (7,922) \n -  \n (310,028)\n\nIntra-Group cost of revenues(1) \n -  \n -  \n -  \n (74,187) \n 74,187  \n - \n\nTotal cost of revenues \n -  \n (662) \n (301,444) \n (82,109) \n 74,187  \n (310,028)\n\nGross profit \n -  \n (622) \n 78,377  \n 57,285  \n (24,601) \n 110,439 \n\nOperating expenses: \n    \n    \n    \n    \n    \n   \n\nThird-party operating expenses \n (9,667) \n (8,147) \n (64,196) \n (58,794) \n -  \n (140,804)\n\nIntra-Group operating expenses(1) \n -  \n -  \n (24,601) \n -  \n 24,601  \n - \n\nTotal operating expenses \n (9,667) \n (8,147) \n (88,797) \n (58,794) \n 24,601  \n (140,804)\n\nOther income/(expense), net \n -  \n -  \n 101  \n 298  \n -  \n 399 \n\nLoss from operations \n (9,667) \n (8,769) \n (10,319) \n (1,211) \n -  \n (29,966)\n\nEquity in loss of the Group’s entities(2) \n 4,586  \n 3,372  \n (16,099) \n -  \n 8,141  \n - \n\nNon-operating income/(expense) \n 4  \n 10,014  \n 30,400 \n (11,304) \n -  \n 29,114\n\nLoss before income tax expenses \n (5,077) \n 4,617  \n 3,982 \n (12,515) \n 8,141  \n (852)\n\nIncome tax benefits \n -  \n (31) \n (16) \n (1,227) \n -  \n (1,274)\n\nShare of results of equity investees \n -  \n -  \n -  \n 242  \n -  \n 242 \n\nNet loss \n (5,077) \n 4,586  \n 3,966 \n (13,500) \n 8,141  \n (1,884)\n\nLess: Net income attributable to the non-controlling interest shareholders \n -  \n -  \n 594 \n 2,600  \n -  \n 3,194\n\nNet loss attributable to Boqii Holding Limited \n (5,077) \n 4,586  \n 3,372  \n (16,100) \n 8,141  \n (5,078)\n\n* *\n\n*Notes:*\n\n \n\n(1)Represents\nthe elimination of the intercompany transactions at the consolidation level. For the years ended March 31, 2024, 2025 and 2026, the primary\nbeneficiary of the VIE didn’t charge any service fees according to the exclusive consultation and service agreements.\n\n \n\n(2)Represents\nthe elimination of investments among Boqii, the primary beneficiaries of VIEs and their subsidiaries, the other subsidiaries and the\nVIEs and their subsidiaries that we consolidate.\n\n13\n\n \n\n \n\n  \nYear Ended March 31, 2024 \n\n  \nBoqii Holding\nLimited  \nAll\nothers  \nPrimary\nBeneficiaries of\nVIEs and their\nsubsidiaries  \nVIEs and their\nsubsidiaries  \nEliminating\nadjustments  \nConsolidated\ntotals \n\n  \n(RMB in thousands) \n\nCash flows from operating activities: \n   \n   \n   \n   \n   \n  \n\nNet cash provided by/(used in) transactions with external parties \n (8,944) \n (15,112) \n (246,170) \n 244,798  \n -  \n (25,428)\n\nNet cash provided by/(used in) transactions with the Group’s entities \n -  \n -  \n 717,589  \n (717,589) \n -  \n - \n\nNet cash provided by/(used in) operating activities \n (8,944) \n (15,112) \n 471,419  \n (472,791) \n -  \n (25,428)\n\nCash flows from investing activities: \n    \n    \n    \n    \n    \n   \n\nCapital contribution to the Group’s entities \n (35,466) \n (39,938) \n -  \n -  \n 75,404  \n - \n\nCash flows of loan funding provided to the Group’s entities, net of repayments received \n -  \n (28,328) \n (569,335) \n -  \n 597,663  \n - \n\nOther investing activities \n 19  \n 40,675  \n 1,901  \n 5,219  \n -  \n 47,814 \n\nNet cash provided by/(used in) investing activities \n (35,447) \n (27,591) \n (567,434) \n 5,219  \n 673,067  \n 47,814 \n\nCash flows from financing activities: \n    \n    \n    \n    \n    \n   \n\nProceeds from issuance of ordinary shares \n 35,920  \n    \n    \n    \n    \n 35,920 \n\nCapital contribution from the Group’s entities \n -  \n 35,466  \n 39,938  \n -  \n (75,404) \n - \n\nCash flows of loan funding received from the Group’s entities, net of repayments made \n -  \n 29,551  \n 99,898  \n 468,214  \n (597,663) \n - \n\nOther financing activities \n 8,815  \n -  \n (80,899) \n 3,032  \n -  \n (69,052)\n\nNet cash provided by financing activities \n 44,735  \n 65,017  \n 58,937  \n 471,246  \n (673,067) \n (33,132)\n\n \n\n14\n\n \n\n \n\n  \nYear Ended March 31, 2025 \n\n  \nBoqii Holding\nLimited  \nAll\nothers  \nPrimary\nBeneficiaries of\nVIEs and their\nsubsidiaries  \nVIEs and their\nsubsidiaries  \nEliminating\nadjustments  \nConsolidated\ntotals \n\n  \n(RMB in thousands) \n\nCash flows from operating activities: \n   \n   \n   \n   \n   \n  \n\nNet cash provided by/(used in) transactions with external parties \n (7,142) \n (37,360) \n (139,244) \n 116,914  \n -  \n (66,832)\n\nNet cash provided by/(used in) transactions with the Group’s entities \n -  \n -  \n 175,936  \n (175,936) \n -  \n - \n\nNet cash provided by/(used in) operating activities \n (7,142) \n (37,360) \n 36,692  \n (59,022) \n -  \n (66,832)\n\nCash flows from investing activities: \n    \n    \n    \n    \n    \n   \n\nCapital contribution to the Group’s entities \n (12,624) \n (22,283) \n -  \n -  \n 34,907  \n - \n\nCash flows of loan funding provided to the Group’s entities, net of repayments received \n -  \n -  \n (122,104) \n -  \n 122,104  \n - \n\nOther investing activities \n 85  \n 26,778  \n (592) \n (1,672) \n -  \n 24,599 \n\nNet cash provided by/(used in) investing activities \n (12,539) \n 4,495  \n (122,696) \n (1,672) \n 157,011  \n 24,599 \n\nCash flows from financing activities: \n    \n    \n    \n    \n    \n   \n\nCapital contribution from the Group’s entities \n -  \n 12,624  \n 22,283  \n -  \n (34,907) \n - \n\nCash flows of loan funding received from the Group’s entities, net of repayments made \n -  \n -  \n 46,149  \n 75,955  \n (122,104) \n - \n\nOther financing activities \n 24,300  \n -  \n 4,000  \n (20,150) \n -  \n 8,150 \n\nNet cash provided by financing activities \n 24,300  \n 12,624  \n 72,432  \n 55,805  \n (157,011) \n 8,150 \n\n \n\n15\n\n \n\n \n\n  \nYear Ended March 31, 2026 \n\n  \nBoqii Holding\nLimited  \nAll\nothers  \nPrimary\nBeneficiaries of\nVIEs and their\nsubsidiaries  \nVIEs and their\nsubsidiaries  \nEliminating\nadjustments  \nConsolidated\ntotals \n\n  \n(RMB in thousands)  \n  \n\nCash flows from operating activities: \n   \n   \n   \n   \n   \n  \n\nNet cash provided by/(used in) transactions with external parties \n (7,456) \n (14,235) \n (79,766) \n 72,165  \n -  \n (29,292)\n\nNet cash provided by/(used in) transactions with the Group’s entities \n -  \n -  \n 124,905  \n (124,905) \n -  \n - \n\nNet cash provided by/(used in) operating activities \n (7,456) \n (14,235) \n 45,139  \n (52,740) \n -  \n (29,292)\n\nCash flows from investing activities: \n    \n    \n    \n    \n    \n   \n\nCapital contribution to the Group’s entities \n (21,555) \n 4,333  \n -  \n -  \n 17,222  \n - \n\nCash flows of loan funding provided to the Group’s entities, net of repayments received \n -  \n    \n (35,106) \n (17,068) \n 52,174  \n - \n\nOther investing activities \n -  \n 286  \n (277) \n 23,717  \n -  \n 23,726 \n\nNet cash provided by/(used in) investing activities \n (21,555) \n 4,619  \n (35,383) \n 6,649  \n 69,396  \n 23,726 \n\nCash flows from financing activities: \n    \n    \n    \n    \n    \n   \n\nProceeds from issuance of ordinary shares \n 24,334  \n -  \n -  \n -  \n -  \n 24,334 \n\nCapital contribution from the Group’s entities \n -  \n 21,555  \n (4,333) \n -  \n (17,222) \n - \n\nCash flows of loan funding received from the Group’s entities, net of repayments made \n -  \n 14  \n 16,704  \n 35,456  \n (52,174) \n - \n\nOther financing activities \n -  \n -  \n (16,000) \n 8,000  \n -  \n (8,000)\n\nNet cash provided by financing activities \n 24,334  \n 21,569  \n (3,629) \n 43,456  \n (69,396) \n 16,334 \n\n \n\n**Permits and Permission Required from the PRC Authorities for Our\nOperations**\n\n \n\nAs advised by our PRC counsel,\nShanghai DeheHantong Law Offices, except otherwise disclosed in this annual report, as of the date of this annual report, our PRC subsidiaries\nand the VIEs have obtained all licenses and approvals required for conducting our operations in China, and we currently do not foresee\nany impediments for us to complete such update or renewal. Additionally, all of the lease agreements of our leased properties have not\nbeen registered with the relevant PRC government authorities as required by PRC law and our certain leased properties are for industrial\nuse, which may expose us to potential fines.\n\n \n\nIf future laws and regulations,\nthe interpretation of current laws and regulations, or other relevant laws and regulations require us or parties on whom we rely to obtain\nadditional licenses, permits, filings, certificates, or approvals for our business operations in the future, or if we, VIEs or their subsidiaries\nare found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits,\napprovals, certificates, or filings, there can be no assurance that we, VIEs or their subsidiaries will successfully obtain such permits,\nlicenses or certificates and the relevant PRC regulatory authorities would take action in dealing with such violations or failures. In\naddition, if we had inadvertently concluded that such approvals, permits, registrations or filings were not required, or if applicable\nlaws, regulations or interpretations change in a way that requires us to obtain such approval, permits, registrations or filings in the\nfuture, we and the VIEs may be unable to obtain such necessary approvals, permits, registrations or filings in a timely manner. Any such\ncircumstance may subject us to fines and other regulatory, civil or criminal liabilities, and we may be ordered by the competent government\nauthorities to suspend relevant operations, which will materially and adversely affect our business operation. Furthermore, we may be\nsubject to regular inspections, examinations, inquiries or audits by regulatory authorities, and an adverse outcome of such inspections,\nexaminations, inquiries or audits may result in the loss or non-renewal of the relevant licenses and approvals. Moreover, the criteria\nused in reviewing applications for, or renewals of licenses and approvals may change from time to time, and there can be no assurance\nthat we will be able to meet new criteria that may be imposed to obtain or renew the necessary licenses and approvals. Many of such licenses\nand approvals are material to the operation of our business, and if we fail to maintain or renew material licenses and approvals, our\nability to conduct our business could be materially impaired. See “*Item 3. Key Information*-*3.D. Risk Factors-Risks Related\nto Doing Business in China- PRC laws and regulations regarding data security and cybersecurity are evolving. These laws and regulations\ncould have a material impact on our business operation*.”\n\n \n\n16\n\n \n\n \n\n**Regulatory Developments**\n\n** **\n\n**Cybersecurity Review Measures**\n\n \n\nOn December 28, 2021, the\nCyberspace Administration of China, or the CAC, published the Revised Cybersecurity Review Measures, which became effective on February\n15, 2022 and repealed the Cybersecurity Review Measures promulgated on April 13, 2020. The Revised Cybersecurity Review Measures provide\nthat a critical information infrastructure operator purchasing network products and services, and platform operators carrying out data\nprocessing activities, which affect or may affect national security, shall apply for cybersecurity review and that a platform operator\nwith more than one million users’ personal information aiming to list abroad must apply for cybersecurity review.\n\n \n\nIn the past, we were fined\nRMB100,000 by Shanghai Internet Information Office in December 2021 for the publishing and transmission of illegal information on our\nBoqii Pet APP and RMB5,000 by the Shanghai Pudong New Area Market Supervision Administration in May 2023 for the failure to stop sending\ncommercial information to consumers upon receiving their request to unsubscribe. We have fully paid such fines and rectified the non-compliance,\nand such past incidents did not have a material adverse impact on our business. As of the date of this annual report, we have not been\ninvolved in any investigations or become subject to a cybersecurity review initiated by the CAC based on the Revised Cybersecurity Review\nMeasures, and we have not received any inquiry, notice, warning, sanctions in such respect or any regulatory objections to our listing\non NYSE American LLC, or NYSE American, from the CAC. If the CSRC, the CAC or other regulatory agencies later deem us to be a critical\ninformation infrastructures operator and require that we obtain their approvals for our future offshore offerings, we may be unable to\nobtain such approvals in a timely manner, or at all. Any such circumstance could affect our ability to continue to offer securities to\ninvestors and cause the value of such securities to significantly decline or be worthless. In addition, implementation of industry-wide\nregulations affecting our operations could affect our ability to attract new customers and/or users and cause the value of our securities\nto significantly decline. For more information related to risks of cybersecurity review related to our business, see “*Item 3.\nKey Information*-*3.D. Risk Factors-Risks Related to Doing Business in China-PRC laws and regulations regarding data security and\ncybersecurity are evolving. These laws and regulations could have a material impact on our business operation*.”\n\n** **\n\n**Permissions or Approvals Required from the PRC Authorities for\nOffering Securities to Foreign Investors**\n\n \n\nOn July 6, 2021, the relevant\nPRC governmental authorities published the Opinions on Strictly Cracking Down on Illegal Securities Activities in Accordance with the\nLaw. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas\nlistings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems\nto deal with the risks and incidents faced by China-based overseas-listed companies.\n\n \n\nOn February 17, 2023, the\nCSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, or the Overseas Listing\nTrial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Overseas Listing Trial Measures, the\nCSRC circulated No.1 to No.5 Supporting Guidance Rules, the Notes on the Overseas Listing Trial Measures, the Notice on Administration\nArrangements for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official\nwebsite of the CSRC, or collectively, the Guidance Rules and Notice. Under the Overseas Listing Trial Measures and the Guidance Rules\nand Notice, domestic companies conducting overseas securities offering and listing activities, either in direct or indirect form, shall\ncomplete filing procedures with the CSRC pursuant to the requirements of the Overseas Listing Trial Measures within three business days\nfollowing its submission of initial public offering or listing application. The companies that have already been listed on overseas stock\nexchanges are not required to make immediate filings for its listing, yet need to make filings for subsequent offerings in accordance\nwith the Overseas Listing Trial Measures. In view of the fact that the Overseas Listing Trial Measures have come into effect on March\n31, 2023, we shall fulfill the filing procedures with the CSRC for any future offshore offering as per requirements of the Overseas Listing\nTrial Measures. According to CSRC’s Questions and Answers with respect to Trial Administrative Measures of Overseas Securities Offering\nand Listing by Domestic Companies on February 17, 2023, for the filing of overseas listing of enterprises with a VIE structure, the filing\nprocedure will adhere to the principles of market-oriented principle, rule of law, and strengthened regulatory synergy. The CSRC will\nconsult the relevant competent authorities, and the overseas listing of VIE structured enterprises that meet the compliance requirements\nwill be filed. We may not be able to complete the filing if the filing materials are incomplete or do not meet the requirements of the\nCSRC. Any failure to obtain or delay in going through filing procedures for any of our offshore offerings, or a rescission of such filing\nif completed, may subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which may materially and adversely\naffect our business, financial condition, and results of operations.\n\n \n\n**3.A. [Reserved]**\n\n** **\n\n**3.B. Capitalization and Indebtedness**\n\n \n\nNot applicable.\n\n** **\n\n**3.C. Reason for the Offer and Use of Proceeds**\n\n \n\nNot applicable.\n\n** **\n\n17\n\n \n\n** **\n\n**3.D. Risk Factors**\n\n** **\n\n**Summary of Significant Risk Factors**\n\n \n\nBelow please find a summary\nof the principal risks we face, organized under relevant headings.\n\n** **\n\n**Risks Related to Our Business and Industry**\n\n \n\nRisks and uncertainties related\nto our business and industry include, but are not limited to, the following:\n\n \n\n●Our\nlimited operating history across our various business initiatives makes it difficult to evaluate our business prospects and future growth\nrate. For details, see the risk factor with the same heading on page 21 of this annual report.\n\n \n\n●We\nhave a history of net losses and may continue to incur losses in the future. For details, see the risk factor with the same heading on\npage 21 of this annual report.\n\n \n\n●We\nhave significant working capital requirements and have historically experienced working capital deficits. If we continue to experience\nsuch working capital deficits in the future, our business, liquidity, financial condition and results of operations may be materially\nand adversely affected. For details, see the risk factor with the same heading on page 21 of this annual report.\n\n \n\n●If\nwe are unable to diversify our monetization channels, our business and prospects may be materially and adversely affected. For details,\nsee the risk factor with the same heading on page 21 of this annual report.\n\n \n\n●Our\nbusiness, prospects and financial results may be affected by our relationship with third-party e-commerce platforms. For details, see\nthe risk factor with the same heading on page 22 of this annual report.\n\n \n\n●Our\nbusiness is subject to the changing preferences and needs of our customers and their pets. Any failure by us to timely adapt our offerings\naccording to changes in customer preferences may adversely affect our business and results of operations. For details, see the risk factor\nwith the same heading on page 22 of this annual report.\n\n \n\n●If\nwe fail to acquire and retain new customers, or fail to do so in a cost-effective manner, our business, financial condition and results\nof operations may be materially and adversely affected. For details, see the risk factor with the same heading on page 22 of this annual\nreport.\n\n** **\n\n**Risks Related to Our\nCorporate Structure and Contractual Arrangements**\n\n \n\nHaving a corporate structure\nbeing based primarily in China poses risks to investors. Risks and uncertainties related to our corporate structure and the contractual\narrangements include, but are not limited to, the following:\n\n \n\n●There\nare substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations, and rules relating\nto the agreements that establish the VIE structure for our operations in China, including potential future actions by the PRC government,\nchanges in PRC regulatory requirements applicable to offshore listings, which could affect the enforceability of our contractual arrangements\nwith the VIEs and, consequently, significantly affect our financial condition and results of operations. If the PRC government finds\nour contractual arrangements noncompliant with relevant PRC laws, regulations, and rules, or if these laws, regulations, and rules or\nthe interpretation thereof change in the future, we could be subject to severe penalties or be forced to relinquish our interests in\nthe VIEs. For details, see the risk factor with the same heading on page 40 of this annual report.\n\n \n\n●Uncertainties\nexist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact our business, financial\ncondition and results of operations. For details, see the risk factor with the same heading on page 42 of this annual report.\n\n \n\n18\n\n \n\n \n\n●We\nrely on contractual arrangements with the VIEs and their respective shareholders for our business operations, which may not be as effective\nas direct ownership in providing operational control. For details, see the risk factor with the same heading on page 42 of this annual\nreport.\n\n \n\n●Any\nfailure by any of the VIEs or their shareholders to perform their respective obligations under our contractual arrangements with them\nwould have a material and adverse effect on our business. For details, see the risk factor with the same heading on page 42 of this annual\nreport.\n\n \n\n●Our\ncontractual arrangements are governed by PRC law. Accordingly, these contracts would be interpreted in accordance with PRC law, and any\ndisputes would be resolved in accordance with PRC legal procedures. For details, see the risk factor with the same heading on page 43\nof this annual report.\n\n** **\n\n**Risks Related to Doing\nBusiness in China**\n\n \n\nHaving the majority of our\noperations in China poses risks to investors. We face risks arising from the legal system in China, including risks and uncertainties\nregarding the enforcement of laws, rules and regulations in China:\n\n \n\n●Uncertainties\nwith respect to the PRC legal system could adversely affect us. For details, see the risk factor with the same heading on page 45 of\nthis annual report.\n\n \n\n●PRC\nlaws and regulations regarding data security and cybersecurity are evolving. These laws and regulations could have a material impact\non our business operation. For details, see the risk factor with the same heading on page 46 of this annual report.\n\n \n\n●Any\nfailure or perceived failure by us to comply with Anti-monopoly Guidelines for Internet Platforms and other Anti-monopoly laws and regulations\nmay result in governmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on\nour business, financial condition and results of operations. For details, see the risk factor with the same heading on page 49 of this\nannual report.\n\n \n\nWe face risks that the Chinese\ngovernment may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign\ninvestment in China-based issuers, which could result in a material change in our operations, significantly limit or hinder our ability\nto offer or continue to offer securities to investors, and cause the value of such securities to significantly decline or be worthless:\n\n \n\n●Changes\nin China’s economic, political or social conditions or government policies could have a material adverse effect on our business\nand operations. For details, see the risk factor with the same heading on page 44 of this annual report.\n\n \n\n●The\nfiling and approval from the CSRC or other PRC government authorities may be required in connection with an offshore offering under PRC\nlaw, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing. For\ndetails, see the risk factor with the same heading on page 46 of this annual report.\n\n \n\nIn addition, we are also\nsubject to other risks and uncertainties related to doing business in China, which include, but are not limited to risks to related our\nbusiness, enforcement of legal procedures and regulatory developments in relation to the Public Company Accounting Oversight Board (“PCAOB”)\ninspection:\n\n \n\n●Our\nbusiness, financial condition and results of operations depend on the level of consumer confidence and spending in China and may be adversely\naffected by the downturn in the global or Chinese economy. The PRC tax authorities may challenge the contractual arrangements among the\nWFOE, the VIEs and their shareholders and impose additional taxes, penalties or interest. For details, see the risk factor with the same\nheading on page 45 of this annual report.\n\n \n\n19\n\n \n\n \n\n●You\nmay experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us\nor our management named in this annual report based on foreign laws, and the ability of U.S. authorities to bring actions in China may\nalso be limited. For details, see the risk factor with the same heading on page 50 of this annual report.\n\n \n\n●It\nmay be difficult for overseas regulators to conduct investigation or collect evidence within China. For details, see the risk factor\nwith the same heading on page 51 of this annual report.\n\n \n\n●Trading\nin our securities will be prohibited under the Holding Foreign Companies Accountable Act (the “HFCAA”) if the PCAOB determines\nthat it is unable to inspect or investigate completely our registered public accounting firm, and as a result, U.S. national securities\nexchanges, such as the NYSE American, may determine to delist our securities. For details, see the risk factor with the same heading\non page 58 of this annual report.\n\n \n\n**Risks Related to Our Class A Ordinary Shares**\n\n \n\nIn addition to the risks\ndescribed above, we are subject to risks related to Class A ordinary shares, including, but are not limited to, the following:\n\n \n\n●The\ntrading price of our Class A ordinary shares is likely to be volatile, which could result in substantial losses to investors. For details,\nsee the risk factor with the same heading on page 59 of this annual report.\n\n \n\n●Our\nmulti-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage\nothers from pursuing any change of control transactions that holders of our Class A ordinary shares may view as beneficial. For details,\nsee the risk factor with the same heading on page 60 of this annual report.\n\n \n\n●The\nmulti-class structure of our ordinary shares may adversely affect the trading market for our Class A ordinary shares. For details, see\nthe risk factor with the same heading on page 61 of this annual report.\n\n \n\n●If\nsecurities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations\nregarding our Class A ordinary shares, the market price for our Class A ordinary shares and trading volume could decline. For details,\nsee the risk factor with the same heading on page 61 of this annual report.\n\n \n\n●The\nsale or availability for sale of substantial amounts of our Class A ordinary shares could adversely affect their market price. For details,\nsee the risk factor with the same heading on page 62 of this annual report.\n\n \n\n●Techniques\nemployed by short sellers may drive down the market price of our Class A ordinary shares. For details, see the risk factor with the same\nheading on page 62 of this annual report.\n\n \n\n●If\nwe are classified as a passive foreign investment company, or PFIC, United States taxpayers who own our Class A ordinary shares may have\nadverse United States federal income tax consequences. For details, see the risk factor with the same heading on page 65 of this\nannual report.\n\n \n\n20\n\n \n\n \n\n**Risks Related to Our Business and Industry**\n\n** **\n\n**Our limited operating history across our\nvarious business initiatives makes it difficult to evaluate our business prospects and future growth rate.**\n\n \n\nWe have a limited operating\nhistory across our various business initiatives, such as operating our private label lines, cooperating with KOLs to promote sales on\nour platform, offering SaaS solutions to offline pet stores, engaging in pet healthcare business and other new pet-related product and\nservice offerings. As a result, our historical performance may not be indicative of our future growth or financial results. In addition,\nwe may continue to introduce and implement new business strategies and initiatives as we continue to respond to changing market needs\nand customer preferences. We cannot assure you that we will be able to successfully implement our business initiatives or achieve our\nexpected growth rate, or at all, as our business model continues to evolve. Our overall business growth may slow down or become negative,\nand our revenues may decline for a number of possible reasons, some of which are beyond our control, including decreasing customer spending,\nchanges in consumer preferences, increasing competition, declining growth of our overall market or industry, the emergence of alternative\nbusiness models, changes in rules, regulations, government policies or general economic conditions. Our net revenues were approximately\nRMB 709.4 million, RMB468.9 million and RMB420.5 million (approximately US$61.0 million) in the years ended March 31, 2024, 2025 and 2026,\nrespectively. If our net revenues continue to decline in future or if our business initiatives fail to yield positive customer acceptance\nor economic returns as expected or if such initiatives cause any material disruption to our business model, investors’ perceptions\nof our business and prospects may be materially and adversely affected and the market price of our Class A ordinary shares could decline.\nYou should consider our prospects in light of the risks and uncertainties that companies with a limited operating history may encounter.\n\n** **\n\n**We have a history of net losses and may continue to incur losses\nin the future.**\n\n \n\nWe recorded net loss of approximately\nRMB68.9 million, RMB58.6 million and RMB1.9 million (approximately US$0.3 million) for the years ended March 31, 2024, 2025 and 2026,\nrespectively. Our net revenues will be impacted by various factors, including customer spending and preference, competitive landscape\nand macroeconomic and regulatory environment. Hence, our net revenues may not grow at the rate we expect.\n\n \n\nMoreover, our net revenues\nmay not increase sufficiently to offset the increase in our expenses as we further increase our brand awareness, expand our customer base,\nenhance customer experience, and expand our product and service offerings as well as offline distribution network. We will continue to\ninvest in sales, marketing and branding efforts. We will also continue to invest in improving our technologies and developing additional\nproducts and services. These efforts may be more costly than we expect. We may continue to incur losses in the future and we cannot assure\nyou that we will eventually achieve profitability.\n\n \n\n**We have significant working capital requirements\nand had historically experienced working capital deficits. If we experience such working capital deficits in the future again, our business,\nliquidity, financial condition and results of operations may be materially and adversely affected.**\n\n \n\nWe had a positive working\ncapital, representing the difference between total current assets and total current liabilities, of approximately RMB206.2 million, RMB176.5\nmillion and RMB134.1 million (approximately US$19.4 million) as of March 31, 2024, 2025 and 2026, respectively. Although we had a positive\nworking capital as of March 31, 2026 to meet our ongoing working capital needs, there is no assurance that we will generate sufficient\nnet income or operating cash flows to meet our working capital requirements and repay our liabilities as they become due in the future.\nWorking capital constraints have in the past limited, and may continue to limit, our ability to grow revenues, especially with emerging\nbrands that generally require larger inventory investments during their early commercial development. Working capital deficits will restrict\nour liquidity position and have a negative impact on our ability to repay current liabilities. Our inability to take actions that address\nour working capital deficit in a timely and efficient manner, including prudently managing our working capital, or raising additional\nequity or debt financing on terms that are acceptable to us when necessary, could materially adversely affect our liquidity, results of\noperations, financial condition and ability to operate.\n\n** **\n\n**If we are unable to diversify our monetization\nchannels, our business and prospects may be materially and adversely affected.**\n\n \n\nTo promote business growth\nand enhance our platform, we will diversify our monetization channels, such as expanding our offline presence and monetizing our online\ncommunity user base. However, we cannot assure you that we will be able to execute any of such strategies for monetization and business\nexpansion successfully.\n\n \n\n21\n\n \n\n \n\nIn addition, these monetization\nstrategies will require significant efforts and resources from our management. For instance, we need to continue to manage our relationships\nwith KOLs to ensure that our content appeals to our users and customers in an effort to monetize our online community user base. Content\nofferings may not achieve broad user acceptance, and may present new and difficult technological or operational challenges and subject\nus to claims if users and customers are not satisfied with the quality of the content or if customers are not satisfied with the products\npromoted on our platform. For further information, see “*Item 3. Key Information*-*3.D. Risk Factors-If we fail to maintain\nour relationships with content creators, in particular KOLs, or if our KOLs fail to produce popular pet-focused contents, we may not be\nable to attract or retain users of our online community, and our revenues and results of operations may be harmed*.” Also, we\nwill need to gain acceptance from offline pet stores and maintain steady relationships with them to expand our offline distribution network.\nFor further information, see “*Item 3. Key Information*-*3.D. Risk Factors*-*Our business, prospects and financial results\nmay be affected by our relationships with offline pet stores*.” All of these endeavors involve risks and will require significant\nmanagement, financial and human resources. We cannot assure you that we will be able to implement our strategies successfully. If we are\nnot able to diversify our monetization channels and achieve growth in our financials effectively, our business and prospects may be materially\nand adversely affected.\n\n** **\n\n**Our business, prospects and financial results may be affected\nby our relationship with third-party e-commerce platforms.**\n\n \n\nIn addition to our self-operated\nBoqii Mall, we also operate flagship stores on third-party e-commerce platforms, including Tmall, JD.com, Douyin, RedNote and Pinduoduo.\nWe leverage customer traffic of these e-commerce platforms to boost our product sales. Sales through these platforms have significantly\ncontributed to our financial performance. Nevertheless, these e-commerce platforms tend to lack expertise in the pet industry, and may\nlose appeal to customers who need tailored services and specialized pet products. To the extent that we fail to leverage traffic on these\nthird-party platforms, our flagship store sales may decline and we may experience difficulties in locating customers. At the same time,\nour cooperation with these third-party platforms may be negatively affected by a number of factors, including but not limited to higher\ncommissions and fees, negative publicity and service outages of these platforms, all of which are beyond our control. In addition, these\nthird-party platforms may deem our business a strong competitor of theirs and terminate their cooperation with us. If our relationships\nwith these third-party platforms deteriorate or are terminated or if we fail to maintain the relationships on commercially viable terms,\nwe may not be able to quickly locate alternative sales channels. Hence, our operations and financial condition will be materially and\nadversely affected.\n\n** **\n\n**Our business is subject to the changing\npreferences and needs of our customers and their pets. Any failure by us to timely adapt our offerings according to changes in customer\npreferences may adversely affect our business and results of operations.**\n\n \n\nOur growth depends, in part,\non our ability to successfully introduce new products to meet the evolving requirements of our customers and that of their pets. This,\nin turn, depends on our ability to foresee and respond to evolving customer trends, demands and preferences. The development and introduction\nof new products involve considerable costs, and may not generate sufficient customer interest or sales to cover their development or marketing\nexpenses, which may reduce our operating income. In addition, any such unsuccessful effort may adversely affect our brand and reputation.\nTo the extent that we are not able to successfully identify customer preferences, develop or promote new products, we may lose our competitive\nedge in the market and our business, financial condition and results of operations may be adversely affected.\n\n** **\n\n**If we fail to acquire and retain new customers,\nor fail to do so in a cost-effective manner, our business, financial condition and results of operations may be materially and adversely\naffected.**\n\n \n\nOur success depends on our\nability to acquire and retain new customers and to do so in a cost-effective manner. We must continue to acquire customers in order to\nincrease sales and achieve profitability. Considering our ability to monetize the user base of our online community is also critical to\nour business and growth, we have invested heavily in branding, sales and marketing to acquire and retain customers. We operate a pet-focused\nonline community in China’s pet market with approximately 4.4 million active buyers. As of March 31, 2026, we managed approximately\nseveral hundreds pet-focused Weixin/WeChat groups to extend our customer reach and promote our brand. We also leverage third-party e-commerce\nplatforms and social networks for customer traffic. As social network and e-commerce channels continue to rapidly evolve, we may be unable\nto develop or maintain a presence within these channels. Furthermore, we utilize online search engines from time to time on an as-needed\nbasis to generate additional traffic to our platforms through search engine optimization and posting sponsored articles. In the years\nended March 31, 2024, 2025 and 2026, we incurred approximately RMB85.1 million, RMB74.5 million and RMB81.6 (approximately US$11.8 million)\nin sales and marketing expenses, respectively. We expect to continue to spend significant amounts to acquire additional customers and\nretain existing ones, which may lead to increased net losses. However, there is no assurance that we will be able to recover the costs\nof our sales and marketing activities or successfully convert users on our online community into our customers, or that these activities\nwill be effective in attracting new customers or retaining existing customers. If we fail to attract sufficient new customers, increase\nour sales per customer, generate customer traffic for our online sales platforms, generate repeat purchases or maintain high levels of\ncustomer engagement in a cost-effective and timely manner, or at all, our revenues may decrease and our business, financial condition,\nand results of operations will be materially and adversely affected.\n\n \n\n22\n\n \n\n \n\n**We rely on assumptions and estimates to\ncalculate certain key operating metrics, such as GMV, and such measures may not be directly comparable with similarly titled operating\nmetrics adopted by other companies in our industry, which may lead to inaccurate interpretation of our business operations and our market\nposition.**\n\n \n\nGMV and certain other key\noperating metrics are calculated using internal company data. While these numbers are based on what we believe to be reasonable calculations\nfor the applicable periods of measurement, there are inherent challenges in measuring those metrics. For example, when calculating GMV,\nwe exclude products sold through the consignment model and the value of services offered by us. Although our management believes that\nsuch metrics are defined in a way that best reflects our business operations, our operating metrics may differ from estimates published\nby third parties or from similarly titled operating metrics used by other companies in our industry due to differences in data availability,\nsources and methodology. If third parties do not perceive our operating metrics to be accurate representations of our business operations\nor if we discover material inaccuracies in our operating metrics, our reputation may be harmed, which could adversely affect our business\nand operating results.\n\n** **\n\n**Increasing focus with respect to environmental,\nsocial and governance matters may impose additional costs on us or expose us to additional risks. Failure to comply with the laws and\nregulations on environmental, social and governance matters may subject us to penalties and adversely affect our business, financial condition\nand results of operations.**\n\n \n\nThe PRC government and public\nadvocacy groups have been increasingly focused on environment, social and governance, or ESG, issues in recent years, making our business\nmore sensitive to ESG issues and changes in governmental policies and laws and regulations associated with environment protection and\nother ESG-related matters. Investor advocacy groups, certain institutional investors, investment funds, and other influential investors\nare also increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost\nof their investments. Regardless of the industry, increased focus from investors and the PRC government on ESG and similar matters may\nhinder access to capital, as investors may decide to reallocate capital or to not commit capital as a result of their assessment of a\ncompany’s ESG practices. Any ESG concern or issue could increase our regulatory compliance costs. If we do not adapt to or comply\nwith the evolving expectations and standards on ESG matters from investors and the PRC government or are perceived to have not responded\nappropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational\ndamage and the business, financial condition, and the price of Class A ordinary shares could be materially and adversely effected.\n\n** **\n\n**We face risks related to natural disasters,\nhealth epidemics, civil and social disruption and other outbreaks, which could significantly disrupt our operations.**\n\n \n\nWe are vulnerable to natural\ndisasters, other epidemics and calamities. Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war,\nriots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures or internet failures, which\ncould cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect our ability to provide\nour offerings.\n\n** **\n\n**Any harm to our brand or failure to maintain\nand enhance our brand recognition may materially and adversely affect our business and results of operations.**\n\n \n\nWe believe that the recognition\nand reputation of our brands among customers and brand partners are crucial to our business and competitiveness. Many factors, some of\nwhich are beyond our control, are important to maintaining and enhancing our brands and may negatively impact our brands and reputation\nif not properly managed. These factors include our ability to:\n\n \n\n●maintain\nsuperior customer experience;\n\n \n\n●maintain\na diverse selection of high-quality products;\n\n \n\n●maintain\nand grow our customer base, online community user base and keep our users highly active and engaged;\n\n \n\n●maintain\nand grow our content offerings and ensure access to high-quality content creators, especially KOLs;\n\n \n\n●maintain\nand enhance our reputation and goodwill generally and in the event of any negative publicity on product quality, customer services, internet\nsecurity, or other issues affecting us or our industry in China;\n\n \n\n●maintain\nour relationships with brand partners, manufacturers, physical pet stores and pet hospitals and oversee the quality of products and services\nprovided by these third parties; and\n\n \n\n●maintain\nour relationships with KOLs and ensure that their behaviors represent our brands and products.\n\n** **\n\n23\n\n \n\n** **\n\n**We operate in a relatively new and evolving market.**\n\n \n\nOur business and prospects\nprimarily depend on the continuing development and growth of China’s pet industry, which is relatively new, evolving and unproven.\nChina’s pet industry is affected by numerous factors, including but not limited to, comprehensive consumption upgrade, governmental\nand regulatory policy and expansion and diversification of pet products and services portfolio. Compared to U.S. pet parents, Chinese\npet parents generally have less pet parenting experience. They are generally more price sensitive and less brand loyal. Accordingly, we\nbelieve that first-time Chinese pet parents prefer general e-commerce platforms that offer pet products at competitive prices, and we\nalso believe that they have limited demand for specialized, pure-play online retail platforms with high-quality pet-focused product offerings,\nsuch as our online sales platforms. If we no longer offer competitive discounts, we may experience a decrease in the number of our customers\nand their orders, which materially and adversely affects our results of operations and financial condition. Pet products still represent\na niche market in China. If China’s pet industry does not grow or grows slower than expected, our business, financial condition\nand results of operation may be materially and adversely affected.\n\n \n\n**We face intense competition. If we do not\ncompete successfully against existing or new competitors, we may lose customers and market share.**\n\n \n\nChina’s pet industry\nis highly competitive and Chinese pet parents are generally price-sensitive. We compete with pet product retail stores, supermarkets,\ngeneric e-commerce platforms and other pet-focused online retail platforms. Our competitors may have more financial, technical, marketing\nand other resources than we do and may be more experienced and able to devote greater resources to the development, promotion and support\nof their business. Specifically, they may be able to derive greater net sales and profits from their existing large customer base, acquire\ncustomers at lower costs or respond more quickly to new or emerging technologies and changes in customer preferences or habits than we\ncan. They may also engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt\nmore aggressive pricing policies, including but not limited to predatory pricing policies and provision of substantial discounts, which\nmay allow them to build larger customer bases and generate more net sales than we do. Increased competition may reduce our market share\nand require us to increase our sales and marketing efforts and capital commitment in the future, which could negatively affect our results\nof operations or force us to incur further losses. Furthermore, any disputes with current or future competitors may lead to negative publicity\nrelated to us, which may cause us to incur significant costs to defend against these activities and harm our business.\n\n \n\nWe expect competition in\nChina’s pet industry, in particular among pet-focused online retail platforms, to continue to increase. We believe that our ability\nto compete successfully in this market depends on many factors both within and beyond our control, including:\n\n \n\n●the\nsize and composition of our customer base;\n\n \n\n●the\nnumber of brand partners and products that we feature;\n\n \n\n●the\nquality and price of the products that we offer;\n\n \n\n●our\nability to customize content and product recommendations to customers tailored to their needs;\n\n \n\n●the\nconvenient shopping experience that we provide;\n\n \n\n●our\nselling and marketing efforts, including our ability to promote the brands of our brand partners and our private label brands; and\n\n \n\n●our\nreputation and brand strength.\n\n \n\nIf we fail to compete successfully\nin this market, our business, financial condition, and results of operations could be materially and adversely affected.\n\n** **\n\n**We may be unable to manage and expand the\nrelationships with brand partners, or otherwise fail to cooperate with them at favorable terms, and our business and growth prospects\nmay suffer as a result.**\n\n \n\nWe cooperate with our brand\npartners to provide a substantial majority of the products offered on our platforms. Maintaining strong relationships with our brand partners\nis important to the growth of our business. If we lose our existing brand partners due to, for example, increased competition, ineffectiveness\nof our advertisement solutions or fulfillment process, a significant change in the business policy or operation of the relevant brand\npartners, or any deterioration in our relationship with such brand partners, our business, financial condition and results of operations\nmay be materially and adversely affected.\n\n \n\n24\n\n \n\n \n\nWe generally do not maintain\nlong-term exclusive supply contracts with our brand partners. We cannot assure you that our existing brand partners will continue to cooperate\nwith us on commercially attractive terms, or at all, after the term of the current agreements expire. If these brand partners choose to\nenter into distribution agreements with our competitors or develop and rely on their in-house e-commerce capabilities, our sales could\nsuffer and our business could be adversely affected. The loss of any of our significant brand partners or the discontinuance of any preferential\npricing or supply terms they currently offer to us would have a material and negative impact on our business, financial condition, and\nresults of operations. Additionally, there can be no assurance that our current brand partners will be able to accommodate our requirements.\nAn inability of our existing brand partners to provide products in a timely or cost-effective manner could also impair our business and\ngrowth prospects. Moreover, our principal brand partners have provided us with certain incentives, such as cash rebates and free products.\nA reduction or discontinuance of these incentives would increase our costs and prevent us from achieving our profitability. In addition,\nif one or more of our brand partners were to offer these incentives, including preferential pricing, to our competitors, our competitive\nadvantage would be reduced, which could materially and adversely affect our business, financial condition, and results of operations.\n\n \n\nMeanwhile, we are continually\nseeking to build relationships with other high-quality brand partners. If we are unable to attract or cooperate with new brand partners,\nor to replace the loss of any of our existing brand partners, in a timely manner, or at all, we may experience a competitive disadvantage,\nour business may be disrupted and our business, financial condition, and results of operations may be materially and adversely affected.\n\n** **\n\n**Our private label products may not always\nappeal to our customers, and may compete with our brand partners.**\n\n \n\nWe launched our private labels,\nYoken and Mocare, in 2015 and 2018, respectively. Our Yoken brand offers high value for money pet food and products, and our Mocare brand\nfocuses on premium freeze-dried cat food. We launched two “D-cat” labels in 2022, under which we offer (i) pet snacks and\npet supplies and (ii) pet pharmaceuticals and medical care products, respectively.\n\n \n\nHowever, there is no assurance\nthat our private label product offerings will continue to generate customer interest and cater to their needs. If we are unable to generate\nsufficient sales of our private label products, we may fail to cover our development, manufacturing and marketing expenses on these products,\nand our business, results of operations and financial condition may be adversely affected.\n\n \n\nMoreover, as we sell both\nbranded products sourced from our brand partners and our private label products on our online sales platforms, we are likely to face competition\nfrom our brand partners. Branded products may have an advantage over our private label products primarily due to name recognition, although\nprivate label products are typically more competitively priced compared to branded products. In addition, selling private label products\nmay harm our relationship with our brand partners. If we lose our brand partners or if our relationships with our brand partners deteriorate,\nour business may be adversely affected. See “*Item 3. Key Information*-*3.D. Risk Factors*–*We may be unable to\nmanage and expand the relationships with brand partners, or otherwise fail to cooperate with them at favorable terms, and our business\nand growth prospects may suffer as a result*.”\n\n** **\n\n**We outsource the manufacturing of our private\nlabel products. As a result, our business, results of operations, financial conditions and reputation may be affected by issues relating\nto our manufacturers.**\n\n \n\nWe outsource the manufacturing\nof our private label products to pet food manufacturers in China. We may be unable to maintain our relationships with our manufacturing\npartners or identify or enter into relationships with new manufacturing partners to meet the manufacturing needs of our private label\nbusiness in a timely manner, or at all. Additionally, manufacturing at our manufacturing partners may be disrupted or delayed for a variety\nof reasons, including, but not limited to, natural and man-made disasters, health epidemics, information technology system failures, commercial\ndisputes, labor disputes, and environmental and worker health and safety issues. As a result, we may experience shortage in supply and\ndelay in delivery of our private label products, and our business, financial condition, results of operations and reputation may be materially\nand adversely affected.\n\n** **\n\n**Failure to maintain the quality and safety\nof our products and significant merchandise returns or refunds resulting could have a material and adverse effect on our reputation, financial\ncondition and results of operations.**\n\n \n\nThe quality and safety of\nour products are critical to our business. We have implemented stringent quality control systems on our private label products. Yet, due\nto the scale of our operations and rapid growth of our offline presence, maintaining consistent product quality depends significantly\non the effectiveness of our quality control system, which in turn depends on a number of factors, including the design of our quality\ncontrol system and the implementation of our quality control procedures. We may not be able to fully monitor the manufacturing process\nof our private label products and the quality control measures taken by our manufacturers may not be effective. There can be no assurance\nthat our quality control system will always prove to be effective.\n\n \n\n25\n\n \n\n \n\nWe may be exposed to product\nrecalls and withdrawals and adverse publicity if our products are alleged to be fake or expired, or cause injury or illness or if we are\nalleged to have mislabeled or misbranded our products or otherwise violated governmental regulations. We may also voluntarily recall or\nwithdraw products that we consider below our standards, whether for taste, appearance or otherwise. Consumer concerns regarding the safety\nof our products, whether justified or not, could adversely affect our brand reputation and business. A product recall or withdrawal could\nresult in substantial and unexpected expenditures, destruction of product inventory and lost sales, which could reduce our cash flow and\nprevent us from achieving profitability. In addition, a product recall or withdrawal may have detrimental effects on our brand reputation,\nleading to increased scrutiny by regulatory agencies and sharp decrease in demand for our products, all of which require significant management\nattention. These could negatively impact our business and, consequently, adversely affect our results of operations and reputation.\n\n \n\nWe do not carry product liability\ninsurance and may be subject to product liability claims if consumption and use of our products is alleged to cause injury or illness\nto our customers and their pets. The real or perceived sale of contaminated food products by us could result in product liability claims\nagainst our brand partners or us, expose us or our brand partners to governmental enforcement action or private litigation, or lead to\ncostly recalls and a loss of consumer confidence, any of which could have an adverse effect on our business, financial condition and results\nof operations. While we may attempt to seek compensation from responsible brand partners or our manufacturers in the event that we become\nsubject to claims due to their misconduct, such compensation may be limited and if we cannot fully recover our damages from them, we will\nbe required to bear such losses at our own costs. Any material product liability claim, litigation or governmental enforcement action\ncould materially and adversely affect our business, financial condition and results of operations. Even unsuccessful claims could result\nin the use of funds and managerial efforts in defending them and could negatively impact on our reputation.\n\n \n\nIn addition, we allow our\ncustomers to return certain products and offer refunds, subject to our return and refunds policy. If merchandise returns or refunds are\nsignificant or higher than anticipated and forecasted, our business, financial condition, and results of operations could be adversely\naffected. Furthermore, we revise our policies relating to returns or refunds from time to time, and may do so in the future, which may\nresult in customer dissatisfaction and harm to our reputation or brand, or an increase in the number of product returns or the amount\nof refunds we make.\n\n** **\n\n**If we cannot manage the growth of our business\nor execute our strategies effectively, our business and prospects may be materially and adversely affected.**\n\n \n\nBusiness growth will place\nsignificant demands on our management, operational and financial resources. We may encounter difficulties as we expand our operations,\ndata and technology, sales and marketing, and general and administrative functions, which may strain our ability to maintain the quality\nand reliability of our platform and products and services we offer, develop and improve our operational, financial, legal and management\ncontrols, and enhance our reporting systems and procedures. Our expenses may grow faster than our revenues, and our expenses may be greater\nthan we anticipate. Managing our growth will require significant expenditures and allocation of valuable management resources. If we are\nunable to manage our growth or execute our strategies effectively, our business and prospects may be materially and adversely affected.\n\n** **\n\n**Diversifying our product offerings may expose\nus to more risks.**\n\n \n\nSince our inception, we have\nfocused on selling pet food, treats and supplies, and have also expanded our product offerings to include veterinary drugs. Diversifying\nour product offerings involves new risks and challenges different from those of our existing product categories. Our lack of familiarity\nwith and lack of relevant customer data relating to new products may make it more difficult for us to anticipate customer demand and preferences,\ninspect and control quality and handle and store the products. As we broaden our product offerings, we may also be required to obtain\nadditional licenses or permits for the sales of certain new products and subject to additional regulations by the relevant PRC government\nauthorities. There is no assurance that we will be able to acquire additional requisite licenses or permits or to comply with the relevant\nlegal requirements, which may materially and adversely affect our business. Moreover, as we continue to diversify our product offerings,\nwe will need to continuously enhance and upgrade our technology, optimize our branding, sales and marketing efforts, expand our research\nand development team and train our customer service staff. All these efforts will require significant managerial, financial and human\nresources. At the same time, new products may have lower profit margins than our existing offerings, and we may need to price aggressively\nto gain market share or remain competitive in any new categories, which may further reduce our profit margins.\n\n \n\n26\n\n \n\n \n\n**If we fail to maintain our relationships\nwith content creators, in particular KOLs, or if our KOLs fail to produce popular pet-focused contents, we may not be able to attract\nor retain users of our online community, and our revenues and results of operations may be harmed.**\n\n \n\nWe rely on our content creators,\nin particular KOLs, to present popular pet-focused content on our online community and promote our products that appeal to existing and\npotential customers. Hence, if we fail to maintain our relationships with KOLs, our revenues and results of operations may be materially\nand adversely affected.\n\n \n\nWe generally enter into customary\ncontracts with our KOLs, under which they are paid a fee for each piece of advertising post or video. We may need to offer higher compensation\nand incur additional recruitment costs to retain our KOLs due to increased competition for KOLs. Even so, we cannot assure you that we\nwill be able to control, incentivize or retain KOLs to provide popular content and stimulate purchases of our products. If our KOLs cease\nto contribute content to our online community, or their content fail to attract users and customers, we may experience a decline in user\ntraffic and user engagement of our online community. If we are unable to grow our user base or increase user engagement, our online community\nwill become less attractive to existing and potential customers, which will have a material and adverse effect on our business and results\nof operations.\n\n** **\n\n**Any change, disruption, discontinuity in\nthe features and functions of major social networks could severely limit our ability to continue growing our customer base, and our business\nmay be materially and adversely affected.**\n\n \n\nWe leverage social networks\nas a tool for customer acquisition and engagement. Through these social networks, such as WeChat/Weixin, our customers may share product\ninformation and their purchase experiences with their friends, family and other social contacts, which helps us generate low-cost organic\ntraffic and active interactions among customers. A portion of our customer traffic comes from such user recommendation or product introduction\nfeature on social networks. To the extent that we fail to leverage such social networks, our ability to attract or retain customers may\nbe severely harmed. If any of these social networks changes its features or support, such as charging fees for the current free features,\nor stops providing us with infrastructure support, we may not be able to locate alternative platforms of similar scale to provide similar\nfeatures or support on commercially reasonable terms in a timely manner, or at all. Furthermore, we may fail to establish or maintain\nrelationships with social network operators to support the growth of our business on economically viable terms, or at all. Any interruption\nto or discontinuation of our relationships with major social network operators may severely and negatively impact our ability to continue\ngrowing our customer base, and any occurrence of the circumstances mentioned above may have a material adverse effect on our business,\nfinancial condition and results of operations.\n\n** **\n\n**We may be held liable for any false or misleading\nstatements or advice given by KOLs on our online community.**\n\n \n\nWe may be held liable for\nany false or misleading statements or advice given by KOLs on our online community. When these KOLs post pet-related content, respond\nto user inquiries, offer pet parenting advice or recommend products to pet parents, they may make false or misleading statements in relation\nto pet parenting or the suitability and effectiveness of pet products. These KOLs may be negligent in giving advice or fail to specify\nthat their recommendation is general in nature and may not apply to the circumstances of particular pet parents and their pets. We may\nnot always have appropriate disclaimers in place on our online community for such behavior.\n\n \n\nWe may be subject to legal\nand administrative proceedings and claims from time to time where these statements are found to result in harm to our customers or their\npets. These claims and proceedings may be expensive and time consuming to investigate and defend and may divert resources and management\nattention from the operation of our business. Although these claims may not be successful, they may harm our reputation and business.\n\n** **\n\n**Negative media coverage could adversely\naffect our business and reputation.**\n\n \n\nNegative publicity about\nus or our business, shareholders, affiliates, directors, officers or other employees, brand partners, manufacturers, content creators,\nthird-party platforms, delivery service providers and other third parties as well as the industry in which we operate, can harm our operations\nand reputation. Such negative publicity could be related to a variety of matters, including, but not limited to:\n\n \n\n●alleged\nmisconduct or other improper activities committed by our shareholders, affiliates, directors, officers and other employees, as well as\nour brand partners, manufacturers, content creators, third-party platforms, delivery service providers and other third parties;\n\n \n\n●allegations\nor rumors about us or our shareholders, affiliates, directors, officers and other employees, as well as our brand partners, manufacturers,\ncontent creators, third-party platforms, delivery service providers and other third parties;\n\n \n\n●customer\ncomplaints about the quality of products and services provided by us or third parties we cooperate with;\n\n \n\n●infringement\nactivities associated with counterfeit goods on our platform;\n\n \n\n●security\nbreaches or customer data leakage;\n\n \n\n●governmental\nand regulatory investigations or penalties resulting from our failure to comply with applicable laws and regulations;\n\n \n\n●instances\nof product or service safety issues, even those not involving us or our business partners; and\n\n \n\n●other\nlawsuits and legal proceedings, with or without merits.\n\n \n\n27\n\n \n\n \n\nIn addition to traditional\nmedia, there has been an increasing use of social media platforms and similar devices in China, including instant messaging applications,\nsocial media websites and other forms of internet-based communications that provide individuals with access to a broad audience of users\nand other interested persons. The availability of information on instant messaging applications and social media platforms is virtually\nimmediate and may not afford us an opportunity for redress or correction. The opportunity for dissemination of information, including\ninaccurate information, is seemingly limitless and readily available. Information concerning our company, shareholders, directors, officers\nand employees as well as our brand partners, manufacturers, content creators, third-party platforms and other third parties may be posted\non such platforms at any time. Such negative publicity, whether valid or not, may result in a decrease in customer confidence in us and\nmaterially and adversely affect our reputation, business, financial condition and results of operations.\n\n** **\n\n**Our reputation, business and result of operations\nwould be adversely impacted by any counterfeit, unauthorized or infringing products sold on our platform that fail to meet the applicable\nlegal requirements sold on our platforms.**\n\n \n\nAlthough we have adopted\nvarious measures to ensure the authenticity of products sold on our platform, these measures may not always be successful. If we were\nto negligently participate or assist in infringement activities associated with counterfeit goods or failed to duly verify the qualifications\nor the licenses of our brand partners, we may be subject to sanctions under PRC law, including injunctions to cease infringing activities,\nrectification, compensation, administrative penalties and even criminal liability, depending on the gravity of such misconduct. See “*Item\n4.B. Business Overview-Regulation-Regulations on Consumer Protection*” and “*Item 4.B. Business Overview-Regulation-Regulations\non E-commerce*.”\n\n \n\nWe believe our brand and\nreputation are extremely important to our success and our competitive position. If counterfeit products were sold on our platform or we\nwere facing any administrative penalties against us due to products that failed to meet the applicable legal requirements, our reputation\ncould be severely damaged and customers may choose not to spend time on our platform. As a result, our business operations and financial\nresults may be negatively affected.\n\n** **\n\n**Our business, prospects and financial results\nmay be affected by our relationships with offline pet stores.**\n\n \n\nWe sell selected products\nto offline pet stores and pet hospitals as a supplement to our online sales. Offline sales to pet stores and pet hospitals are generally\nsteady and help us maintain a healthy inventory levels, increase our brand awareness and expand our customer reach. We intend to cooperate\nwith more offline pet stores and pet hospitals to expand our geographical footprint and further build up our offline network in the future.\nIf our relationships with such businesses deteriorate or are terminated or we fail to maintain such relationships on commercially viable\nterms, our business, financial condition and results of operations may be materially and adversely affected.\n\n \n\n**If we do not successfully optimize, operate\nand manage our fulfillment network, our business, financial condition, and results of operations could be harmed.**\n\n \n\nFailures to successfully\noptimize, operate and manage our fulfillment network result in excess or insufficient fulfillment capacity, increased costs, and impairment\ncharges, any of which could materially and adversely affect our business. As of March 31, 2026, we operated two warehouse and utilized\neight fulfillment centers, and as we continue to expand our business with different requirements and add fulfillment capacity, our fulfillment\nnetwork will become increasingly complex and operating them will become more challenging. If we grow faster than we anticipate, we may\nexceed our fulfillment capacity sooner than we anticipate, we may experience difficulties fulfilling orders in a timely manner and our\ncustomers may experience delays in receiving their purchases, which could harm customer experience and our reputation. As a result, we\nwould need to increase our capital expenditures on expanding our fulfillment network sooner than we expected. We cannot assure you that\nwe will be able to locate suitable facilities or recruit qualified managerial and operational personnel to support the expansion our fulfillment\nnetwork. Also, there can be no assurance that we will be able to operate our fulfillment network cost effectively.\n\n \n\nIn addition, failure to optimize\ninventory in our fulfillment network may increase our shipping costs and result in delayed shipment. In particular, we maintain inventory\nof most of our brand partners’ products, which further complicates our inventory management. Our failure to properly handle our\ninventory may result in us being unable to secure sufficient storage space or optimize the use of our warehouses or cause other unexpected\ncosts and harm to our business and operations.\n\n \n\n28\n\n \n\n \n\n**Delivery is a critical part of our business\nand any changes in, or disruptions to, our delivery arrangements could adversely affect our business, financial condition, and results\nof operations.**\n\n \n\nWe rely on a limited number\nof third-party delivery service providers, to fulfill orders to our customers. If we are unable to negotiate acceptable pricing and other\nterms with these delivery service providers, our results of operations and financial condition will be negatively affected. Our delivery\nservice providers may experience performance problems or other difficulties in processing orders or delivering our products to customers\non time, including natural disasters, labor disputes, financial difficulties, system failures or other disruptions to their operations.\nWe are also subject to risks of damage or loss during delivery by our delivery service providers. If the products ordered by our customers\nare not delivered in a timely fashion or are damaged or lost during the delivery process, our customers could become dissatisfied and\ncease buying products from us, which would adversely affect our business, financial condition, results of operations and reputation.\n\n** **\n\n**Our results of operations are subject to\nfluctuations due to the seasonality of our business and other events.**\n\n \n\nWe have experienced and expect\nto continue to experience seasonal fluctuations in our financial performance. These seasonal patterns have caused and will continue to\ncause fluctuations in our operating results. Historically, we have recorded stronger performance in the fourth quarter of a calendar year,\nprimarily because consumers increase their purchases during e-commerce festivals in China, such as the periods around Double Eleven Shopping\nFestival (which is an online sales promotion event that falls on November 11 of each year) and Double Twelve (which is another online\nsales promotion event that falls on December 12 of each year). In addition, we generally experience a lower level of sales activity in\nthe first quarter due to the Chinese New Year holiday, during which the volumes of online purchases and logistical operations drop significantly\ndue to vacations and business closures.\n\n \n\nIn anticipation of increased\nsales activity prior to shopping festivals, we increase our inventory levels and incur additional expenses such as procuring additional\nworking capital and increasing the size of our workforce on a temporary basis. If our seasonal sales patterns become more pronounced in\nthe future, this may strain our personnel, customer service operations, fulfillment operations and shipment activities and may cause a\nshortfall in revenues compared to expenses in a given period. As a result, our financial results may be materially and adversely affected.\nIn addition to increasing our own inventory levels, we also rely on our brand partners to increase their inventory levels to match projected\nseasonal demand. If we and our brand partners do not increase inventory levels for popular products in sufficient amounts or if we are\nunable to restock popular products from our brand partners in a timely manner, we may fail to fulfill customer demand. This may harm our\nreputation and damage the trust that consumers have in our business, which is a key part of our business model. As a result, we may experience\na material and adverse effect on our financial conditions and results of operations.\n\n** **\n\n**Our SaaS solutions bring additional business\nand operational risks, and may not be attractive to offline pet stores.**\n\n \n\nWe first introduced our self-developed\nsoftware-as-a-service, or SaaS, to pet stores in 2015. We currently offer our SaaS solutions for free and there can be no assurance that\nour SaaS solutions will be well accepted by offline pet stores or that we will be able to monetize our SaaS solutions in the future. In\naddition, we may find it difficult and costly to support our SaaS solutions, which require professional implementation and technical support\nservices which we could not provide without incurring significant costs. To the extent that our SaaS solutions are defective or there\nare disruptions to our services, demand for our SaaS solutions could diminish, and we would be subject to substantial liability. Specifically,\nif we experience security breaches and unauthorized access to our customer’s data or our data, our SaaS solutions may be perceived\nas not secure. As a result, customers may stop using our SaaS solutions, leading to loss of monetization opportunities, and we may incur\nsignificant legal and financial exposure and liabilities. Our reputation and results of operations may be adversely affected.\n\n** **\n\n**Our customers use third-party payment service\nproviders to make payments on our platform. If these payment services are restricted or curtailed in any way or become unavailable to\nus or our customers for any reason, our business may be materially and adversely affected.**\n\n \n\nOur customers make payments\nthrough a variety of methods, including payment through our third-party online payment service partners. We depend on the billing, payment\nand escrow systems of these service providers to maintain accurate records of payments of sales proceeds and collect such payments. If\nthe quality, utility, convenience or attractiveness of these payment processing and escrow services declines, our platform may become\nless attractive to our customers. Moreover, certain commercial banks in China impose limits on the amounts that may be transferred by\nautomated payment from customers’ bank accounts to their linked accounts with third-party online payment services. We cannot predict\nwhether these and any additional restrictions that could be put in place would have a material adverse effect on our platform. We may\nalso be subject to various rules, regulations and requirements, regulatory or otherwise, governing electronic fund transfers and online\npayment, which could change or be reinterpreted to make it difficult or impossible for us to comply with.\n\n \n\n29\n\n \n\n \n\nIn addition, we cannot assure\nyou that we will be successful to enter into amicable relationships with additional online payment service providers or maintain our relationship\nwith existing ones. Identifying, negotiating and maintaining relationships with these providers require significant time and resources.\nThey could choose to terminate their relationships with us or propose terms that we cannot accept. For example, increasing costs to these\npayment service providers, including fees charged by banks to process transactions through online payment channels, would increase our\ngeneral and administrative expenses. Furthermore, these service providers may not perform as expected under our agreements with them,\nand we may have disagreements or disputes with such payment service providers, any of which could adversely affect our brand and reputation\nas well as our business operations. Meanwhile, we may be subject to fraud, customer data leakage and other illegal activities in connection\nwith the various payment methods we offer.\n\n \n\n**The proper functioning of our online platforms\nis essential to our business. Any disruption to our IT systems could materially affect our ability to maintain the satisfactory performance\nof our platform and deliver consistent services to our users and customers.**\n\n \n\nThe proper functioning of\nour online platforms is essential to our business. The satisfactory performance, reliability and availability of our IT systems are critical\nto our success, our ability to attract and retain users and customers and our ability to maintain and deliver consistent services to them.\nHowever, we may be unable to monitor and ensure high-quality maintenance and upgrade of our IT systems and infrastructure on a real-time\nbasis, and customers may experience service outages or delays in accessing and using our platform to place orders. Specifically, we may\nexperience surges in online traffic and orders associated with promotional activities and generally as we scale, under which our platform\nmay be overloaded and may not be able to function properly. Our technology infrastructure may also fail to keep pace with increased sales\nand traffic on our online platforms, and as a result, we may be required to incur significant additional costs to upgrade the underlying\nnetwork infrastructure both in terms of capacity and functionality. We cannot assure you that we will be successful in executing these\nsystem upgrades in a timely manner, or at all, and the failure to do so may affect our user experiences and impede our growth.\n\n \n\nWe currently use third-party\ncloud services and servers to store our data, to allow us to analyze a large amount of data simultaneously and to update our user and\ncustomer database and profiles quickly. Servers may be vulnerable to computer viruses, physical or electronic break-ins and similar disruptions,\nwhich could lead to system interruptions, website or mobile app slowdown or unavailability, delays or errors in transaction processing,\nloss of data or the inability to accept and fulfill customer orders. We also rely on various Internet service providers and mobile networks\nto deliver and “push” communications to users and customers and allow them to access our online platforms. Any interruption\nor delay in the functionality of these cloud service providers, servers or networks may materially and adversely affect the operations\nof our business. Additionally, the costs and complexities involved in expanding and upgrading our systems may prevent us from doing so\nin a timely manner and may prevent us from adequately meeting the demand placed on our systems. Given that we exercise little control\nover these third-party service providers, we are vulnerable to issues with the services they provide.\n\n \n\nFurthermore, our technology\nor infrastructure may not function properly at all times, and may be subject to disruptions caused by natural disasters, accidents, power\ndisruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or other events\nor disruptions. Any of such occurrences could lead to the unavailability of our online platforms and mobile apps, interruption of our\nsupply chain and delivery, leakage or permanent loss of customer data, interruptions or decreases in connection speed, or other events\nwhich would affect our operations. While we have certain disaster recovery arrangements in place, such as back-up servers and data redundancy\nplans, our precautionary measures may be inadequate, and our business interruption insurance may not be sufficient to cover potential\nloss. If any IT disruptions were to occur to our business, our reputation or relationships with our customers may be damaged and our customers\nmay switch to our competitors. As a result, our operations could be impaired and our business, financial condition, and results of operations\nmay be materially and adversely affected.\n\n** **\n\n**Our business may be adversely affected if\nwe are unable to provide our customers with a cost-effective platform that is able to respond and adapt to rapid changes in technology.**\n\n \n\nThe number of people who\naccess the Internet through devices other than personal computers, such as mobile phones and tablets, has increased dramatically in recent\nyears. The versions of our website, mobile app and mini-program on Weixin developed for these devices may not be compelling to customers.\nAdapting our services and/or infrastructure to these devices as well as other new Internet, networking or telecommunications technologies\ncould be time consuming and could require us to incur substantial expenditures, which could adversely affect our business, financial condition,\nand results of operations.\n\n \n\n30\n\n \n\n \n\nAdditionally, as new mobile\ndevices and platforms are released, we may need to devote significant time and resources to the creation, support and maintenance of such\napplications. If we are unable to attract consumers to our website or mobile app through these devices or are slow to develop a version\nof our website or mobile app that is more compatible with alternative devices, we may fail to capture a significant share of customers\nin the pet industry and or lose existing customers, which could materially and adversely affect our business, financial condition, and\nresults of operations.\n\n** **\n\nFurther, we regularly upgrade\nour technologies and business applications, and we will continue to implement new technologies or business applications in the future.\nTechnology upgrades and changes require significant investments. Our financial condition and results of operations may be affected by\nthe timing, effectiveness and costs associated with any of these upgrades or changes to our systems and infrastructure. In the event that\nit is more difficult for our customers to buy products from us on their mobile devices, or if our customers choose not to buy products\nfrom us on their mobile devices or to use mobile products that do not offer access to our website, we may not be able to retain our existing\ncustomers or attract new customers. As a result, our customer growth could be harmed and our business, financial condition, and results\nof operations may be materially and adversely affected.\n\n \n\n**We may be subject to liability for placing\nadvertisements with content that is deemed inappropriate or misleading under PRC laws.**\n\n \n\nWe provide online and offline\nonline marketing and information services to our brand partners, helping them design and implement effective marketing strategies. PRC\nlaws and regulations prohibit advertising companies from producing, distributing or publishing any advertisement with content that violates\nPRC laws and regulations, impairs the national dignity of the PRC, involves designs of the PRC national flag, national emblem or national\nanthem or the music of the national anthem, is considered reactionary, obscene, superstitious or absurd, is fraudulent, or disparages\nsimilar products. We may also be subject to the administrative penalties incurred by the exaggerating or fraudulent advertisement from\ntime to time. Additionally, we may be subject to claims by customers misled by information on our mobile apps, website or other portals\nwhere we place advertisements. We may not be able to recover such losses from brand partners by enforcing the indemnification provisions\nin the contracts, which may result us in diverting our management’s time and other resources from our business and operations to\ndefend against these infringement claims. As a result, our business, financial condition, results of operations and reputation could be\nmaterially and adversely affected.\n\n** **\n\n**Our business generates and processes a large\namount of data, and the improper collection, storage, use or disclosure of such data could harm our reputation as well as have a material\nadverse effect on our business and prospects.**\n\n \n\nOur business generates and\nprocesses a large quantity of data. We face risks inherent in handling and possessing large volumes of data and in protecting the security\nof such data. In particular, we face a number of challenges relating to data from transactions and other activities on our platforms,\nincluding without limitation:\n\n \n\n●protecting\nthe data in and hosted on our system, including against attacks on our system by outside parties or fraudulent behavior or improper use\nby our employees;\n\n \n\n●addressing\nconcerns related to privacy and sharing, safety, security and other factors; and\n\n \n\n●complying\nwith applicable laws, rules and regulations relating to the collection, use, storage, transfer, disclosure or security of personal information,\nincluding any requests from regulatory and government authorities relating to such data.\n\n \n\nConcerns about our practices\nwith regard to the collection, use or disclosure of personal information or other privacy-related and security matters, even if unfounded,\ncould damage our reputation and operations. On November 28, 2019, the Secretary Bureau of the Cyberspace Administration of China, the\nGeneral Office of the Ministry of Industry and Information Technology, the General Office of the Ministry of Public Security and the General\nOffice of the State Administration for Market Regulation promulgated the Identification Method of Illegal Collection and Use of Personal\nInformation Through App, which provides guidance for the regulatory authorities to identify the illegal collection and use of personal\ninformation through mobile apps, and for the app operators to conduct self-examination and self-correction and for other participants\nto voluntarily monitor compliance. Moreover, the PRC Constitution, the PRC Criminal Law, the Civil Code of the PRC and the Cybersecurity\nLaw protect individual privacy in general, which require certain authorization or consent from internet users prior to collection, use\nor disclosure of their personal data and also protection of the security of the personal data of such users. In particular, Amendment\n7 to the PRC Criminal Law prohibits institutions, companies and their employees in the telecommunications and other industries from selling\nor otherwise illegally disclosing a citizen’s personal information obtained during the course of performing duties or providing\nservices. While we strive to comply with all applicable data protection laws and regulations, as well as our own privacy policies, any\nfailure or perceived failure to comply may result in proceedings or actions against us by government entities or private individuals,\nwhich could have an adverse effect on our business. See *“Item 3. Key Information*-*3.D. Risk Factors-Risks Related to Doing\nBusiness in China-PRC laws and regulations regarding data security and cybersecurity are evolving. These laws and regulations could have\na material impact on our business operation*.” Moreover, failure or perceived failure to comply with applicable laws and regulations\nrelated to the collection, use, or sharing of personal information or other privacy-related and security matters could result in a loss\nof confidence in us by customers and users, which could adversely affect our business, financial condition and results of operations.\n\n \n\n31\n\n \n\n \n\nFurthermore, in August 2021,\nthe Standing Committee of the National People’s Congress, or the SCNPC, officially promulgated the Personal Information Protection\nLaw of the People’s Republic of China, or the Personal Information Protection Law. The Personal Information Protection Law provides\na comprehensive personal information protection system, under which in case of any personal information processing, individual prior consent\nmust be obtained except in other circumstances stipulated therein to the contrary. No organization or individual may illegally collect,\nuse, process or transmit the personal information of others, illegally buy or sell, provide or make public the personal information of\nothers, or engage in the processing of personal information that endangers the national security or public interests. The Personal Information\nProtection Law raises the protection requirements for processing personal information, and many specific requirements of the Personal\nInformation Protection Law remain to be clarified by the CAC, other regulatory authorities, and courts in practice. We may be required\nto make further adjustments to our business practices to comply with the personal information protection laws and regulations. In addition,\nif we fail to collect, use, process or transmit personal information properly, our reputation as well as our business and prospects may\nbe affected adversely.\n\n \n\n**Failure to protect confidential information\nof our users and customers and network against security breaches could damage our reputation and brand and substantially harm our business\nand results of operations.**\n\n \n\nOrders for products we offer\nare made through our online sales platforms. Online payments for our products are settled through third-party online payment service providers.\nWe also share certain personal information about our customers with third-party delivery service providers, such as their names, addresses,\nand phone numbers. In such cases, maintaining complete security for the transmission of confidential information on our platform, such\nas customer names, personal information and billing addresses, is essential to maintaining customer confidence.\n\n \n\nWe have adopted security\npolicies and measures, including encryption technology, to protect our proprietary data and customer information. We do not maintain insurance\nagainst damages incurred by us resulting from customer identity theft and subsequent fraudulent payments. However, advances in technology,\nthe expertise of hackers, new discoveries in the field of cryptography or other events or developments could result in a compromise or\nbreach of the technology that we use to protect confidential information. We may not be able to prevent third parties, especially hackers\nor other individuals or entities engaging in similar activities, from illegally obtaining such confidential or private information we\nhold as a result of our customers’ visits on our online platforms. We could therefore be exposed to litigation and regulatory action\nand possible liability, causing significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures,\nwhich could in turn have a material adverse effect on our business, financial condition, and results of operations. Such individuals or\nentities obtaining our users’ and customers’ confidential or private information may further engage in various other illegal\nactivities using such information. In addition, we have limited control or influence over the security policies or measures adopted by\nthird-party providers of online payment services. Our third-party delivery service providers may also violate their confidentiality obligations\nand disclose or use information about our customers illegally. Any negative publicity on our platform’s safety or privacy protection\nmechanism and policy could have a material and adverse effect on our public image and reputation. Any compromise of our information security\nor third-party service providers’ information security measures could require us to expend significant capital and other resources\nto alleviate the problems and, despite our best remediation efforts, have a material and adverse effect on our reputation, business, prospects,\nfinancial condition and results of operations.\n\n** **\n\n**We have and may continue to invest in or\nacquire complementary assets, technologies and businesses, or enter into strategic alliances. Such efforts may fail and have in the past\nresulted, and may continue to result, in equity or earnings dilution, which may materially and adversely affect our results of operations\nand financial condition.**\n\n \n\nWe have in the past invested\nin or acquired, and may continue to invest in or acquire, assets, technologies and businesses, or enter into strategic alliances, that\nare complementary to our business. These investments may involve minority stakes in other companies, acquisitions of entire companies\nor acquisitions of selected assets.\n\n \n\nRisks and uncertainties associated\nwith such investments, acquisitions or strategic alliances include:\n\n \n\n●acquired\nbusinesses or assets may not yield the results we expect;\n\n \n\n●acquisitions\nof assets and businesses have in the past resulted, and may continue to result, in the use of substantial amounts of cash, potentially\ndilutive issuances of equity securities, significant amortization expenses related to intangible assets and exposure to potential unknown\nliabilities of the acquired businesses or assets;\n\n \n\n●any\nfuture strategic alliances, investments or acquisitions and the subsequent integration of the new assets and businesses obtained or developed\nfrom such transactions into our own may divert management from their primary responsibilities and subject us to additional liabilities;\n\n \n\n32\n\n \n\n \n\n●to\nthe extent we fund these investment or acquisition through the issuance of equity or convertible debt securities, the ownership interests\nof our shareholders could be significantly diluted;\n\n \n\n●the\ncost of identifying and consummating acquisitions, and integrating the acquired businesses or assets into ours, may materially exceed\nour expectations, and the integration of acquired businesses or assets may be disruptive to our business operations;\n\n \n\n●we\nmay not be able to successfully retain the customers and key personnel of acquisitions over the longer term, which could also adversely\naffect our business;\n\n \n\n●we\nmay have to obtain approval from the relevant PRC governmental authorities or counterparts elsewhere in the world for the acquisitions\nand comply with any applicable PRC rules and regulations, which may be costly; and\n\n \n\n●if\nwe fail to integrate successfully such acquisitions, or the business associated with such acquisitions, into our company, the revenues\nand operating results of the combined company could be adversely affected.\n\n \n\nThe size and complexity of\nour business has increased following previous acquisitions, and may continue to increase following additional acquisitions in the future.\n\n** **\n\n**We may need additional capital, and financing\nmay be not available on terms acceptable to us, or at all.**\n\n \n\nWe require additional cash\nresources to fund our business operations, including any marketing initiatives or investments we may decide to pursue. If these resources\nare insufficient to satisfy our cash requirements, we may seek to obtain additional credit facilities or sell additional equity or debt\nsecurities. The issuance and sale of additional equity securities could result in dilution of our existing shareholders. The incurrence\nof indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict\nour operations. It is uncertain whether financing will be available in amounts or on terms acceptable to us, if at all. If financing proves\nto be unavailable or on unacceptable terms, we may be forced to raise funds on undesirable terms, or we may be unable to maintain or grow\nour business or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition,\nand results of operations.\n\n** **\n\n**The failure of any bank in which we deposit\nour funds could have an adverse effect on our business, financial condition and results of operations.**\n\n \n\nEvents involving limited\nliquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or\nother companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events\nof these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. Most recently, on\nMarch 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation,\nwhich appointed the U.S. Federal Deposit Insurance Corporation (“FDIC”) as receiver. Similarly, on March 12, 2023, Signature\nBank was also placed into receivership. A statement by the U.S. Department of the Treasury, the Federal Reserve and the FDIC indicated\nthat all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured\ndeposit accounts, however, borrowers under credit agreements, letters of credit and certain other financial instruments with SVB, Signature\nBank or any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts thereunder.\n\n \n\nAlthough we do not hold funds\nat the banks described above, we have funds at other banks. As of the date of this annual report, we have not experienced any difficulty\nin withdrawing cash from our deposit accounts with the banks. We generally seek to diversify our cash and cash equivalents across several\nfinancial institutions in an attempt to minimize exposure to any one of these entities. Nevertheless, our cash balance with a financial\ninstitution may exceed the amount under the deposit guarantee program in the relevant jurisdiction. To the extent any of the financial\ninstitutions in which we have deposited funds ultimately fails, we may lose our deposits to the extent they exceed the amount under the\ndeposit guarantee program in the relevant jurisdiction, and/or we may be required to move our accounts to another financial institution,\nwhich could cause operational difficulties, such as delays in making payments to third parties, which could have an adverse effect on\nour business, financial condition and results of operations.\n\n \n\n33\n\n \n\n \n\n**Disruption in the financial markets and\neconomic conditions could affect our ability to raise capital.**\n\n \n\nGlobal economies could suffer\ndramatic downturns as the result of a deterioration in the credit markets and related financial crisis as well as a variety of other factors\nincluding, extreme volatility in security prices, severely diminished liquidity and credit availability, ratings downgrades of certain\ninvestments and declining valuations of others. For example, the Covid-19 caused significant volatility in financial markets across the\nworld. In the past, governments have taken unprecedented actions in an attempt to address and rectify these extreme market and economic\nconditions by providing liquidity and stability to the financial markets. If these actions are not successful, the return of adverse economic\nconditions may cause a significant impact on our ability to raise capital, if needed, on a timely basis and on acceptable terms or at\nall.\n\n** **\n\n**Our business depends substantially on the\ncontinuing efforts of our senior management. If we lose their services, we could incur significant costs in finding suitable replacements\nand our business may be severely disrupted.**\n\n \n\nOur business operations depend\nsubstantially on the continuing efforts of our senior management. If one or more members of our senior management were unable or unwilling\nto continue their employment with us, we might not be able to replace them in a timely manner, or at all. As qualified individuals are\nin high demand, we may incur additional expenses to recruit and retain qualified replacements. As a result, our business may be severely\ndisrupted and our financial condition and results of operations may be materially and adversely affected. In addition, our senior management\nmay join a competitor or form a competing company. We can provide no assurance that we will be able to successfully enforce our contractual\nrights included in the employment agreements we have entered into with our senior management team, particularly in China, where such individuals\nreside. As a result, our business may be negatively affected due to the loss of one or more members of our senior management.\n\n** **\n\n**Employee or other business misconduct could\nexpose us to monetary loss, legal liability, regulatory scrutiny, and reputational harm.**\n\n \n\nOur employees and outsourced\nworkers may engage in illegal, fraudulent, corrupt or collusive activities that adversely affect our business. For example, if an employee\nwere to engage in illegal or suspicious activities such as fraud, theft, kickback or bribery, we could suffer direct losses, become subject\nto regulatory sanctions and suffer serious harm to our financial condition and reputation. In addition, any business misconduct in violation\nof applicable laws and regulations could also subject us to administrative penalties or fine, or even criminal liability in extreme cases,\nby the competent authorities. In the past, we were fined RMB100,000 by Shanghai Internet Information Office in December 2021 for the publishing\nand transmission of illegal information on our Boqii Pet APP and RMB5,000 by the Shanghai Pudong New Area Market Supervision Administration\nin May 2023 for the failure stop sending commercial information to consumers upon receiving their request to unsubscribe. As the date\nof this annual report, we have rectified these two activities. There can be no assurance that our internal controls and policies will\nprevent fraud or illegal activity or that similar incidents will not occur in the future. Any of such activities could severely damage\nour brand and reputation, which could drive customers away from our platform, and materially and adversely affect our business, financial\ncondition and results of operations.\n\n** **\n\n**We rely on proper operation and maintenance\nof our platforms and internet infrastructure and telecommunications networks in China. Any deficiencies, malfunction, capacity constraint\nor operation interruption, any undetected programming errors or flaws or failure to maintain effective customer service could harm our\nreputation, impair our platform, and may have an adverse impact on our business.**\n\n \n\nCurrently, a majority of\nour product sales are generated through our online sales platforms. Therefore, the satisfactory performance, reliability and availability\nof our platforms are critical to our success and our ability to attract and retain users and customers. Our business depends on the performance\nand reliability of the internet infrastructure in China. The reliability and availability of our platforms depends on telecommunications\ncarriers and other third-party providers for communications and storage capacity, including bandwidth and server storage. If we are unable\nto enter into and renew agreements with these providers on acceptable terms, or if any of our existing agreements with such providers\nare terminated as a result of our breach or otherwise, our ability to provide our services to our users and customers could be adversely\naffected.\n\n \n\nAccess to internet in China\nis maintained through state-owned telecommunications carriers under administrative control, and we obtain access to end-user networks\noperated by such telecommunications carriers and internet service providers to give customers access to our mobile platform. The failure\nof telecommunications network operators to provide us with the requisite bandwidth could also interfere with the speed and availability\nof our platforms. Service interruptions prevent customers from accessing our platforms and placing orders, and frequent interruptions\ncould frustrate users and customers and discourage them from attempting to place orders or accessing our platforms, which could cause\nus to lose customers and harm our operating results.\n\n \n\n34\n\n \n\n \n\nIn addition, our platforms\nand internal systems rely on software that is highly technical and complex, and depend on the ability of such software to store, retrieve,\nprocess and manage immense amount of data. The software on which we rely has contained, and may now or in the future contain, undetected\nprogramming errors or flaws. Some errors may only be discovered after the code has been released for external or internal use. Errors\nor other design defects within the software on which we rely may result in a negative experience for customers using our platforms, delay\nintroductions of new features or enhancements, result in errors or compromise our ability to support effective customer service and enjoyable\ncustomer engagement. Any errors, bugs or defects discovered in the software on which we rely could result in harm to our reputation and\nloss of users and customers, which could adversely affect our business, results of operations and financial conditions.\n\n** **\n\n**We may be subject to intellectual property\ninfringement claims, which may be expensive to defend and may disrupt our business and operations.**\n\n \n\nWe cannot be certain that\nour operations or any aspects of our business do not or will not infringe upon or otherwise violate trademarks, patents, copyrights, know-how\nor other intellectual property rights held by third parties. We may be subject to legal proceedings and claims relating to the intellectual\nproperty rights of others. In addition, there may be other third-party intellectual property that is infringed upon by our products, services,\nthe content displayed on our platform or other aspects of our business. There could also be existing patents or other intellectual property\nrights of which we are not aware that our products or content may inadvertently infringe. We cannot assure you that holders of the relevant\nintellectual property rights purportedly relating to some aspect of our technology platform or business, if any such holders exist, would\nnot seek to enforce such intellectual property rights against us in China, the United States or any other jurisdictions. As of the date\nof this annual report, we have not received from the proprietors or competent authorities any warning, subpoena, administrative penalties\nor fine as a result of our unauthorized use of such IT software or systems, but we cannot assure you that such actions will not be taken\nin the future. We strive to closely monitor the products offered on our platforms. However, we cannot be certain that these measures would\nbe effective in completely preventing the infringement of trademarks, patents, copyrights, know-how or other intellectual property rights\nheld by third parties. Further, the application and interpretation of China’s intellectual property right laws and the procedures\nand standards for granting trademarks, patents, copyrights, know-how or other intellectual property rights in China are still evolving\nand are uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis. If we are found to\nhave violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited\nfrom using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own, but such alternative\nmay not be available on terms acceptable to us or at all. In addition, we may incur significant expenses, and may be forced to divert\nmanagement’s time and other resources from our business and operations to defend against these third-party infringement claims,\nregardless of their merits. Successful infringement or licensing claims made against us may result in significant monetary liabilities\nand may materially disrupt our business and operations by restricting or prohibiting our use of the intellectual property in question.\nThese risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.\n\n** **\n\n**We may not be able to prevent others from\nunauthorized use of our intellectual property, which could harm our business and competitive position.**\n\n \n\nWe regard our trademarks,\ncopyrights, patents, domain names, know-how, proprietary technologies, and similar intellectual property as critical to our success, and\nwe rely on a combination of intellectual property laws and contractual arrangements, including confidentiality, invention assignment and\nnon-compete agreements with our employees and others, to protect our proprietary rights. Any of our intellectual property rights could\nbe challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive\nadvantages. In addition, there can be no assurance that (i) our application for registration of trademarks, patents, and other intellectual\nproperty rights will be approved, (ii) any intellectual property rights will be adequately protected, or (iii) such intellectual property\nrights will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. Further, because of the\nrapid pace of technological change in our industry, parts of our business rely on technologies developed or licensed by third parties,\nand we may not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on reasonable terms.\n\n \n\nIt is often difficult to\nregister, maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject to judicial interpretation\nand enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation. Confidentiality, invention\nassignment and non-compete agreements may be breached by counterparties, and there may not be adequate remedies available to us for any\nsuch breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights\nin China. Policing any unauthorized use of our intellectual property is difficult and costly and the steps we take may be inadequate to\nprevent the infringement or misappropriation of our intellectual property. For example, third parties may register trademarks or domain\nnames or purchase internet search engine keywords that are similar to our trademarks, brands or websites, or misappropriate our intellectual\nproperty or data and copy our platform, all of which could cause confusion to our users and customers, divert online customers away from\nour content and products and harm our reputation. In the event that we resort to litigation to enforce our intellectual property rights,\nsuch litigation could result in substantial costs and a diversion of our management and financial resources, and could put our intellectual\nproperty at risk of being invalidated or narrowed in scope. We can provide no assurance that we will prevail in such litigation, and even\nif we do prevail, we may not obtain a meaningful recovery. In addition, our trade secrets may be leaked or otherwise become available\nto, or be independently discovered by, our competitors. Any failure in maintaining, protecting or enforcing our intellectual property\nrights could have a material adverse effect on our business, financial condition and results of operations.\n\n \n\n35\n\n \n\n \n\n**We may be held liable for information or\ncontent displayed on, retrieved from or linked to our platforms, or distributed to our users and customers, and PRC authorities may impose\nlegal sanctions on us, including, in serious cases, suspending or revoking the licenses necessary to operate our platforms.**\n\n \n\nThe PRC government has adopted\nregulations governing internet access and the distribution of news and other information over the internet. Under these regulations, internet\ncontent providers and internet publishers are prohibited from posting or displaying over the internet content that, among other things,\nviolates PRC laws and regulations, impairs the national dignity of China, or is reactionary, obscene, superstitious, fraudulent or defamatory.\nFailure to comply with these requirements may result in the revocation of licenses to provide internet content and other licenses, and\nthe closure of the concerned websites. The website operator may also be held liable for such censored information displayed on or linked\nto the websites. Our content creators engage in sales promotion activities through interacting and exchanging information with our users\nand customers and generating and distributing content. It is possible that our users and customers, including our content creators, may\nengage in illegal, obscene or incendiary conversations or activities, including displaying or publishing information or content that may\nbe deemed unlawful under PRC laws and regulations on our platforms. Our informative and interactive content platform, Boqii Community,\nalso allows users to upload user-generated content on our platform, which exposes us to potential disputes and liabilities in connection\nwith third-party copyrights. When users register on our platforms, they agree to our standard agreement, under which they agree not to\ndisseminate any content infringing on third-party copyright on our platform. However, if any information or content on our platforms is\ndeemed illegal, obscene or incendiary, or if appropriate licenses and third-party consents have not been obtained, claims may be brought\nagainst us for defamation, libel, negligence, copyright, patent or trademark infringement, other unlawful activities or other theories\nand claims based on the nature and content of the information delivered on or otherwise accessed through our platform. Defending against\nany such actions could be costly and involve significant time and attention of our management and other resources.\n\n \n\nIf our platforms or content\nis found to be in violation of any applicable requirements, we may be penalized by relevant authorities, or, if we are not eligible for\nthe safe harbor exemption, or if it is found that we have not adequately managed the information or content on our platforms, we may be\nsubject to joint infringement liability and PRC authorities may impose legal sanctions on us, including, in serious cases, suspending\nor revoking the licenses necessary to operate our platforms and our business and reputation may accordingly be adversely affected.\n\n \n\n**We may from time to time be subject to claims,\ncontroversies, lawsuits and other legal and administrative proceedings, which could have a material adverse effect on our business, results\nof operations, financial condition and reputation.**\n\n \n\nAs of the date of this annual\nreport, we are not party to any material legal or administrative proceedings. However, in light of the nature of our business, we are\nsusceptible to potential claims or controversies. We have been, and may from time to time in the future be, subject to or involved in\nvarious claims, controversies, lawsuits and other legal and administrative proceedings. Lawsuits and other administrative or legal proceedings\nthat may arise in the course of our operations can involve substantial costs, including the costs associated with investigation, litigation\nand possible settlement, judgment, penalty or fine. In addition, lawsuits and other legal and administrative proceedings may be costly\nand time consuming and may require a commitment of management and personnel resources that will be diverted from our normal business operations,\nwhich will materially and adversely affect our business, financial condition, and results of operations.\n\n \n\n**Our grant of share options and other forms\nof share based incentive awards may result in significant share based compensation expenses.**\n\n \n\nWe have adopted share incentive\nplans from time to time, to enhance our ability to attract and retain exceptionally qualified individuals and to encourage them to acquire\na proprietary interest in the growth and performance of us. For example, we adopted the 2018 Global Share Plan in August 2018, for the\npurpose of granting share-based compensation awards to employees, directors and consultants to incentivize their performance and align\ntheir interests with ours. The 2018 Global Share Plan was last amended and restated in May 2022, and the total number of Class A ordinary\nshares reserved for awards to be granted to the eligible participants thereunder was increased by 25,000 Class A ordinary shares, in order\nto retain and attract talent to drive the long-term success of Boqii.\n\n \n\nThe maximum aggregate number\nof Class A ordinary shares that may be issued under the amended and restated 2018 Global Share Plan, or the Amended and Restated 2018\nGlobal Share Plan, is 81,174. As of March 31, 2026, options to purchase a total of 77,690 Class A ordinary shares were outstanding, excluding\nthose that were forfeited or canceled, of which options underlying 74,906 Class A ordinary shares had become vested and exercisable. We\naccount for compensation costs for certain share options granted using a fair value-based method and recognize expenses in our consolidated\nstatement of income in accordance with U.S. GAAP. We believe the granting of share-based compensation is of significant importance to\nour ability to attract and retain key personnel and employees, and we will continue to grant share-based compensation to employees in\nthe future. As a result, our expenses associated with share-based compensation may increase, which may have an adverse effect on our results\nof operations.\n\n** **\n\n36\n\n \n\n** **\n\n**None of the lease agreements of our leased\nproperties has been registered with the relevant PRC government authorities as required by PRC law and our certain leased properties are\nfor industrial use, which may expose us to potential fines.**\n\n \n\nUnder PRC law, lease agreements\nof commodity housing tenancy are required to be registered with the local construction (real estate) departments. As of the date of this\nannual report, none of our lease agreements for our leased properties in China has been registered with the relevant PRC government authorities,\nwhich may expose us to potential fines if we fail to remediate after receiving any notice from the relevant PRC government authorities.\nFailure to complete the lease registration will not affect the legal effectiveness of the lease agreements according to PRC law, but the\nreal estate administrative authorities may require the parties to the lease agreements to complete lease registration within a prescribed\nperiod of time, and the failure to do so may subject the parties to fines from RMB1,000 to RMB10,000 for each of such lease agreements.\nFurthermore, our lessors are required to comply with various laws and regulations to enable them to lease effective titles of their properties\nfor our use. Certain of our leased properties used for our warehouse are defined as the properties for industrial use only under the PRC\nlaw. We may need to seek for an alternative lease, and our operation of business may be accordingly affected.\n\n** **\n\n**Failure to make adequate contributions to\nvarious employee benefit plans and withhold individual income tax on employees’ salaries as required by PRC regulations may subject\nus to penalties.**\n\n \n\nIn accordance with the PRC\nSocial Insurance Law and the Regulations on the Administration of Housing Fund and other relevant laws and regulations, China establishes\na social insurance system and other employee benefits including basic pension insurance, basic medical insurance, work-related injury\ninsurance, unemployment insurance, maternity insurance, housing fund, and a handicapped employment security fund, or collectively the\nEmployee Benefits. An employer shall pay the Employee Benefits for its employees in accordance with the rates provided under relevant\nregulations and shall withhold the social insurance and other Employee Benefits that should be assumed by the employees. For example,\nan employer that has not made social insurance contributions at a rate and based on an amount prescribed by the law, or at all, may be\nordered to rectify the noncompliance and pay the required contributions within a stipulated deadline and be subject to a late fee of 0.05%\nper day. If the employer still fails to rectify the failure to make social insurance contributions within the stipulated deadline, it\nmay be subject to a fine ranging from one to three times of the amount overdue if we fail to rectify such failure within the prescribed\ndeadline.\n\n \n\nUnder the PRC Social Insurance\nLaw and the Regulations on the Administration of Housing Fund, PRC subsidiaries shall register with local social insurance agencies and\nregister with applicable housing fund management centers and establish a special housing fund account in an entrusted bank. Both PRC subsidiaries\nand their employees are required to contribute to the Employee Benefits. Companies operating in China are also required to withhold individual\nincome tax on employees’ salaries based on the actual salary of each employee upon payment. We may be subject to late fees and fines\nin relation to the underpaid employee benefits and under-withheld individual income tax and, if so, our financial condition and results\nof operations may be adversely affected.\n\n \n\n**Non-compliance with labor-related laws and\nregulations of the PRC may have an adverse impact on our financial condition and results of operation.**\n\n \n\nWe have been subject to stricter\nregulatory requirements in terms of entering into labor contracts with our employees and paying various statutory employee benefits, including\npensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and childbearing insurance to designated\ngovernment agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law, or the Labor Contract Law, that became effective\nin January 2008 and was amended in 2012 and its implementing rules that became effective in September 2008, employers are subject to stricter\nrequirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation\nand unilaterally terminating labor contracts. In the event that we decide to terminate some of our employees or otherwise change our employment\nor labor practices, the Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or\ncost-effective manner, which could adversely affect our business and results of operations. As of the date of this annual report, we believe\nour current practice complies with the Labor Contract Law and its implementation rules. However, the relevant governmental authorities\nmay take a different view and impose fines on us.\n\n \n\nAs the interpretation and\nimplementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment practice does not and\nwill not violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. If\nwe are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation to our employees\nand our business, financial condition and results of operations could be materially and adversely affected.\n\n** **\n\n37\n\n \n\n** **\n\n**We have identified a material weakness in\nour internal control over financial reporting for the year ended March 31, 2026. If we fail to adequately remediate this weakness or otherwise\ndevelop and maintain an effective system of internal control over financial reporting, or if we experience any additional material weaknesses\nin the future, we may be unable to accurately report our financial results or prevent fraud, or comply with the accounting and reporting\nrequirements applicable to public companies, which may adversely affect investor confidence in us and the market price of our shares.**\n\n \n\nIn preparing our consolidated\nfinancial statements for the year ended March 31, 2026, we and our independent registered public accounting firm identified one material\nweakness in our internal control over financial reporting. As defined in the standards established by the PCAOB, a “material weakness”\nis a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility\nthat a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.\n\n \n\nThe material weakness identified\nis lack of sufficient documented financial closing policies and procedures, specifically those related to period end logistics expenses\ncut-off and accruals and vendor rebate accruals. This material weakness, if not timely remedied, may lead to material misstatements in\nour consolidated financial statements in the future.\n\n \n\nFollowing the identification\nof the material weakness, we have taken measures and plan to continue to take measures to remedy the material weakness. We are in the\nprocess of implementing a number of measures to address this material weakness identified, including: (i) continuing to enhance accounting\npolicies and closing procedures to improve the quality and accuracy of our period end financing closing process with respect to the preparation\nof U.S. GAAP financial statements and (ii) enhancing segregation of responsibilities in financial decision-making processes so that no\nsingle executive will have unilateral authority to approve transactions that pose potential risks to the Company’s financial health\nor governance standards.\n\n \n\nThe process of designing\nand implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in\nour business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system\nthat is adequate to satisfy our reporting obligation. However, the implementation of these measures may not fully address the material\nweakness in our internal control over financial reporting, and we cannot conclude that they have been fully remedied. Our failure to correct\nthe material weakness or our failure to discover and address any other material weakness or control deficiencies could result in inaccuracies\nin our consolidated financial statements and impair our ability to comply with applicable financial reporting requirements and related\nregulatory filings on a timely basis.\n\n \n\nWe are subject to the Sarbanes-Oxley\nAct of 2002. The Securities and Exchange Commission, or the SEC, adopted rules pursuant to Section 404 of the Sarbanes-Oxley Act of 2002\n(“Section 404”) requiring every public company to include a management report on such company’s internal control over\nfinancial reporting in its annual report, which contains management’s assessment of the effectiveness of our internal control over\nfinancial reporting. Although we completed our initial public offering on October 2, 2020 and ceased to qualify as an emerging growth\ncompany as of March 31, 2026, we are not currently required to comply with the auditor attestation requirements of Section 404(b) of the\nSarbanes-Oxley Act for the fiscal year ended March 31, 2026 because we do not meet the definition of an accelerated filer or a large accelerated\nfiler. Accordingly, while we are no longer able to rely on certain exemptions available to emerging growth companies, including reduced\ndisclosure obligations, we remain subject to the management assessment requirements under Section 404(a), but are not required to obtain\nan auditor attestation on the effectiveness of our internal control over financial reporting. We will incur additional expenses in connection\nwith compliance with these regulations and our management will need to devote additional time and effort to implement and comply with\nsuch requirements.\n\n \n\nDue to the material weakness\nidentified in our internal control over financial reporting, our management has concluded that our internal control over financial reporting\nis not effective as of March 31, 2026. In the future, even if our management concludes that our internal control over financial reporting\nis effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that\nis qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or\nreviewed, or if it interprets the relevant requirements differently from us.\n\n \n\nFurthermore, our reporting\nobligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future.\nWe may be unable to timely complete our evaluation testing and any required remediation.\n\n \n\nDuring the course of documenting\nand testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify weaknesses and deficiencies\nin our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial\nreporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis\nthat we have effective internal control over financial reporting in accordance with Section 404. Generally speaking, if we fail to achieve\nand maintain an effective internal control environment, we could suffer material misstatements in our consolidated financial statements\nand fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.\nThis could, in turn, limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of\nour Class A ordinary shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of\nfraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations\nand civil or criminal sanctions.\n\n \n\n38\n\n \n\n** **\n\n**If we fail to implement effective internal controls over financial\nreporting, such failure could result in material misstatements in our financial statements, cause investors to lose confidence in our\nreported financial and other public information and have a negative effect on the trading price of our Class A ordinary shares.**\n\n** **\n\nEffective internal controls\nover financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and\nprocedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in\ntheir implementation could cause us to fail to meet our reporting obligations. Section 404 requires management of public companies to\ndevelop and implement internal controls over financial reporting and evaluate the effectiveness thereof. If we fail to design and operate\neffective internal controls or remediate our existing material weaknesses, it could result in material misstatements in our financial\nstatements, impair our ability to raise revenue, result in the loss of investor confidence in the reliability of our financial statements\nand subject us to regulatory scrutiny and sanctions, which in turn could harm the market value of our ordinary shares.\n\n \n\nWe are required to disclose\nchanges made in our internal control over financial reporting and to have our management assess the effectiveness of these controls on\nan annual basis. Although we completed our initial public offering on October 2, 2020 and ceased to qualify as an emerging growth\ncompany as of March 31, 2026, we are not currently required to comply with the auditor attestation requirements of Section 404(b) of the\nSarbanes-Oxley Act for the fiscal year ended March 31, 2026 because we do not meet the definition of an accelerated filer or a large accelerated\nfiler. Accordingly, while we are no longer able to rely on certain exemptions available to emerging growth companies, including reduced\ndisclosure obligations, we remain subject to the management assessment requirements under Section 404(a), but are not required to obtain\nan auditor attestation on the effectiveness of our internal control over financial reporting. We will incur additional expenses in connection\nwith compliance with these regulations and our management will need to devote additional time and effort to implement and comply with\nsuch requirements.\n\n \n\nWe are currently not required\nto have our registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial\nreporting under Section 404(b) of the Sarbanes-Oxley Act of 2002 because we are neither an accelerated filer nor a large accelerated filer\nand are no longer an emerging growth company. As a result, our internal control over financial reporting has not been subject to the same\nlevel of independent external audit scrutiny as would be required for accelerated or large accelerated filers. An independent assessment\nof the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material\nweaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation.\n\n \n\nWhile management is responsible\nfor establishing and maintaining adequate internal control over financial reporting and for assessing its effectiveness, the absence\nof an auditor attestation could result in:\n\n \n\n●Potential\nundetected material weaknesses in our internal control over financial reporting;\n\n \n\n●Inaccurate\nfinancial reporting or failure to prevent or detect fraud;\n\n \n\n●Reduced\nability to identify and remediate control deficiencies in a timely manner; and\n\n \n\n●A\nnegative impact on investor confidence in our financial statements.\n\n** **\n\nIf\nwe fail to maintain effective internal control over financial reporting or if material weaknesses are identified in the future, we may\nbe unable to accurately report our financial results or prevent fraud. This could result in restatements of our financial statements,\nregulatory scrutiny, or a decline in the price of our securities. Additionally, if we become an accelerated filer or large accelerated\nfiler in the future, we will be required to obtain an auditor attestation of our internal control over financial reporting, and\nwe may incur significant additional costs and resources to comply with such requirements.\n\n \n\n**We are no longer an “emerging growth\ncompany,” which may increase our compliance burden and associated costs.**\n\n** **\n\nAs of March 31, 2026, we\nceased to qualify as an “emerging growth company” as defined under the Jumpstart Our Business Startups Act of 2012, or the\nJOBS Act, because the fifth anniversary of our initial public offering has passed. As a result, we are no longer eligible for certain\nexemptions previously available to us. We are currently not required to comply with the auditor attestation requirements of Section 404\nfor the fiscal year ended March 31, 2026 because we are neither an accelerated filer nor a large accelerated filer. Compliance with these\nrequirements will likely increase our legal, accounting, and other compliance costs and make some activities more time-consuming and costly.\n\n \n\nHowever, because we continue\nto qualify as a “foreign private issuer” under SEC rules, we remain exempt from certain reporting and governance requirements\napplicable to U.S. domestic issuers. These include, among others, the requirement to provide a compensation discussion and analysis and\nother detailed disclosures regarding executive compensation, and the requirement to hold non-binding shareholder advisory votes on executive\ncompensation and golden parachute arrangements.\n\n \n\nAny failure to comply with\nour expanded obligations could adversely affect our business, financial condition, and results of operations.\n\n \n\n39\n\n \n\n \n\n**We have limited insurance coverage which\ncould expose us to significant costs and business disruption.**\n\n \n\nWe believe we have obtained\na prudent amount of insurance for the insurable risks relating to our business, including the property insurance for our warehouse, as\nof the date of this annual report. However, there is no assurance that the insurance policies we maintain are sufficient to cover our\nbusiness operations. If we were to incur substantial liabilities that were not covered by our insurance, we could incur costs and losses\nthat could materially and adversely affect our results of operations.\n\n \n\n**Risks Related to Our Corporate Structure and\nContractual Arrangements**\n\n** **\n\n**There are substantial uncertainties regarding\nthe interpretation and application of current and future PRC laws, regulations, and rules relating to the agreements that establish the\nVIE structure for our operations in China, including potential future actions by the PRC government, which could affect the enforceability\nof our contractual arrangements with the VIEs and, consequently, significantly affect our financial condition and results of operations.\nIf the PRC government finds our contractual arrangements noncompliant with relevant PRC laws, regulations, and rules, or if these laws,\nregulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties or be forced to relinquish\nour interests in the VIEs.**\n\n \n\nPRC laws and regulations\nimpose certain restrictions or prohibitions on foreign ownership of companies that engage in internet and other related businesses, including\nthe provision of internet content. Specifically, foreign ownership is prohibited in industries of online audio program services and internet\ncultural business (excluding music), foreign ownership of an internet content provider in managing value-added telecommunications business\nmay not exceed 50%. Foreign investment in the value-added telecommunication services industry and certain other businesses is extensively\nregulated and subject to numerous restrictions. Pursuant to the Special Management Measures (Negative List) for the Access of Foreign\nInvestment (2024), published by the National Development and Reform Commission and the Ministry of Commerce and took effect on November\n1, 2024, with a few exceptions, foreign investors are not allowed to own more than 50% of the equity interests in a value-added telecommunication\nservice provider.\n\n \n\nThere are substantial uncertainties\nregarding the interpretation and application of current and future PRC laws, regulations and rules. In particular, in March 2019, the\nNational People’s Congress of the PRC adopted the PRC Foreign Investment Law, which became effective on January 1, 2020. Among other\nthings, the PRC Foreign Investment Law defines the “foreign investment” as investment activities in China by foreign investors\nin a direct or indirect manner, including those circumstances explicitly listed thereunder as establishing new projects or foreign invested\nenterprises or acquiring shares of enterprises in China, and other approaches of investment as stipulated by laws, administrative regulations\nor otherwise regulated by the State Council. The PRC Foreign Investment Law leaves uncertainty as to whether foreign investors’\ncontrolling PRC onshore variable interest entities via contractual arrangements will be recognized as “foreign investment”\nand thus be subject to the restrictions and/or prohibitions on foreign investments. If the PRC government finds that the VIE agreements\nthat establish the structure for operating our internet content services and other internet related businesses or for importing veterinary\ndrugs do not comply with PRC government restrictions on foreign investment in these industries, or if these regulations change or are\ninterpreted differently in the future, our securities may decline in value or become worthless, we could be subject to severe penalties,\nincluding being prohibited from continuing operations.\n\n \n\nBoqii is an exempted company\nwith limited liability incorporated in the Cayman Islands and our wholly owned PRC subsidiaries are currently considered foreign-invested\nenterprises. Accordingly, our PRC subsidiaries are not eligible to provide value-added telecommunication services in China or import veterinary\ndrugs. To ensure strict compliance with the PRC laws and regulations, we conduct such business activities through the VIEs, including\nShanghai Guangcheng, Suzhou Taicheng and Suzhou Xingyun. Shanghai Xincheng and Meiyizhi WFOE, our wholly owned subsidiaries in China,\nhave entered into a series of contractual arrangements with the VIEs and their respective shareholders, which enable us to (i) direct\nthe activities of the VIEs, (ii) receive substantially all of the economic benefits of the VIEs, and (iii) have an exclusive option to\npurchase all or part of the equity interests in the VIEs when and to the extent permitted by PRC law. As a result of these contractual\narrangements, our WFOEs are considered the primary beneficiary of the VIEs for accounting purposes and hence are able to consolidate their\nfinancial results as the VIEs under U.S. GAAP. This structure also provides contractual exposure to foreign investment in such companies.\nAs of the date of this annual report, to our knowledge, the VIE agreements have not been tested in a court of law in the PRC.\n\n \n\nOur PRC counsel, Shanghai\nDeheHantong Law Offices, is of the opinion that (i) the ownership structures of the VIEs do not contravene any PRC laws or regulations\ncurrently in effect; and (ii) the agreements under the contractual arrangements among Shanghai Xincheng, Shanghai Guangcheng and their\nrespective shareholders, among Meiyizhi WFOE, Suzhou Xingyun and their respective shareholders, as well as among Shanghai Xincheng, Suzhou\nTaicheng and their respective shareholders governed by PRC laws are valid and binding upon each party to such agreements and enforceable\nagainst each party thereto in accordance with their terms and applicable PRC laws and regulations currently in effect.\n\n \n\n40\n\n \n\n \n\nHowever, there can be no\nassurance that the PRC government authorities will take a view that is not contrary to or otherwise different from the opinion of our\nPRC counsel stated above. There is also the possibility that the PRC government authorities may adopt new laws, regulations and interpretations\nthat may invalidate the contractual arrangements.\n\n \n\nIf the PRC government finds\nthat our contractual arrangements do not comply with its restrictions on foreign investment in the value-added telecommunication services\nindustry or certain other businesses, or if the PRC government otherwise finds that we, the VIEs, or any of their subsidiaries are in\nviolation of PRC laws or regulations or lack the necessary permits or licenses to operate our business, the relevant PRC regulatory authorities\nwould have broad discretion in dealing with such violation or failures, including, without limitation:\n\n \n\n●revoking\nthe business licenses and/or operating licenses of such entities;\n\n \n\n●discontinuing\nor placing restrictions or onerous conditions on our operation through any transactions between our PRC subsidiaries and the VIEs;\n\n \n\n●imposing\nfines on us, placing restrictions on our right to collect revenues, confiscating the income from our PRC subsidiaries or the VIEs, or\nimposing other requirements with which we or the VIEs may not be able to comply;\n\n \n\n●requiring\nus to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIEs and deregistering\nthe equity pledges of the VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or direct the\nactivities of the VIEs;\n\n \n\n●shutting\ndown our servers or blocking our mobile apps and websites;\n\n \n\n●requiring\nus to restructure the operations in such a way as to compel us to establish a new enterprise, reapply for the necessary licenses or relocate\nour businesses, staff and assets;\n\n \n\n●imposing\nadditional conditions or requirements with which we may not be able to comply; or\n\n \n\n●taking\nother regulatory or enforcement actions against us that could be harmful to our business.\n\n \n\nThe imposition of any of\nthese penalties may result in a material and adverse effect on our ability to conduct our business operations. The PRC government has\nbroad discretion in determining rectifiable or punitive measures for non-compliance with or violations of PRC laws and regulations. The\nVIE agreements have never been tested in a court of law in China. In addition, new PRC laws, regulations, and rules may be introduced\nto impose additional requirements, posing additional challenges to our corporate structure and contractual arrangements. If the imposition\nof any of these penalties causes us to lose the rights to direct the activities of our the VIEs or the right to receive their economic\nbenefits, we would no longer be able to consolidate their financial results and/or claim our contractual control rights over the assets\nof the VIEs that conduct substantially all of our operations in China, which could materially and adversely affect our financial condition\nand results of operations and cause our securities to significantly decline in value or become worthless.\n\n** **\n\n41\n\n \n\n** **\n\n**Uncertainties exist with respect to the\ninterpretation and implementation of the newly enacted Foreign Investment Law and how it may impact our business, financial condition\nand results of operations.**\n\n \n\nOn March 15, 2019, the National\nPeople’s Congress of the PRC promulgated the Foreign Investment Law of the People’s Republic of China, or the Foreign Investment\nLaw, which came into effect on January 1, 2020 and replace the trio of existing laws regulating foreign investment in China, namely, the\nSino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested\nEnterprise Law, together with their implementation rules and ancillary regulations. On December 26, 2019, the State Council published\nthe Implementation Rules of Foreign Investment Law, or the Implementation Rules, which came into effect on January 1, 2020. The Foreign\nInvestment Law and its Implementation Rules embody an expected PRC regulatory trend to rationalize its foreign investment regulatory regime\nin line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign\nand domestic investments. The enacted Foreign Investment Law and its Implementation Rules do not mention concepts such as “actual\ncontrol” and “controlling PRC companies by contracts or trusts” that were included in the previous drafts, nor do they\nspecify regulation on controlling through contractual arrangements, and thus this regulatory topic remains unclear. However, these laws\nand rules are relatively new, uncertainties still exist in relation to their interpretation and implementation. For instance, though the\nForeign Investment Law does not explicitly classify contractual arrangements as a form of foreign investment, it contains a catch-all\nprovision under the definition of “foreign investment,” which includes investments made by foreign investors in China through\nmeans stipulated in laws or administrative regulations or other methods prescribed by the State Council. Therefore, it still leaves leeway\nfor future laws, administrative regulations or provisions promulgated by the State Council to provide for contractual arrangements as\na form of foreign investment. Furthermore, if future laws, administrative regulations or provisions prescribed by the State Council mandate\nfurther actions to be taken by companies with respect to existing contractual arrangements, such as unwinding our existing contractual\narrangements and/or disposal of our related business operations, we may face substantial uncertainties as to whether we can complete such\nactions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory\ncompliance challenges could materially and adversely affect our current corporate structure, corporate governance and business operations.\nIf any of these occurrences results in our inability to direct the activities of any of the VIEs and/or our failure to receive economic\nbenefits from any of them, we may not be able to consolidate their results into our consolidated financial statements in accordance with\nU.S. GAAP.\n\n \n\n**We rely on contractual arrangements with\nthe VIEs and their respective shareholders for our business operations, which may not be as effective as direct ownership in providing\noperational control.**\n\n \n\nWe have relied and expect\nto continue to rely on contractual arrangements with the VIEs and their respective shareholders to operate our business in China. These\ncontractual arrangements may not be as effective as direct ownership in providing us with control over the VIEs. For example, the VIEs\nand their respective shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their\noperations in an acceptable manner or taking other actions that are detrimental to our interests. If we had direct ownership of the VIEs\nin China, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of the VIEs, which in turn\ncould implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the\ncurrent contractual arrangements, we rely on the performance by the VIEs and their respective shareholders of their obligations under\nthe contracts to exercise control over the VIEs. The shareholders of the VIEs may not act in the best interests of our company or may\nnot perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions\nof our business through the contractual arrangements with the VIEs. If any dispute relating to these contracts remain unresolved, we will\nhave to enforce our rights under these contracts through the operations of PRC law and arbitration, litigation and other legal proceedings\nand therefore will be subject to uncertainties in the PRC legal system. In the event that we are unable to enforce these contractual arrangements,\nor if we suffer significant delays or other obstacles in the process of enforcing these contractual arrangements, we may not be able to\nexert substantial influence over the VIEs, and our ability to conduct our business may be negatively affected. Therefore, our contractual\narrangements with the VIEs may not be as effective in ensuring our control over the relevant portion of our business operations as direct\nownership would be.\n\n** **\n\n**Any failure by any of the VIEs or their\nshareholders to perform their respective obligations under our contractual arrangements with them would have a material and adverse effect\non our business.**\n\n \n\nIf any of the VIEs or their\nshareholders fail to perform their respective obligations under the contractual arrangements, we may be limited in our ability to enforce\nthe contractual arrangements, and if we are unable to maintain such control, our ability to consolidate the financial results of the VIEs\nwill be affected. We may also have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief,\nand claiming damages, which we cannot assure you will be effective sufficient or effective under PRC law. For example, if the shareholders\nof any of the VIEs refuse to transfer their equity interests in such VIEs to us or our designee if we exercise the purchase option pursuant\nto these contractual arrangements, or if they otherwise act in bad faith toward us, then we may have to take legal actions to compel them\nto perform their contractual obligations. In addition, if any third parties claim any interest in such shareholders’ equity interests\nin any of the VIEs, our ability to exercise shareholders’ rights or foreclose the share pledge according to the contractual arrangements\nmay be impaired. If these or other disputes between the shareholders of the VIEs and third parties were to impair our control over the\nVIEs, our ability to consolidate the financial results of the VIEs would be affected, which would in turn result in a material adverse\neffect on our business, operations and financial condition.\n\n \n\n42\n\n \n\n \n\nIn addition, the individual\nshareholders of the VIEs may be involved in personal disputes with third parties or other incidents that may have an adverse effect on\ntheir respective equity interests in the VIEs and the validity or enforceability of the contractual arrangements. For instance, in the\nevent that such shareholder divorces his or her spouse, the spouse may claim that the equity interest of the VIEs held by such shareholder\nis part of their marital or community property and should be divided between such shareholder and his or her spouse. If such claim is\nsupported by the competent court, the relevant equity interest may be obtained by the shareholder’s spouse or another third-party\nwho is not bound by our contractual arrangements, which could result in our losing ability to direct the activities of the VIEs. Even\nif we receive a consent letter from the spouse of an individual nominee shareholder of the VIEs where such spouse undertakes that he or\nshe would not take any actions to interfere with the contractual arrangements through which we control such VIEs, including by claiming\nthat the equity interest of the VIEs held by such shareholder is part of their marital or community property, we cannot assure you that\nthese undertakings will be complied with or effectively enforced. In the event that any of them is breached or becomes unenforceable and\nleads to legal proceedings, it could disrupt our business, distract our management’s attention and subject us to substantial uncertainties\nas to the outcome of any such legal proceedings. Similarly, if any of the equity interests of the VIEs are inherited by a third-party\non whom the current contractual arrangements are not binding, we could lose our control over the VIEs or have to maintain such control\nat unpredictable cost, which could cause significant disruption to our business operations and harm our financial condition and results\nof operations.\n\n \n\n**Our contractual arrangements are governed\nby PRC law. Accordingly, these contracts would be interpreted in accordance with PRC law, and any disputes would be resolved in accordance\nwith PRC legal procedures.**\n\n \n\nThe legal system in the PRC\nis constantly evolving and may involve more uncertainty than in some other jurisdictions, such as the United States. As a result, uncertainties\nin the PRC legal system could limit our ability to enforce these contractual arrangements. Meanwhile, there are very few precedents and\nlittle formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC law. There\nremain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition,\nunder PRC law, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and if the losing parties fail\nto carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in\nPRC courts, which would require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, or\nif we suffer significant delays or other obstacles in the process of enforcing these contractual arrangements, we may not be able to direct\nthe activities of the VIEs, and our ability to conduct our business may be negatively affected.\n\n** **\n\n**The shareholders of the VIEs may have actual\nor potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.**\n\n \n\nThe shareholders of the VIEs\nmay have actual or potential conflicts of interest with us. These shareholders may refuse to sign or breach, or cause the VIEs to breach,\nor refuse to renew, the existing contractual arrangements we have with them and the VIEs, which would have a material and adverse effect\non our ability to effectively control the VIEs and receive economic benefits from them. For example, the shareholders may be able to cause\nour agreements with the VIEs to be performed in a manner adverse to us by, among other things, failing to remit payments due under the\ncontractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise any or all of these shareholders\nwill act in the best interests of our company or such conflicts will be resolved in our favor. Currently, we do not have any arrangements\nto address potential conflicts of interest between these shareholders and our company. If we cannot resolve any conflict of interest or\ndispute between us and these shareholders, we would have to rely on legal proceedings, which could result in disruption of our business\nand subject us to substantial uncertainty as to the outcome of any such legal proceedings.\n\n \n\n43\n\n \n\n \n\n**Contractual arrangements in relation to\nthe VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or our VIEs owe additional taxes, which\ncould negatively affect our financial condition and the value of your investment.**\n\n \n\nUnder applicable PRC laws\nand regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities withinthe\napplicable statutory limitation period (which may extend up to five years or longer in cases of tax evasion or other material violations).\nWe could face material and adverse tax consequences if the PRC tax authorities determine that the VIE contractual arrangements were not\nentered into on an arm’s-length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws,\nrules and regulations, and adjust income of the VIEs in the form of a transfer pricing adjustment. A transfer pricing adjustment could,\namong other things, result in a reduction of expense deductions recorded by the VIEs for PRC tax purposes, which could in turn increase\nthe VIEs’ tax liabilities without reducing our PRC subsidiaries’ tax expenses. In addition, the PRC tax authorities may impose\nlate payment fees and other penalties on the VIEs for the adjusted but unpaid taxes according to the applicable regulations. Our financial\nposition could be materially and adversely affected if the VIEs’ tax liabilities increase or if the VIEs are required to pay late\npayment fees and other penalties.\n\n** **\n\n**We may lose the ability to use, or otherwise\nbenefit from, the licenses, approvals and assets held by the VIEs, which could severely disrupt our business, render us unable to conduct\nsome or all of our business operations and constrain our growth.**\n\n \n\nAs part of our contractual\narrangements with the VIEs, the VIEs hold certain assets, licenses and permits that are material to our business operations, such as the\nICP License and Veterinary Drug Distribution License. The contractual arrangements contain terms that specifically obligate VIEs’\nshareholders to ensure the valid existence of the VIEs and restrict the disposal of material assets of the VIEs. However, in the event\nthe VIEs’ shareholders breach the terms of these contractual arrangements and voluntarily liquidate the VIEs, or the VIEs declare\nbankruptcy and all or part of its assets become subject to liens or rights of third-party creditors, or are otherwise disposed of without\nour consent, we may be unable to conduct some or all of our business operations or otherwise benefit from the assets held by the VIEs,\nwhich could have a material adverse effect on our business, financial condition and results of operations. Furthermore, if any of the\nVIEs undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claim rights\nto some or all of the assets of such VIEs, thereby hindering our ability to operate our business as well as constrain our growth.\n\n \n\n**Risks Related to Doing Business in China**\n\n** **\n\n**Changes in China’s economic, political\nor social conditions or government policies could have a material adverse effect on our business and operations.**\n\n \n\nAs of the date of this annual\nreport, substantially all of our assets and operations are located in China. Accordingly, our business, financial condition, results of\noperations and prospects may be influenced to a significant degree by political, economic and social conditions in China generally. The\nChinese economy differs from the economies of most developed countries in many respects, including the level of government involvement,\nlevel of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented\nmeasures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and\nthe establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still\nowned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by\nimposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating\nresources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment\nto particular industries or companies. While the Chinese economy has experienced significant growth over past decades, growth has slowed\ndown in recent years and has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic\nconditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect\non the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to a reduction\nin demand for our services and adversely affect our competitive position. The Chinese government has implemented various measures to encourage\neconomic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a\nnegative effect on us. For example, our financial condition and results of operations may be adversely affected by government control\nover capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures,\nincluding interest rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in China,\nwhich may adversely affect our business and operating results.\n\n \n\n44\n\n \n\n \n\nPRC government has significant\nauthority in regulating our operations and may influence our operations. It may exert more oversight and control over offerings conducted\noverseas by, and/or foreign investment in, China-based issuers, which could significantly limit or completely hinder our ability to offer\nor continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities\nto significantly decline.\n\n** **\n\n**Our business, financial condition and results\nof operations depend on the level of consumer confidence and spending in China and may be adversely affected by the downturn in the global\nor Chinese economy.**\n\n \n\nOur business, financial condition\nand results of operations are sensitive to changes in overall economic conditions that affect consumer spending in China. The retail industry,\nincluding the online retail sector, is highly sensitive to general economic changes. Online purchases tend to decline significantly during\nrecessionary periods. Many factors outside of our control, including inflation and deflation, interest rates, volatility of equity and\ndebt securities markets, taxation rates, employment and other government policies can adversely affect consumer confidence and spending.\nWhile the economy in China has grown significantly over the past decades, growth has been uneven, both geographically and among various\nsectors of the economy, and the rate of growth has been slowing. The online retail industry is particularly sensitive to economic downturns,\nand the macroeconomic environment in China may affect our business and prospects. A prolonged slowdown or deterioration in the global\nor Chinese economy that may be caused by events in Ukraine or the Middle East, or higher interest rates and inflation which may lead to\na reduced level of online purchasing activities, may materially and adversely affect our business, financial condition, and results of\noperations.\n\n \n\nIn addition, the domestic\nand international political environments, including military conflicts and political turmoil or social instability, may also adversely\naffect consumer confidence and reduce spending, which could in turn materially and adversely affect our business, financial condition,\nand results of operations.\n\n** **\n\n**Uncertainties with respect to the PRC legal\nsystem could adversely affect us.**\n\n \n\nThe PRC legal system is a\ncivil law system based on written statutes. Unlike common law systems, it is a system in which prior court decisions have limited value\nas precedents. Our PRC subsidiaries and the VIEs are subject to various PRC laws and regulations generally applicable to companies in\nChina. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, their interpretation\nis not always consistent and their enforcement involves uncertainties.\n\n \n\nIn 1979, the PRC government\nbegan to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation\nover the past four decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However,\nChina has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects\nof economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties.\nSince PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual\nterms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy.\nThese uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or\ntort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts\nto extract payments or benefits from us.\n\n \n\nThe PRC government has significant\noversight and discretion over the conduct of our business and may intervene with or influence our operations as the government deems appropriate\nto further regulatory, political and societal goals. The PRC government has recently published new policies that adversely affected our\nindustry and our business, and we cannot rule out the possibility that it will in the future further release regulations or policies regarding\nour industry that could further adversely affect our business, financial condition and results of operations. Furthermore, the PRC government\nhas also recently indicated an intent to exert more oversight and control over securities offerings and other capital markets activities\nthat are conducted overseas and foreign investment in China-based companies like us. Any such action, once taken by the PRC government,\ncould significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of\nsuch securities to significantly decline or in extreme cases, become worthless.\n\n \n\n45\n\n \n\n \n\nHowever, as there are still\nregulatory uncertainties in this regard, we cannot assure you that we will be able to comply with new laws and regulations in all respects,\nand we may be ordered to rectify, suspend or terminate any actions or services that are deemed illegal by the regulatory authorities and\nbecome subject to material penalties, which may materially harm our business, financial condition, results of operations and prospects.\nFurthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely\nbasis or at all and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules\nuntil sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial\ncosts and diversion of resources and management attention.\n\n \n\n**The permission and approval from the CSRC\nor other PRC government authorities may be required in connection with an offshore offering under PRC law, and, if required, we cannot\npredict whether or for how long we will be able to obtain such permission or approval.**\n\n \n\nOn February 17, 2023, the\nCSRC issued the Overseas Listing Trial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Overseas\nListing Trial Measures, the CSRC circulated No.1 to No.5 Supporting Guidance Rules, the Notes on the Overseas Listing Trial Measures,\nthe Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC Answers to\nReporter Questions on the official website of the CSRC, or collectively, the Guidance Rules and Notice. Under the Overseas Listing Trial\nMeasures and the Guidance Rules and Notice, domestic companies conducting overseas securities offering and listing activities, either\nin direct or indirect form, shall complete filing procedures with the CSRC pursuant to the requirements of the Overseas Listing Trial\nMeasures within three working days following its submission of initial public offering or listing application. The companies that have\nalready been listed on overseas stock exchanges are not required to make immediate filings for its listing, yet need to make filings for\nsubsequent offerings in accordance with the Overseas Listing Trial Measures. In view of the fact that the Overseas Listing Trial Measures\nhave come into effect on March 31, 2023, we shall fulfill the filing procedures with the CSRC for any future offshore offering pursuant\nto the requirements of the Overseas Listing Trial Measures. According to CSRC’s Questions and Answers with respect to Trial Administrative\nMeasures of Overseas Securities Offering and Listing by Domestic Companies on February 17, 2023, for the filing of overseas listing of\nenterprises with VIE structure, the filing procedure will adhere to the principles of market-oriented principle, rule of law, and strengthened\nregulatory synergy. The CSRC will consult the relevant competent authorities, and the overseas listing of VIE structured enterprises that\nmeet the compliance requirements will be filed. In addition, on February 24, 2023, the CSRC released the Provisions on Strengthening the\nConfidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises, or, the Confidentiality\nProvisions, which came into effect on March 31, 2023. Pursuant to the Confidentiality Provisions, any future inspection or investigation\nconducted by overseas securities regulator or the relevant competent authorities on our PRC domestic companies with respect to our overseas\nissuance and listing shall be carried out in the manner in compliance with PRC laws and regulations. As the Overseas Listing Trial Measures\nand Confidentiality Provisions have only been recently published, there are significant uncertainties as to their implementation, interpretation\nand impact on our current listing and any future offerings or financings. We may not be able to complete the filing described above if\nthe filing materials are incomplete or do not meet the requirements of the CSRC. Any failure to obtain or delay in obtaining the CSRC\npermission and approval for any of our offshore offerings, or a rescission of such permission and approval if obtained, may subject us\nto sanctions imposed by the CSRC or other PRC regulatory authorities, which may materially and adversely affect our business, financial\ncondition, and results of operations.\n\n** **\n\n**PRC laws and regulations regarding data\nsecurity and cybersecurity are evolving. These laws and regulations could have a material impact on our business operation.**\n\n \n\nPRC regulators, including\nthe SCNPC, the Ministry of Industry and Information Technology of the PRC, or the MIIT and the CAC, have been increasingly focused on\nregulation in the areas of data security and cybersecurity. A series of laws and regulations relating to the protection of privacy, date\nsecurity and cyber security have been enacted. However, such laws and regulations are currently evolving and are likely to remain uncertain\nfor the foreseeable future.\n\n \n\n46\n\n \n\n \n\nOn July 1, 2015, the SCNPC,\npromulgated the National Security Law, or the New National Security Law, which took effect on the same date and replaced the former National\nSecurity Law promulgated in 2009. The New National Security Law covers various types of national security including technology security\nand information security. According to the New National Security Law, the state shall ensure that the information system and data in important\nareas are secure and controllable. In addition, according to the New National Security Law, the state shall establish national security\nreview and supervision policies and mechanisms, and conduct national security reviews of key technologies and IT products and services\nthat affect or may affect national security. In particular, we are obligated under the New National Security Law to safeguard national\nsecurity by, for example, providing evidence related to activities endangering national security, providing convenience and assistance\nfor national security work, and providing necessary support and assistance for national security institutions, public security institutions\nas well as military institutions. As such, we may have to provide data to PRC government authorities and military institutions for compliance\nwith the New National Security Law, which may result in additional expenses to us and subject us to negative publicity which could harm\nour reputation with users and negatively affect the trading price of Class A ordinary shares.\n\n \n\nOn November 7, 2016, the\nSCNPC promulgated the Cybersecurity Law, which took effect on June 1, 2017. The Cybersecurity Law specifies requirements on user information\nprotection applicable to network operators, who are prohibited from collecting or disclosing without permission or selling individual\ninformation with limited exceptions. When network operators become aware of any information of which the release or transmission is prohibited\nby any law or administrative regulation, they are required to immediately cease transmission of such information and take measures such\nas deletion of relevant information to prevent its dissemination. In addition, according to the Cybersecurity Law and relevant regulations,\nnetwork operators, are obligated to take technical and other necessary measures to ensure the security and stable operation of network,\nmaintain the integrity, confidentiality and availability of network data, and furthermore provide assistance and support in accordance\nwith the law for public security and national security authorities to protect national security or assist with criminal investigations.\nIn addition, the PRC Cybersecurity Law provides that personal information and important data collected and generated by operators of critical\ninformation infrastructure in the course of their operations in the PRC should be stored in the PRC, and the law imposes heightened regulation\nand additional security obligations on operators of critical information infrastructure. On September 12, 2022, the CAC proposed a series\nof draft amendments to the Cybersecurity Law, including raising the size of fines for some violations. Such draft amendments are released\nfor soliciting public comments until September 29, 2022, and its final form, interpretation and implementation remain substantially uncertain.\n\n \n\nOn June 10, 2021, the SCNPC\npromulgated the PRC Data Security Law, which became effective in September 2021. The PRC Data Security Law imposes data security and privacy\nobligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection\nsystem based on the importance of data in economic and social development, as well as the degree of harm it will cause to national security,\npublic interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked,\nor illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure for data activities that\nmay affect national security and imposes export restrictions on certain data and information. On December 28, 2021, the CAC, together\nwith other authorities, jointly promulgated the Revised Cybersecurity Review Measures, effective on February 15, 2022 and repeal the Cybersecurity\nReview Measures promulgated on April 13, 2020. The Revised Cybersecurity Review Measures provide that a critical information infrastructure\noperator purchasing network products and services, and platform operators carrying out data processing activities, which affect or may\naffect national security, shall apply for cybersecurity review and that a platform operator with more than one million users’ personal\ninformation aiming to list abroad must apply for cybersecurity review. Such measures further restate and expand the applicable scope of\nthe cybersecurity review.\n\n \n\nOn July 30, 2021, the State\nCouncil promulgated the Regulations on Protection of Critical Information Infrastructure, which became effective on September 1, 2021.\nOn December 31, 2021, the CAC together with other relevant administrative departments published the Administrative Provisions on Internet\nInformation Service Algorithm Recommendation, which became effective on March 1, 2022. This recommendation provides that, among others,\nthat algorithm recommendation service providers shall (i) establish and improve the management systems and technical measures for algorithm\nmechanism and principle review, scientific and technological ethics review, user registration, information release review, data security\nand personal information protection, anti-telecommunications and Internet fraud, security assessment and monitoring, and security incident\nemergency response, formulate and disclose the relevant rules for algorithm recommendation services, and be equipped with professional\nstaff and technical support appropriate to the scale of the algorithm recommendation service; (ii) regularly review, evaluate and verify\nthe principle, models, data and application results of algorithm mechanisms, (iii) strengthen information security management, establish\nand improve a feature database for identifying illegal and bad information, and improve entry standards, rules and procedures; (iv) strengthen\nthe management of user models and user labels, and improve the rules on points of interest recorded into user models and user label management,\nand shall not record illegal and harmful information keywords into the points of interest of users or use them as user labels to push\ninformation.\n\n \n\n47\n\n \n\n \n\nOn November 14, 2021, the\nCAC released the Regulations on the Network Data Security (Draft for Comments), or the Draft Regulations. The Draft Regulations provide\nthat data processors refer to individuals or organizations that have autonomy over the purpose and the manner of data processing activities\nsuch as data collection, storage, utilization, transmission, publication and deletion. In accordance with the Draft Regulations, data\nprocessors shall apply for a cybersecurity review for certain activities, including, among other things, (i) the listing abroad of data\nprocessors that process the personal information of more than one million users and (ii) any data processing activity that affects or\nmay affect national security. However, there have been no clarifications from the relevant authorities as of the date of this annual report\nas to the standards for determining whether an activity is one that “affects or may affect national security.” In addition,\nthe Draft Regulations requires that data processors that process “important data” or are listed overseas must conduct an annual\ndata security assessment by itself or commission a data security service provider to do so, and submit the assessment report of the preceding\nyear to the municipal cybersecurity department by the end of January each year. The Draft Regulations was released for public comments\nuntil December 13, 2021, and their respective provisions and anticipated adoption or effective date may be subject to change with substantial\nuncertainty.\n\n \n\nOn September 30, 2024, the\nState Council promulgated the Network Data Security Management Regulations, which became effective on January 1, 2025. The Network Data\nSecurity Management Regulations provide that network data processors whose network data processing activities affect or may affect national\nsecurity shall be subject to national security review.\n\n \n\nOn July 7, 2022, the CAC\npromulgated the Data Outbound Transfer Security Assessment Measures or the Security Assessment Measures, which came into effect on September\n1, 2022. The Security Assessment Measures provides that, among others, data processors shall apply to competent authorities for security\nassessment when transferring important data abroad or when, in the case of a critical information infrastructure operator, or a personal\ninformation processor that has processed personal information of more than one million individuals, transferring personal information\nabroad.\n\n \n\nWe are making efforts to\ncomply with the applicable laws, regulations and standards relating to the protection of privacy, date security and cybersecurity. As\nthere remains high uncertainty in the interpretation and enforcement of relevant laws and regulations (including whether the Draft Regulations\nwill be implemented in the proposed form and when they will be implemented), there can be no assurance that our measures will be effective\nand sufficient, or we would be able to comply with the requirements therein in a timely manner. In addition, we procure servers and systems\nfor storage, process and other aspects of business operation from time to time. It remains unclear whether such servers and systems will\nfall into the category of the so-called “critical network equipment” or “dedicated network security products”\ndue to lack of specific criteria or standards in the Cybersecurity Law. As such, we cannot assure you that the servers and systems we\nhave procured or may procure in the future comply with relevant requirements, and we may incur additional costs to comply with such requirements.\nAlso, as the scope of operator of critical information infrastructure is not completely clear, certain parties involved in our business\noperation (such as, our customers or suppliers) may be deemed as an operator of critical information infrastructure where the cybersecurity\nreview could be required before we enter into relevant business relationships with them which may have a material adverse effect on our\nbusiness and prospects. Failure to comply with such laws and regulations may lead to fines, suspension of business operation, revocation\nof business permits or licenses and other sanctions, which may have material impact on our business operation. Newly promulgated laws\nand regulations reflect PRC government further attempts to strengthen the legal protection for the national network security, data security,\nthe security of critical information infrastructure and the security of personal information protection. For details on regulations over\ndata protection and privacy in the PRC, see “*Item 4. Information on the Company-4.B. Business Overview-Regulation-Regulations\non Cyber Security and Privacy*” for details on regulations over data protection and privacy in the PRC.\n\n \n\n48\n\n \n\n \n\nFurthermore, according to\nrelevant PRC laws and regulations, no entities or individuals may provide internet audio-visual program services, which includes making\nand editing of audio-visual programs and broadcasting such content to the general public online, without a License for Online Transmission\nof Audio-Visual Programs issued by the State Administration of Press, Publication, Radio, Film and Television, or the SAPPRFT (currently\nknown as National Radio and Television Administration), or its local bureaus or completing the relevant registration procedures. In general,\nonly state-owned or state-controlled entities are eligible to apply for such license. Shanghai Guangcheng may be required  to obtain\nan Internet audio-visual program transmission license for video interaction or recorded video functions in our Boqii Pet app offered by\nShanghai Guangcheng. Shanghai Guangcheng, however, is not eligible to apply for such license since we are not a state-owned or state-controlled\nentity. See “*Item 4. Information on the Company-Item 4.B. Business Overview-Regulation-Regulations on Online Transmission of\nAudio-Visual Program*.” As of the date of this annual report, we have not filed any application for such license, nor have we\nreceived any written notice of warning from, or been subject to penalties imposed by, the relevant government authorities for alleged\nfailure by us to comply with the Audio-Visual Program Provisions. In the event that the authorities find us in violation of the relevant\nlaws and regulations, we may be subject to warnings, fines or orders to rectify such non-compliance. In severe cases, we may be ordered\nto disable the video interaction or recorded video functions in our app and subject to a penalty equal to one to two times our total investment\nin the affected business, and the devices we used for such operation may be confiscated. Furthermore, the competent authorities may order\nus to close our platform, revoke the relevant license or filings for the provision of Internet information services and order the relevant\nnetwork operation entity to stop providing us with signal access services, which could adversely affect our business, financial condition\nand results of operations.\n\n \n\nAs the internet industry\nin China is still at a relatively early stage of development, new laws and regulations may be adopted from time to time to address new\nissues that come to the authorities’ attention. Considerable uncertainties still exist with respect to the interpretation and implementation\nof existing and future laws and regulations governing our business activities. We cannot assure you that we will not be found in violation\nof any future laws and regulations or any of the laws and regulations currently in effect due to changes in or discrepancies with respect\nto the relevant authorities’ interpretation of these laws and regulations. Any failure to comply with such laws and regulations\nor obtain such license or approvals may subject us to potential administrative penalties, fine and even suspension of our business. See\n“*Item 4. Information on the Company-Item 4.B. Business Overview-Regulation*.” We cannot assure you that we will be able\nto timely obtain or maintain all the required licenses or approvals or make all the necessary filings in the future.\n\n \n\nShould we be required to\nobtain additional licenses or approvals, we may not be able to do so in a timely manner or at all. If we fail to obtain or maintain any\nof the required licenses or approvals or make the necessary filings, or fail to obtain required licenses or approvals in a timely manner,\nwe may be subject to various penalties, such as confiscation of the revenues that were generated through the unlicensed activities, the\nimposition of fines and the termination or restriction of our operations. Any such penalties may disrupt our business operations or materially\nand adversely affect our business, financial condition and results of operations.\n\n** **\n\n**Any failure or perceived failure by us to\ncomply with Anti-monopoly Guidelines for Internet Platforms and other anti-monopoly laws and regulations may result in governmental investigations\nor enforcement actions, litigation or claims against us and could have an adverse effect on our business, financial condition and results\nof operations.**\n\n \n\nIn recent years, PRC anti-monopoly\nenforcement agencies have strengthened enforcement under the PRC Anti-monopoly Law. In March 2018, the State Administration for Market\nRegulation, or the SAMR, was formed as a new governmental agency to take over, among other things, the anti-monopoly enforcement functions\nfrom the relevant departments under the Ministry of Commerce of the People’s Republic of China, or the MOFCOM, the National Development\nand Reform Commission, or the NDRC, and the State Administration for Industry and Commerce, or the SAIC (the predecessor of the SAMR),\nrespectively. Since its inception, the SAMR has continued to strengthen anti-monopoly enforcement. In December 2018, the SAMR issued the\nNotice on Anti-monopoly Enforcement Authorization, which grants authorities to its province-level branches to conduct anti-monopoly enforcement\nwithin their respective jurisdictions. In November 2021, the National Anti-monopoly Bureau was inaugurated by the State Council, which\naims to further implement the fair competition policies, and strengthen anti-monopoly supervision in the PRC, especially to strengthen\noversight and law enforcement in areas involving platform economy, innovation, science and technology, information security and people’s\nlivelihood.\n\n \n\n49\n\n \n\n \n\nThe PRC anti-monopoly regulators\nmay also issue implementation rules or guidelines from time to time to reinforce their regulation on certain industrial sectors. In February\n2021, the Anti-monopoly Committee of the State Council published the Anti-monopoly Guidelines for Internet Platforms. This guideline prohibits\nmonopolistic conduct such as entering into monopoly agreements, abusing market dominance and concentration of undertakings that may have\nthe effect to eliminate or restrict competition in the field of platform economy. More specifically, the Anti-monopoly Guidelines for\nInternet Platforms outlines certain practices that may, if without justifiable reasons, constitute abuse of a dominant position, including\nwithout limitation, discriminating customers in terms of pricing and other transactional conditions using big data and analytics, coercing\ncounterparties into exclusivity arrangements, using technology means to block competitors’ interface, using bundle services to sell\nservices or products, and compulsory collection of users’ unnecessary data. The Anti-monopoly Guidelines for Internet Platforms\nfurther expressly states that concentration involving VIE will also be subject to antitrust filing requirements, and therefore will also\nfall within the scope of the antitrust review. In addition, Anti-monopoly Guidelines for Internet Platforms reinforces antitrust merger\nreview for internet platform related transactions to safeguard market competition. Since the Anti-monopoly Guidelines for Internet Platforms\nis relatively new and may be subject to interpretation by the regulators in the process of implementing such guidelines, we cannot assure\nyou that our business operations will comply with such regulation in all respects, and any failure or perceived failure by us to comply\nwith such regulation may result in governmental investigations, fines and/or other sanctions on us. Furthermore, on October 23, 2021,\nthe SCNPC issued a discussion draft of the amended Anti-monopoly Law. On June 24, 2022, the Decision of the Standing Committee of the\nNational People’s Congress on Revising the Anti-monopoly Law of the People’s Republic of China, or the Revised Anti- monopoly\nLaw was released, which became effective on August 1, 2022. According to the Revised Anti-monopoly Law, the fines for illegal concentration\nof business operators have been increased to no more than ten percent of its last year’s sales revenue if the concentration of business\noperator has or may have an effect of excluding or limiting competitions; or a fine of up to RMB5 million if the concentration of business\noperator does not have an effect of excluding or limiting competition. The Revised Anti-monopoly Law also stipulates that the relevant\nauthority shall investigate a transaction where there is any evidence that the concentration has or may have the effect of eliminating\nor restricting competitions, even if such concentration does not reach the filing threshold. And in order to adapt the Revised Anti-monopoly\nLaw, on March 10, 2023, the SAMR issued the Provisions on Prohibition of the Abuse of Market Dominance, which took effect on April 15,\n2023. See “*Item 4. Information of the Company-4.B. Business Overview-Regulation-Regulations on Anti-Monopoly*.”\n\n** **\n\n**You may experience difficulties in effecting\nservice of legal process, enforcing foreign judgments or bringing actions in China against us, our directors or our management named in\nthis annual report based on foreign laws, and the ability of U.S. authorities to bring actions in China may also be limited.**\n\n \n\nBoqii is an exempted company\nwith limited liability incorporated under the laws of the Cayman Islands. We conduct substantially all of our operations in China, and\nsubstantially all of our assets are located in China. In addition, all our senior executive officers and directors reside within China\nfor a significant portion of their time and most are PRC nationals. There are also uncertainties regarding the status of the rights of\nBoqii, with respect to our contractual arrangements with the VIEs, our founders and shareholders. As a result, it may be difficult for\nour shareholders to effect service of process upon us or those persons inside China.\n\n \n\nThe recognition and enforcement\nof foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance\nwith the requirements of the PRC Civil Procedures Law and other applicable laws, regulations and interpretations based either on treaties\nbetween China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any\ntreaties or other forms of reciprocity with the U.S. and many other jurisdictions that provide for the reciprocal recognition and enforcement\nof judgments from the U.S. and many other jurisdictions. In addition, according to the PRC Civil Procedures Law, the PRC courts will not\nenforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of\nPRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would\nenforce a judgment rendered by a court in the U.S and many other jurisdictions. Moreover, the SEC, the U.S. Department of Justice and\nother U.S. authorities and the comparable authorities from many other jurisdictions may also have difficulties in bringing and enforcing\nactions against us or our directors or officers in the PRC.\n\n \n\n**You may have difficulty enforcing judgments\nin Hong Kong.**\n\n \n\nJudgment of United States\ncourts will not be directly enforced in Hong Kong as there are currently no treaties or other arrangements providing for reciprocal enforcement\nof foreign judgments between Hong Kong and the United States. However, subject to certain conditions, including but not limited to when\nthe judgment is for a fixed sum in a civil matter and not in respect of taxes, fines, penalties or similar charges, the judgment is final\nand conclusive upon the merits of the claim and has not been stayed or satisfied in full, the proceedings in which the judgment was obtained\nwere not contrary to natural justice, were not procured by fraud and the enforcement of the judgment is not contrary to public policy\nof Hong Kong, Hong Kong courts may accept such judgment obtained from a United States court as a debt due under the rules of common law\nenforcement. However, a separate legal action for debt must be commenced in Hong Kong in order to recover such debt from the judgment\ndebtor.\n\n** **\n\n50\n\n \n\n** **\n\n**It may be difficult for overseas regulators\nto conduct investigation or collect evidence within China.**\n\n \n\nShareholder claims or regulatory\ninvestigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For\nexample, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigation\ninitiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory\nauthorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities\nregulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore,\naccording to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator\nis allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. While detailed interpretation\nof or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly\nconduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your\ninterests.\n\n** **\n\n**We may rely on dividends and other distributions\non equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our\nPRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.**\n\n \n\nBoqii is a Cayman Islands\nholding company and relies principally on dividends and other distributions on equity from our PRC subsidiaries for its cash requirements,\nincluding for services of any debt it may incur. The ability of our PRC subsidiaries to pay dividends and other distributions on equity,\nin turn, depends on the payment they receive from the VIEs as service fees pursuant to certain contractual arrangements among our PRC\nsubsidiaries, the VIEs and the VIEs’ shareholders entered into to comply with certain restrictions under PRC law on foreign investment.\nFor more information about such contractual arrangements, see “*Item 3. Key Information-Contractual Arrangements with the VIEs\nand Their Respective Shareholders*.”\n\n \n\nOur PRC subsidiaries’\nability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay\ndividends to their respective shareholders only out of their accumulated profits, if any, determined in accordance with PRC accounting\nstandards and regulations. In addition, each of our PRC subsidiaries, the VIEs and their subsidiaries are required to set aside at least\n10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital.\nThese reserves are not distributable as cash dividends. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments\ngoverning the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the ability of our PRC\nsubsidiaries to distribute dividends or other payments to their respective shareholders could materially and adversely limit our ability\nto grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our\nbusiness. For example, the funds in our PRC subsidiaries or the variable interest entities in mainland China may not be available to fund\noperations or for other use outside of mainland China due to interventions in or the imposition of restrictions and limitations on the\nability of our holding company, our subsidiaries, or the VIEs by the PRC government on cash transfers. While we are not aware of any similar\nrestrictions under current Hong Kong laws, there is no assurance that such restrictions will not be introduced in the future or that the\nHong Kong government will not intervene in or impose restrictions on the ability of a Hong Kong entity to transfer cash or assets out\nof Hong Kong in the future.\n\n \n\nTo address the persistent\ncapital outflow and the Renminbi’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s Bank of\nChina and the SAFE have implemented a series of capital control measures in the subsequent months, including stricter vetting procedures\nfor China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For\ninstance, the Circular on Promoting the Reform of Foreign Exchange Management and Improving Authenticity and Compliance Review, or the\nSAFE Circular 3, issued on January 26, 2017, provides that the banks shall, when dealing with dividend remittance transactions from domestic\nenterprise to its offshore shareholders of more than US$50,000, review the relevant board resolutions, original tax filing form and audited\nfinancial statements of such domestic enterprise based on the principal of genuine transaction. The PRC government may continue to strengthen\nits capital controls and our PRC subsidiaries’ dividends and other distributions may be subject to tightened scrutiny in the future.\nAny limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely\nlimit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund\nand conduct our business.\n\n \n\n51\n\n \n\n \n\nIn addition, the Enterprise\nIncome Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by\nPRC companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and governments\nof other countries or regions where the non-PRC resident enterprises are tax resident.\n\n** **\n\n**The custodians or authorized users of our\ncontrolling nontangible assets, including chops and seals, may fail to fulfill their responsibilities, or misappropriate or misuse these\nassets.**\n\n \n\nUnder the PRC law, legal\ndocuments for corporate transactions, including agreements and contracts are executed using the chop or seal of the signing entity or\nwith the signature of a legal representative whose designation is registered and filed with relevant PRC industry and commerce authorities.\n\n \n\nIn order to secure the use\nof our chops and seals, we have established internal control procedures and rules for using these chops and seals. In any event that the\nchops and seals are intended to be used, the responsible personnel will submit the application which will then be verified and approved\nby authorized employees in accordance with our internal control procedures and rules. In addition, in order to maintain the physical security\nof our chops, we generally have them stored in secured locations accessible only to authorized employees. Although we monitor such authorized\nemployees, the procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that our employees could\nabuse their authority, for example, by entering into a contract not approved by us or seeking to gain control of one of our subsidiaries\nor VIEs. If any employee obtains, misuses or misappropriates our chops and seals or other controlling nontangible assets for whatever\nreason, we could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve\nsignificant time and resources to resolve and divert management from our operations.\n\n** **\n\n**Fluctuations in exchange rates could have\na material and adverse effect on our results of operations and the value of your investment.**\n\n \n\nThe value of the Renminbi\nagainst the U.S. dollar and other currencies has in the past fluctuated significantly and may in the future continue to do so. Since October\n1, 2016, the Renminbi has joined the International Monetary Fund’s basket of currencies that make up the Special Drawing Right,\nalong with the U.S. dollar, the Euro, the Japanese yen and the British pound. With the development of the foreign exchange market and\nprogress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further\nchanges to the exchange rate system and there is no guarantee that the Renminbi will not appreciate or depreciate significantly in value\nagainst the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange\nrate between the Renminbi and the U.S. dollar in the future.\n\n \n\nA majority of our revenue\nis denominated in Renminbi. Vast majority of our costs are denominated in Renminbi and a portion of them are denominated in U.S. dollars\nand Hong Kong dollars as we import certain products from overseas. Boqii is a holding company and we rely on dividends paid by our operating\nsubsidiaries in China for our cash needs. Any significant revaluation of Renminbi may materially and adversely affect our results of operations\nand financial position reported in Renminbi when translated into U.S. dollars, and the value of, and any dividends payable on, the Class\nA ordinary shares in U.S. dollars.\n\n \n\nVery limited hedging options\nare available in China to reduce our exposure to exchange rate fluctuations. In addition, our currency exchange losses may be magnified\nby PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.\n\n** **\n\n52\n\n \n\n** **\n\n**Governmental control of currency conversion\nmay limit our ability to utilize our revenues effectively and affect the value of your investment.**\n\n \n\nThe PRC government imposes\ncontrols on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China.\nWe receive substantially all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company primarily\nrelies on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign\nexchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related\nforeign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements.\nSpecifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC\nsubsidiaries in China may be used to pay dividends to our company. However, approval from or registration with appropriate government\nauthorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such\nas the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the\noperations of our PRC subsidiaries and the VIEs to pay off their respective debt in a currency other than Renminbi owed to entities outside\nChina, or to make other capital expenditure payments outside China in a currency other than Renminbi.\n\n \n\nThe PRC government has imposed\nmore restrictive foreign exchange policies and scrutiny of major outbound capital movement including overseas direct investment. More\nrestrictions and substantial vetting process are put in place by SAFE to regulate cross-border transactions falling under the capital\naccount. See “*Item 4. Information on the Company-Item 4.B. Business Overview-Regulation-Regulations on Foreign Exchange*”\nand “*Item 4. Information on the Company-Item 4.B. Business Overview-Regulation-Regulations on Outbound Direct Investment*.”\n\n \n\nWe have notified all PRC\nentities who directly or indirectly hold shares in our Cayman Islands holding company to complete the overseas direct investment registrations\nand filings. However, we may not be informed of the identities of all the PRC entities holding direct or indirect interest in our company,\nnor can we compel our beneficial owners to comply with overseas direct investment registration or filing requirements as required by SAFE,\nNDRC and MOC regulations. As a result, we cannot assure you that all of our shareholders or beneficial owners which are PRC entities have\ncomplied with, and will in the future make, obtain or update any applicable overseas direct investment registrations or approvals. If\nany of our shareholders regulated by such policies fails to satisfy the applicable overseas direct investment filing or approval requirement\ntimely or at all, it may be subject to penalties from the relevant PRC authorities, and our PRC subsidiaries may be prohibited from distributing\ntheir profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be further restricted in our\nability to contribute additional capital to our PRC subsidiaries. The PRC government may at its discretion further restrict access to\nforeign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient\nforeign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.\nIn addition, our shareholders may be required to suspend or stop the investment and complete the registration within a specified time,\nand may be warned or prosecuted for criminal liability if a crime is constituted. Moreover, failure to comply with the SAFE registration\ncould result in liability under PRC laws for evasion of applicable foreign exchange restrictions.\n\n** **\n\n**Certain PRC regulations may make it more\ndifficult for us to pursue growth through acquisitions.**\n\n \n\nAmong other things, the Regulations\non Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies\nin 2006 and amended in 2009, established additional procedures and requirements that could make merger and acquisition activities by foreign\ninvestors more time-consuming and complex. Such regulation requires, among other things, that MOFCOM be notified in advance of any change-of-control\ntransaction in which a foreign investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations,\nif certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued by the State\nCouncil in 2008 and amended in 2018, are triggered. Moreover, the Anti-monopoly Law promulgated by the SCNPC was newly amended on June\n24, 2022, which took effect on August 1, 2022. Pursuant to the Revised Anti-monopoly Law, the relevant authority shall investigate a transaction\nwhere there is any evidence that the concentration has or may have the effect of eliminating or restricting competitions, even if such\nconcentration does not reach the filing threshold. On February 7, 2021, the Anti-monopoly Commission of the State Council promulgated\nthe Anti-Monopoly Guidelines for the Internet Platform Economy Sector that aims at specifying some of the circumstances under which an\nactivity of internet platforms may be identified as monopolistic act as well as clarifying that concentration of undertakings involving\nVIE structure shall be subject to anti-monopoly review. In addition, the Rules of the MOFCOM on Implementation of Security Review System\nof Mergers and Acquisitions of Domestic Enterprises by Foreign Investors issued by MOFCOM, which became effective in September 2011 require\nacquisitions by foreign investors of PRC companies engaged in military related or certain other industries that are crucial to national\nsecurity be subject to security review before consummation of any such acquisition. Further, the Measures for the Security Review of Foreign\nInvestments promulgated by the NDRC and MOFCOM which became effective from January 2021 requires that security review by relevant governmental\nauthorities shall be conducted in accordance with the provisions of the Measures for foreign investments that affect or may affect national\nsecurity. We may pursue potential strategic acquisitions that are complementary to our business and operations. Complying with the requirements\nof these regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval\nor clearance from MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our\nbusiness or maintain our market share.\n\n** **\n\n53\n\n \n\n** **\n\n**PRC regulation of loans to and direct investment\nin PRC entities by offshore holding companies and governmental control of currency conversion may delay us from making loans or additional\ncapital contributions to our PRC subsidiaries and to make loans to the VIEs, which could materially and adversely affect our liquidity\nand our ability to fund and expand our business.**\n\n \n\nWe conduct our operations\nin China through our PRC subsidiaries, VIEs and their subsidiaries. We may make loans to our PRC subsidiaries, VIEs and their subsidiaries,\nor we may make additional capital contributions to our PRC subsidiaries, or we may establish new PRC subsidiaries and make capital contributions\nto these new PRC subsidiaries, or we may acquire offshore entities with business operations in China in an offshore transaction.\n\n \n\nMost of these ways are subject\nto PRC regulations and approvals. For example, loans by us to our wholly owned PRC subsidiaries to finance their activities cannot exceed\nstatutory limits and must be registered with the local counterpart of SAFE. If we decide to finance our wholly owned PRC subsidiaries\nby means of capital contributions, these capital contributions are subject to the requirement of making necessary filings in the Foreign\nInvestment Comprehensive Management Information System and registration with other governmental authorities in China. Due to the restrictions\nimposed on loans in foreign currencies extended to any PRC domestic companies, we are not likely to make such loans to our consolidated\naffiliated entities, which are PRC domestic company. Further, we are not likely to finance the activities of our consolidated affiliated\nentities by means of capital contributions due to regulatory restrictions relating to foreign investment in PRC domestic enterprises engaged\nin value-added telecommunication services and certain other businesses.\n\n \n\nSAFE promulgated Circular\non the Reforming of the Management Method of the Settlement of Foreign Currency Capital of Foreign-invested Enterprises, or SAFE Circular\n19, effective on June 1, 2015 and recently amended on March 23, 2023, in replacement of the Circular on the Relevant Issues Concerning\nthe Launch of Reforming Trial of the Administration Model of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises,\nthe Notice from the State Administration of Foreign Exchange on Relevant Issues Concerning Strengthening the Administration of Foreign\nExchange Businesses, and the Circular on Further Clarification and Regulation of the Issues Concerning the Administration of Certain Capital\nAccount Foreign Exchange Businesses. According to SAFE Circular 19, the flow and use of the Renminbi capital converted from foreign currency-denominated\nregistered capital of a foreign-invested company is regulated such that Renminbi capital may not be used for the issuance of Renminbi\nentrusted loans, the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred to a third party.\nAlthough SAFE Circular 19 allows Renminbi capital converted from foreign currency-denominated registered capital of a foreign-invested\nenterprise to be used for equity investments within China, it also reiterates the principle that Renminbi capital converted from the foreign\ncurrency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope.\nThus, it is unclear whether SAFE will permit such capital to be used for equity investments in China in actual practice. SAFE promulgated\nthe Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy\nof Capital Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19,\nbut changes the prohibition against using Renminbi capital converted from foreign currency-denominated registered capital of a foreign-invested\ncompany to issue Renminbi entrusted loans to a prohibition against using such capital to issue loans to nonassociated enterprises. Violations\nof SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19 and SAFE Circular 16 may significantly\nlimit our ability to transfer any foreign currency we hold, including the net proceeds from our overseas offerings, to our PRC subsidiaries,\nwhich may adversely affect our liquidity and our ability to fund and expand our business in China.\n\n \n\n54\n\n \n\n \n\nOn October 23, 2019, SAFE\npromulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and\nInvestment, or SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign\ncurrency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable\nlaws, and complies with the negative list on foreign investment. However, since SAFE Circular 28 is newly promulgated, it is unclear how\nSAFE and competent banks will carry this out in practice.\n\n \n\nIn light of the various requirements\nimposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that\nwe will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if\nat all, with respect to future loans by us to our PRC subsidiaries or with respect to future capital contributions by us to our PRC subsidiaries.\nIf we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we received from our initial public\noffering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect\nour liquidity and our ability to fund and expand our business.\n\n** **\n\n**PRC regulations relating to the establishment\nof offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries to liability\nor penalties, limit our ability to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their\nregistered capital or distribute profits to us, or may otherwise adversely affect us.**\n\n \n\nSAFE promulgated the Circular\non Issues Concerning the Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic\nResidents via Special Purpose Vehicles, or SAFE Circular 37, in July 2014. SAFE Circular 37 requires PRC residents or entities to register\nwith SAFE or its local branches in connection with their establishment or control of an offshore entity established for the purpose of\noverseas investment or financing with such PRC residents or entities’ legally owned assets or equity interests in domestic enterprises\nor offshore assets or interests. In addition, such PRC residents or entities must update their SAFE registrations when the offshore special\npurpose vehicle undergoes material events relating to any change of basic information (including change of such PRC citizens or residents,\nname and operation term), increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. According\nto the Circular of Further Simplifying and Improving the Policies of Foreign Exchange Administration Applicable to Direct Investment released\nin February 2015 by SAFE, local banks will examine and handle foreign exchange registration for overseas direct investment, including\nthe initial foreign exchange registration and amendment registration, under SAFE Circular 37 from June 2015. See “*Item 4. Information\non the Company-4.B. Business Overview-Regulation-Regulations on Foreign Exchange*” and “*Item 4. Information on the Company-4.B.\nBusiness Overview-Regulation-Regulations on Offshore Special Purpose Companies Held by PRC Residents*.”\n\n \n\nIf our shareholders who are\nPRC residents or entities do not complete their registration with the local SAFE, NDRC or MOC branches, our PRC subsidiaries may be prohibited\nfrom distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted\nin our ability to contribute additional capital to our PRC subsidiaries. In addition, our shareholders may be required to suspend or stop\nthe investment and complete the registration within a specified time, and may be warned or prosecuted for criminal liability if a crime\nis constituted. Moreover, failure to comply with the SAFE registration described above could result in liability under PRC laws for evasion\nof applicable foreign exchange restrictions.\n\n \n\nWe have notified all PRC\nresidents or entities who directly or indirectly hold shares in our Cayman Islands holding company and who are known to us as being PRC\nresidents to complete the foreign exchange registrations. However, we may not be informed of the identities of all the PRC residents or\nentities holding direct or indirect interest in our company, nor can we compel our beneficial owners to comply with SAFE registration\nrequirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents or entities have\ncomplied with, and will in the future make, obtain or update any applicable registrations or approvals required by SAFE regulations. Failure\nby such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations\nof our PRC subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit\nour PRC subsidiaries’ ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely\naffect our business and prospects.\n\n \n\n55\n\n \n\n \n\nFurthermore, as these foreign\nexchange regulations are still relatively new and their interpretation and implementation has been constantly evolving, it is unclear\nhow these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented\nby the relevant government authorities. For example, we may be subject to a more stringent review and approval process with respect to\nour foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect\nour financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that\nwe or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings\nand registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and\ncould adversely affect our business and prospects.\n\n** **\n\n**Any failure to comply with PRC regulations\nregarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other\nlegal or administrative sanctions.**\n\n \n\nIn February 2012, SAFE promulgated\nthe Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of\nOverseas Publicly Listed Company, replacing earlier rules promulgated in 2007 and 2008. Pursuant to these rules, PRC citizens and non-PRC\ncitizens who reside in China for a continuous period of not less than one year who participate in any stock incentive plan of an overseas\npublicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could\nbe the PRC subsidiaries of such overseas-listed company, and complete certain other procedures. In addition, an overseas-entrusted institution\nmust be retained to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests.\nWe and our executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of not less than\none year and who have been granted options have become subject to these regulations when our company became an overseas-listed company.\nAs of the date of this annual report, we and some of our executive officers and employees who are subject to the registration requirements\nhave not completed the required registrations. We are in the process to complete and will assist such PRC option grantees to complete\nthe required registrations and procedures.  If we or any of the PRC option grantees fail to complete the SAFE registrations, we or\nthe PRC option grantee may be subject to fines and other legal or administrative sanctions. Also, there may be additional restrictions\non the ability of them to exercise their stock options or remit proceeds gained from sale of their stock into the PRC. We also face regulatory\nuncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees\nunder PRC law. See “*Item 4. Information on the Company-4.B. Business Overview-Regulation-Regulations on Stock Incentive Plans*.”\n\n \n\n**If we are classified as a PRC resident enterprise\nfor PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.**\n\n \n\nUnder the PRC Enterprise\nIncome Tax Law and its implementation rules, an enterprise established outside of the PRC with its “de facto management body”\nwithin the PRC is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income\nat the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and\nsubstantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009,\nthe State Taxation Administration, or STA, issued a circular, known as STA Circular 82, which provides certain specific criteria for determining\nwhether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although\nthis circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC\nindividuals or foreigners, the criteria set forth in the circular may reflect the STA’s general position on how the “de facto\nmanagement body” text should be applied in determining the tax resident status of all offshore enterprises. According to STA Circular\n82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident\nby virtue of having its “de facto management body” in mainland China, and will be subject to PRC enterprise income tax on\nits global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is\nin the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval\nby organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and\nboard and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives\nhabitually reside in the PRC.\n\n \n\n56\n\n \n\n \n\nWe believe our company is\nnot a PRC resident enterprise for PRC tax purposes. However, the tax resident status of an enterprise is subject to determination by the\nPRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” If\nthe PRC tax authorities determine that our company is a PRC resident enterprise for enterprise income tax purposes, we will be subject\nto PRC enterprise income tax on our worldwide income at the rate of 25%. Furthermore, we will be required to withhold a 10% withholding\ntax from dividends we pay to our shareholders that are nonresident enterprises. In addition, nonresident enterprise shareholders may be\nsubject to PRC tax at a rate of 10% on gains realized on the sale or other disposition of ordinary shares, if such gain is treated as\nderived from a PRC source. Furthermore, if we are deemed a PRC resident enterprise, dividends paid to our non-PRC individual shareholders\nand any gain realized on the transfer of ordinary shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the\ncase of dividends, may be withheld at source by us). These rates may be reduced by an applicable tax treaty. For example, PRC Enterprise\nIncome Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise, or an FIE, to its immediate\nholding company outside of mainland China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company\nis registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with mainland China, subject to a qualification review\nat the time of the distribution. But it is unclear whether non-PRC shareholders of our company would, in practice, be able to obtain the\nbenefits of any tax treaties between their country of tax residence and the mainland China in the event that we are treated as a PRC resident\nenterprise. Any such tax may reduce the returns on your investment in the ordinary shares.\n\n** **\n\n**We face uncertainty with respect to indirect\ntransfers of equity interests in PRC resident enterprises by their non-PRC holding companies.**\n\n \n\nOn February 3, 2015, the\nState Tax Administration, or the STA, issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of\nProperties by Non-Tax Resident Enterprises, or STA Bulletin 7. STA Bulletin 7 extends its tax jurisdiction to transactions involving the\ntransfer of taxable assets through offshore transfer of a foreign intermediate holding company. In addition, STA Bulletin 7 has introduced\nsafe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. STA Bulletin 7\nalso brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable\nassets.\n\n \n\nOn October 17, 2017, the\nSTA issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Nonresident Enterprise Income\nTax at Source, or STA Bulletin 37, which came into effect on December 1, 2017 and amended on June 15, 2018. The STA Bulletin 37 further\nclarifies the practice and procedure of the withholding of nonresident enterprise income tax.\n\n \n\nWhere a nonresident enterprise\ntransfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer,\nthe nonresident enterprise as either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such\nIndirect Transfer to the relevant tax authority. Using a “substance over form” principle, the PRC tax authority may disregard\nthe existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing,\navoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax, and\nthe transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a\nrate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to\npenalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.\n\n \n\nWe face uncertainties as\nto the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore\nrestructuring, sale of the shares in our offshore subsidiaries and investments. Our company may be subject to filing obligations or taxed\nif our company is the transferor in such transactions, and may be subject to withholding obligations if our company is the transferee\nin such transactions, under STA Bulletin 7 and/or STA Bulletin 37. For transfer of shares in our company by investors who are non-PRC\nresident enterprises, our PRC subsidiaries may be requested to assist in the filing under STA Bulletin 7 and/or STA Bulletin 37. As a\nresult, we may be required to expend valuable resources to comply with STA Bulletin 7 and/or STA Bulletin 37 or to request the relevant\ntransferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed\nunder these circulars, which may have a material adverse effect on our financial condition and results of operations.\n\n** **\n\n57\n\n \n\n** **\n\n**Trading in our securities will be prohibited\nunder the HFCAA if the PCAOB determines that it is unable to inspect or investigate completely our registered public accounting firm and\nas a result, U.S. national securities exchanges, such as the NYSE American, may determine to delist our securities.**\n\n \n\nU.S. legislators and regulators\nhave in recent years voiced concerns about risks associated with investing in companies that are based in or have substantial operations\nin emerging markets, including China. In particular, lawmakers have highlighted the increased risks associated with companies whose independent\nauditors are unable to be inspected or investigated completely by the PCAOB.\n\n \n\nAs part of this continued\nfocus in the United States on access to audit and other information currently protected by national law, in particular China’s,\non December 18, 2020, the U.S. president signed the HFCAA into law. Among other things, the HFCAA requires the SEC to identify public\ncompanies that have retained a registered public accounting firm to issue an audit report where the firm has a branch or office that:\n(i) is located in a foreign jurisdiction, and (ii) the Public Company Accounting Oversight Board, or the PCAOB, has determined that it\nis unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction. On December 29,\n2022, the U.S. President signed the “Consolidated Appropriations Act, 2023” into law, which, among other things, amended the\nHFCAA to reduce the number of consecutive years an issuer can be identified as a Commission-Identified Issuer before the SEC must impose\nan initial trading prohibition on the issuer’s securities from three years to two years. Therefore, if we are identified as a Commission-Identified\nIssuer for two consecutive years, the SEC is required under the HCFAA to prohibit the trading of our securities on a U.S. national securities\nexchange and in the over-the-counter market.\n\n \n\nOn December 16, 2021, the\nPCAOB issued the HFCAA Determination Report, according to which registered public accounting firms headquartered in mainland China and\nHong Kong, including PricewaterhouseCoopers Zhong Tian LLP(“PwC”), our former auditor, were subject to the determinations\nthat the PCAOB is unable to inspect or investigate completely. On August 22, 2022, we were conclusively identified by the SEC under the\nHFCAA as having filed audit reports issued by a registered public accounting firm that cannot be inspected or investigated completely\nby the PCAOB in connection with the filing of our annual report on the Form 20-F for the year ended March 31, 2022. The inability of the\nPCAOB to conduct inspections in the past also deprived our investors of the benefits of such inspections.\n\n \n\nOur current auditor, Assentsure\nPAC (“Assentsure”), the independent registered public accounting firm that issues the audit report included elsewhere in this\nannual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject\nto laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the\napplicable professional standards. Our auditor is headquartered in Singapore, and is subject to inspection by the PCAOB on a regular basis\nwith the latest inspection in September 2024. As of the date of this annual report, our auditor is not among the firms listed on the PCAOB\nDetermination List issued in December 2021.\n\n \n\nOn August 26, 2022, the PCAOB\nsigned a Statement of Protocol with China Securities Regulatory Commission, or the CSRC, and the Ministry of Finance of the People’s\nRepublic of China, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms\nheadquartered in mainland China and Hong Kong. On December 15, 2022, the PCAOB announced that it was able to conduct inspections and investigations\ncompletely of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong in 2022. The PCAOB vacated its previous\n2021 determinations accordingly. While vacating those determinations, each year, the PCAOB will determine whether it can inspect and investigate\ncompletely accounting firms headquartered in mainland China and Hong Kong. Uncertainties exist with respect to the implementation of this\nframework and there is no assurance that the PCAOB will be able to have continued access for complete inspections and investigations in\n2023 and beyond. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting\nfirms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report\non our financial statements filed with the SEC, our securities would be prohibited from being traded on a national securities exchange\nor in the over-the-counter trading market in the United States. The delisting of our Class A ordinary shares, or the threat\nof their being delisted, may materially and adversely affect the value of your investment. The HFCAA or other efforts to increase U.S.\nregulatory access to audit information could cause investor uncertainty for affected issuers, including us, and the market price of our\nClass A ordinary shares could be adversely affected.\n\n \n\n58\n\n \n\n \n\nIf our Class A ordinary shares\nare delisted from the NYSE American and are prohibited from trading in the over-the-counter market in the United States, there is no certainty\nthat we will be able to list our securities on a non-U.S. securities exchange or that a market for our securities will develop outside\nof the United States. Such a delisting would significantly affect our ability to raise capital on terms acceptable to us, or at all, which\nwould have a material adverse impact on our business, financial condition, results of operations and prospects.\n\n \n\n**Changes in U.S. and international policies,\nparticularly with regard to China, may adversely impact our business and operating results.**\n\n \n\nRecently there have been\nchanges in international trade policies and rising political tensions, particularly between the U.S. and China, but also as a result of\nthe war in Ukraine and sanctions on Russia. For instance, the U.S. government has in the past imposed, additional, new, or higher tariffs\non certain products imported from China to penalize China for what it characterizes as unfair trade practices. China has responded by\nimposing additional, new, or higher tariffs on certain products imported from the United States. Although the United States and China\nentered into the Economic and Trade Agreement between the United States of America and the People’s Republic of China as a phase\none trade deal, effective on February 14, 2020, it is uncertain whether there will be any further material changes to tariff policies.\nAny unfavorable government policies on international trade, such as capital controls or tariffs, may affect our business, financial condition\nand results of operations. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated\nor, in particular, if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could\nhave an adverse effect on our business, financial condition and results of operations.\n\n \n\nIn addition to the proposed\nU.S. legislation and policies relating to Chinese companies’ compliance with applicable U.S. securities laws, our business and prospect\nmay also be negatively affected by other changes in governmental policies including sanctions and export controls administered by U.S.\ngovernment authorities, including those imposed as a result of a material deterioration of the political or economic relations between\nChina and the United States and other geopolitical challenges. There is no assurance that the governmental authorities in the United States\nwill not take any such actions against us or affiliates in the event the tensions between China and the United States escalate, which\ncould result in a material and adverse impact on our business and prospect.\n\n \n\n**Risks Related to our Class A Ordinary Shares**\n\n** **\n\n**The trading price of our Class A ordinary\nshares is likely to be volatile, which could result in substantial losses to investors.**\n\n \n\nThe trading price of our\nClass A ordinary shares is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because\nof broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business\noperations located mainly in China that have listed their securities in the United States. In addition to market and industry factors,\nthe price and trading volume for our Class A ordinary shares may be highly volatile for factors specific to our own operations, including\nthe following:\n\n \n\n●actual\nor anticipated fluctuations in our results of operations, e.g., net revenues, earnings and cash flows;\n\n \n\n●the\nfinancial projections we may provide to the public, any changes in these projections or our failure to meet these projections;\n\n \n\n●announcements\nof significant technical innovations, new investments, acquisitions, strategic partnerships, joint ventures, results of operations or\ncapital commitments by us or our competitors;\n\n \n\n●announcements\nof new offerings, solutions and expansions by us or our competitors;\n\n \n\n59\n\n \n\n \n\n●failure\nof securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts\nwho follow our company or our failure to meet these estimates or the expectations of investors;\n\n \n\n●detrimental\nadverse publicity about us, our services or our industry;\n\n \n\n●announcements\nof new regulations, rules or policies relevant to our business;\n\n \n\n●additions\nor departures of key personnel;\n\n \n\n●release\nof lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;\n\n \n\n●potential\nlitigation or regulatory investigations; and\n\n \n\n●other\nevents or factors, including those resulting from war, epidemics, incidents of terrorism or responses to these events.\n\n \n\nAny of these factors may result in\nlarge and sudden changes in the volume and price at which our Class A ordinary shares will trade.\n\n \n\nIn addition, the stock market\nin general, and the performance and fluctuation of the market prices for internet-related companies and other companies with operations\nmainly in China in particular, may affect the volatility in the prices of and trading volumes for our Class A ordinary shares. The securities\nof some China-based companies that have listed their securities in the United States have experienced significant volatility that often\nhas been unrelated to the operating performance of such companies, including, in some cases, substantial declines in the trading prices\nof their securities. The trading performances of these companies’ securities may affect the attitudes of investors towards Chinese\ncompanies listed in the United States in general, which consequently may impact the trading performance of our Class A ordinary shares,\nregardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices\nor fraudulent accounting, corporate structure or other matters of other Chinese companies may also negatively affect the attitudes of\ninvestors towards Chinese companies in general, including us, regardless of whether we have engaged in any inappropriate activities. In\nparticular, the global financial crisis, the ensuing economic recessions and deterioration in the credit market in many countries have\ncontributed and may continue to contribute to extreme volatility in the global stock markets. These broad market and industry fluctuations\nmay adversely affect the market price of our Class A ordinary shares. Volatility or a lack of positive performance in our Class A ordinary\nshare price may also adversely affect our ability to retain key employees, most of whom have been granted options or other equity incentives.\n\n \n\nIn the past, shareholders\nof public companies have often brought securities class action suits against those companies following periods of instability in the market\nprice of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s\nattention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which\ncould harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our\nability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant\ndamages, which could have a material adverse effect on our financial condition and results of operations.\n\n** **\n\n**Our multi-class share structure with different\nvoting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions\nthat holders of our Class A ordinary shares may view as beneficial.**\n\n \n\nWe have adopted a multi-class\nshare structure such that our ordinary shares consist of Class A ordinary shares, Class B ordinary shares and Class C ordinary shares.\nIn respect of matters requiring the votes of shareholders, each Class A ordinary share is entitled to one vote, each Class B ordinary\nshare is entitled to 20 votes, and each Class C ordinary share is entitled to 100 votes. Each Class B ordinary share is convertible into\none Class A ordinary share at any time by the holder thereof, Class A ordinary shares are not convertible into Class B ordinary shares,\nand Class C ordinary shares are not convertible into Class A ordinary shares or Class B ordinary shares under any circumstances. Upon\nany sale, transfer, assignment or disposition of any Class B ordinary shares by a holder thereof to any person who is not a Founder (as\nsuch term is defined under our MAA) or an affiliate of a Founder, or upon a change of ultimate beneficial ownership of any Class B ordinary\nshare to a person who is not a Founder or an affiliate of a Founder, each of such Class B ordinary shares will be automatically and immediately\nconverted into one Class A ordinary share. There is no limit on the circumstances where holders of Class B ordinary shares may transfer\nor otherwise dispose of their Class B ordinary shares. Mr. Hao (Louis) Liang, Ms. Yingzhi (Lisa) Tang and a former director beneficially\nown all of our issued Class B ordinary shares. As of March 31, 2026, the Class B ordinary shares they held in the aggregate accounted\nfor approximately 1.7% of our total issued and outstanding share capital and 2.9% of the aggregate voting power of our total issued and\noutstanding shares, and the Class C ordinary shares held by Mr. Liang and Ms. Tang in the aggregate accounted for approximately 89.4%\nof the aggregate voting power of our total issued and outstanding shares.\n\n \n\n60\n\n \n\n \n\nAs a result of this multi-class\nshare structure, the holders of our Class C ordinary shares will have complete control over the outcome of matters put to a vote of shareholders\nand have significant influence over our business, including decisions regarding mergers, consolidations, liquidations and the sale of\nall or substantially all of our assets, election of directors and other significant corporate actions. As the Class C ordinary shares\noutstanding, which are currently held by Mr. Liang and Ms. Tang, have an aggregate voting power of 89.4% of our shares issued outstanding,\nthe holders of Class C ordinary shares currently control the outcome of a shareholder vote with respect to matters requiring an ordinary\nresolution which requires the affirmative vote of a simple majority of shareholder votes and with respect to matters requiring a special\nresolution which requires the affirmative vote of no less than two-thirds of shareholder votes. The holders of Class C ordinary shares\nmay take actions that are not in the best interest of us or our other shareholders. It may discourage, delay or prevent a change in control\nof our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares\nas part of a sale of our company and may reduce the price of our Class A ordinary shares. This concentrated control will limit your ability\nto influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions\nthat holders of Class A ordinary shares may view as beneficial.\n\n \n\nFuture issuances of our Class\nB ordinary shares and Class C ordinary shares, which can be approved by the Board, could result in dilution to existing holders of our\nClass A ordinary shares. Such issuances, or the perception that such issuances may occur, could depress the market price of our Class\nA ordinary shares. We may issue additional equity securities from time to time, including Class B ordinary shares and Class C ordinary\nshares. As a result, holders of Class A ordinary shares bear the risk that future issuances of equity securities may reduce the value\nof their Class A ordinary shares and dilute their ownership interests. In addition, any conversion of any Class B ordinary shares into\nClass A ordinary shares, at the option of any holder of Class B ordinary shares and Class C ordinary shares, would dilute holders of Class\nA ordinary shares in terms of voting power and, in the case of Class B ordinary shares, beneficial ownership and as a result, the market\nprice of our Class A ordinary shares could be adversely affected. Furthermore, the conversion of Class B ordinary shares to Class A ordinary\nshares, while increasing the absolute voting power of holders of our Class A ordinary shares, may have the effect of increasing the relative\nvoting power of the holders of Class B ordinary shares who retain their shares in the long term. As a result, the relative voting power\nof holders of Class A ordinary shares may remain limited for a significant period of time.\n\n** **\n\n**The multi-class structure of our ordinary\nshares may adversely affect the trading market for our Class A ordinary shares.**\n\n \n\nS&P Dow Jones and FTSE\nRussell have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including\nthe S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of\ntotal voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to\nthe use of multiple class structures. As a result, the dual class structure of our ordinary shares may prevent the inclusion of our Class\nA ordinary shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance\npractices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active\ntrading market for our Class A ordinary shares. Any actions or publications by shareholder advisory firms critical of our corporate governance\npractices or capital structure could also adversely affect the value of our Class A ordinary shares.\n\n \n\n**If securities or industry analysts do not\npublish research or reports about our business, or if they adversely change their recommendations regarding our Class A ordinary shares,\nthe market price for our Class A ordinary shares and trading volume could decline.**\n\n \n\nThe trading market for our\nClass A ordinary shares will be influenced by research or reports that industry or securities analysts publish about our business, our\nmarket and our competitors. We do not have any control over these analysts. If one or more analysts who cover us downgrade the Class A\nordinary shares or change their opinion on our Class A ordinary shares, the market price for our Class A ordinary shares would likely\ndecline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the\nfinancial markets, which in turn could cause the market price or trading volume for our Class A ordinary shares to decline.\n\n \n\n61\n\n \n\n** **\n\n**The sale or availability for sale of substantial\namounts of Class A ordinary shares could adversely affect their market price.**\n\n \n\nSales of substantial amounts\nof Class A ordinary shares in the public market, or the perception that these sales could occur, could adversely affect the market price\nof our Class A ordinary shares and could materially impair our ability to raise capital through equity offerings in the future. We cannot\npredict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability\nof these securities for future sale will have on the market price of our Class A ordinary shares.\n\n** **\n\n**Techniques employed by short sellers may\ndrive down the market price of our Class A ordinary shares.**\n\n \n\nShort selling is the practice\nof selling securities that the seller does not own but rather has borrowed from a third-party with the intention of buying identical securities\nback at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the\nsale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than\nit received in the sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish,\nor arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative\nmarket momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling\nof shares in the market.\n\n \n\nPublic companies that have\nsubstantially all of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has\ncentered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities\nand mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result,\nmany of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject\nto shareholder lawsuits and/or SEC enforcement actions.\n\n \n\nIt is not clear what effect\nsuch negative publicity could have on us. If we were to become the subject of any unfavorable allegations, whether such allegations are\nproven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend ourselves.\nWhile we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against\nthe relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation\ncould be costly and time-consuming, and could distract our management from growing our business. Even if such allegations are ultimately\nproven to be groundless, allegations against us could severely impact our business operations, and any investment in our Class A ordinary\nshares could be greatly reduced or even rendered worthless.\n\n** **\n\n**Because we will not pay dividends in the\nforeseeable future, you must rely on a price appreciation of our Class A ordinary shares for a return on your investment.**\n\n \n\nWe currently intend to retain\nmost, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we will\nnot pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our Class A ordinary shares as\na source for any future dividend income.\n\n \n\nOur Board has discretion\nas to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary\nresolution declare a dividend, but no dividend may exceed the amount recommended by our Board. In either case, all dividends are subject\nto certain restrictions under Cayman Islands law, namely that our company may pay a dividend out of either profit or share premium account,\nand provided always that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts\nas they fall due in the ordinary course of business. Even if our Board decides to declare and pay dividends, the timing, amount and form\nof future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus, the\namount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors\ndeemed relevant by our Board. Accordingly, the return on your investment in our Class A ordinary shares will likely depend entirely upon\nany future price appreciation of our Class A ordinary shares. There is no guarantee that our Class A ordinary shares will appreciate in\nvalue or even maintain the price at which you purchased our Class A ordinary shares. You may not realize a return on your investment in\nour Class A ordinary shares and you may even lose your entire investment in our Class A ordinary shares.\n\n \n\n62\n\n \n\n \n\n**You may face difficulties in protecting\nyour interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands\nlaw.**\n\n \n\nBoqii is an exempted company\nwith limited liability incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles\nof association, as amended from time to time, the Companies Act (As Revised), or the Companies Act, of the Cayman Islands and the common\nlaw of the Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the\nfiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.\nThe common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as\nfrom the common law of England and Wales, the decisions of whose courts are of persuasive authority, but are not binding, on a court in\nthe Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly\nestablished as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman\nIslands have a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed\nand judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have a standing\nto initiate a shareholder derivative action in a federal court of the United States.\n\n \n\nShareholders of Cayman Islands\nexempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of the register\nof members of these companies (other than the memorandum and articles of association, the register of mortgages and charges and any special\nresolutions passed by shareholders). The Registrar of Companies of the Cayman Islands shall make available the list of the names of our\ncurrent directors of (and where applicable the current alternate directors of the Company) for inspection by any person upon payment of\na fee by such person. Our directors have discretion under our fifteenth amended and restated memorandum and articles of association currently\nin effect, or the MAA, to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders,\nbut are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed\nto establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.\n\n \n\nCertain corporate governance\npractices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other\njurisdictions such as the United States. If we choose to follow home country practice, our shareholders may be afforded less protection\nthan they otherwise would under rules and regulations applicable to U.S. domestic issuers.\n\n \n\nAs a result of all of the\nabove, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management or\nmembers of the Board than they would as public shareholders of a company incorporated in the United States. For a discussion of significant\ndifferences between the provisions of the Companies Act and the laws applicable to companies incorporated in the United States and their\nshareholders, see “*Item 10. Additional Information-10.B. Memorandum and Articles of Association*.”\n\n** **\n\n**Certain judgments obtained against us by\nour shareholders may not be enforceable.**\n\n \n\nBoqii is an exempted company\nlimited by shares incorporated under the laws of the Cayman Islands. As of the date of this annual report, substantially all of our assets\nare located outside of the United States. Substantially all of our current operations are conducted in China. In addition, all of our\ncurrent directors and officers are nationals and residents of countries other than the United States. Substantially all of the assets\nof these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against\nus or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S.\nfederal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and\nof China may render you unable to enforce a judgment against our assets or the assets of our directors and officers. However, the deposit\nagreement gives you the right to submit claims against us to binding arbitration, and arbitration awards may be enforceable against us\nand our assets in China even when court judgments are not.\n\n \n\n63\n\n \n\n \n\n**We are a foreign private issuer within the\nmeaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.**\n\n \n\nBecause we qualify as a foreign\nprivate issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States\nthat are applicable to U.S. domestic issuers, including:\n\n \n\n●the\nrules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;\n\n \n\n●the\nsections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under\nthe Exchange Act;\n\n \n\n●the\nsections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability\nfor insiders who profit from trades made in a short period of time; and\n\n \n\n●the\nselective disclosure rules by issuers of material nonpublic information under Regulation FD.\n\n \n\nWe are required to file an\nannual report on Form 20-F within four months of the end of each fiscal year. In addition, we publish our results on a semi-annual basis\nas press releases, distributed pursuant to the rules and regulations of the NYSE American. Press releases relating to financial results\nand material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to\nthe SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result,\nyou may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic\nissuer.\n\n \n\nIn addition, the NYSE American\nrules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance\npractices in the Cayman Islands, which is our home country, may differ significantly from the NYSE American corporate governance listing\nstandards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with the NYSE American\ncorporate governance listing standards.\n\n \n\nWe currently follow Cayman\nIslands corporate governance practices in lieu of the corporate governance requirements of the NYSE American that listed companies must\n(i) have a majority of independent directors, (ii) have a minimum of three members at its audit committee, (iii) have a nominating committee\nand a compensation committee each composed entirely of independent directors, (iv) hold an annual meeting of shareholders no later than\none year after the fiscal year end and (v) obtain shareholder approval with respect to the establishment of (or material amendment to)\na stock option or equity compensation plans and (vi) obtain shareholder approval prior to an issuance of securities in any transaction\nor series of related transactions under Sections 712 and 713 of the NYSE American LLC Company Guide. For details, see “*Item 16.G.\nCorporate Governance*.” As we have chosen to follow home country practice as described above, our shareholders may be afforded\nless protection than they otherwise would enjoy under the NYSE American corporate governance listing standards applicable to U.S. domestic\nissuers.\n\n** **\n\n64\n\n \n\n** **\n\n**If we are classified as a passive foreign\ninvestment company, or PFIC, United States taxpayers who own our Class A ordinary shares may have adverse United States federal income\ntax consequences.**\n\n \n\nIn general, a non-U.S. corporation is a PFIC for U.S. federal income\ntax purposes for any taxable year in which (i) 50% or more of the average value of its assets (generally determined on a quarterly basis)\nconsists of assets that produce, or are held for the production of, passive income (the “asset test”), or (ii) 75% or more\nof its gross income consists of passive income. For purposes of the above calculations, a non-U.S. corporation that owns (or is treated\nas owning for U.S. federal income tax purposes), directly or indirectly, at least 25% by value of the shares of another corporation is\ntreated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of\nthe income of the other corporation. Passive income generally includes dividends, interest, rents, royalties and gains from financial\ninvestments. Cash is generally a passive asset for these purposes. Depending on the amount of cash we hold, together with any other assets\nheld for the production of passive income, it is possible that, for our current taxable year or any subsequent year, more than 50% of\nour assets may be assets which produce passive income. Our status as a PFIC is a fact-intensive determination made on an annual basis.\nWe will make this determination following the end of any particular tax year. Taking into account the composition of our income and assets,\nwe believe it is reasonable to take the position that we were not a PFIC for our taxable year ended on March 31, 2025. However, due to\nthe uncertainty described above, as well as uncertainties regarding the characterization and value of certain of our assets for purposes\nof the asset test, our PFIC status for our taxable year ended on March 31, 2025 is not entirely clear and the U.S. Internal Revenue Service\nmay assert that we were a PFIC for that year. Moreover, it is not entirely clear how the contractual arrangements between us, the VIEs\nand their nominal shareholders will be treated for purposes of the PFIC rules, and we may be or become a PFIC if the VIEs are not treated\nas owned by us for these purposes.\n\n \n\nIf we are a PFIC for any\ntaxable year during which a U.S. taxpayer holds our Class A ordinary shares, the U.S. taxpayer generally will be subject to adverse U.S.\nfederal income tax consequences, including increased tax liability on disposition gains and “excess distributions” and additional\nreporting requirements. This will generally continue to be the case even if we ceased to be a PFIC in a later taxable year, unless certain\nelections are made. See “*Item 10.E. Taxation-Material U.S. Federal Income Tax Considerations-Passive Foreign Investment Company\nRules*.”"}