{"url_path":"/sec/pom/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 KEY INFORMATION","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-14","source_url":"https://www.sec.gov/Archives/edgar/data/1877971/0001213900-26-056576-index.html","accession_number":"0001213900-26-056576","cik":"0001877971","ticker":"POM","issuer_name":"POMDOCTOR Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1877971/0001213900-26-056576-index.html","primary_entity_key":"0001877971","primary_entity_name":"POMDOCTOR Ltd"},"word_count":43573,"has_tables":true,"body_markdown":"ITEM 3.KEY INFORMATION\n\n \n\n**Our\nHolding Company Structure and Risks Related to Doing Business in China**\n\n \n\nPOMDOCTOR LIMITED is a Cayman\nIslands exempted company primarily operating in China through its subsidiaries and contractual arrangements with its VIE, namely Guangzhou\nQilekang Digital Health Medical Technology Co., Ltd., a limited liability company established under PRC law (“Qilekang Digital\nHealth”), and its subsidiaries. The VIE is consolidated for accounting purpose only and PomDoctor does not own any equity interest\nin the VIE. PomDoctor does not conduct operations directly, and its subsidiaries and the VIE conduct operations in China. Foreign\nownership of certain of our businesses including value-added telecommunication services and medical institutions is subject to restrictions\nunder current PRC laws and regulations. As such, our WFOE is not eligible to provide value-added telecommunication services, services\nas internet hospitals or provide certain other restricted services related to our businesses. We therefore operate these businesses in\nChina through the VIE and its subsidiaries. For a summary of these contractual arrangements, see “Item 4. Information on The\nCompany—4.C. Organizational Structure—Contractual Arrangements with The VIE and Its Shareholders.” Investors in the\nADSs thus are not purchasing, and may never directly hold, equity interests in the VIE. As used in this annual report, “we,”\n“us” or “our” refers to PomDoctor and its subsidiaries.\n\n \n\nOur corporate structure is\nsubject to risks relating to our contractual arrangements with Qilekang Digital Health and its shareholders. Such contractual arrangements\nhave not been tested in any of the PRC courts. There are substantial uncertainties regarding the interpretation and application of current\nand future PRC laws, regulations, and rules relating to these contractual arrangements. If the PRC government finds these contractual\narrangements non-compliant with the restrictions on direct foreign investment in the relevant industries, or if the relevant PRC\nlaws, regulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties or be forced\nto relinquish our interests in the VIE or forfeit our rights under the contractual arrangements. PomDoctor and investors in the ADSs\nface uncertainty about potential future actions by the PRC government, which could affect the enforceability of our contractual arrangements\nwith Qilekang Digital Health and, consequently, could result in a material adverse change in our operations and the value of our ADSs,\nsignificantly limit or hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities\nto significantly decline or become worthless. If we are unable to claim our right to control the assets of the VIE, our ADSs may significantly\ndecline in value or become worthless. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Corporate\nStructure.”\n\n \n\nPomDoctor is not a Chinese\noperating company, but a Cayman Islands holding company with operations mainly conducted by the VIE and its subsidiaries based in China.\nWe face various legal and operational risks and uncertainties associated with being based in or having our operations primarily in China\nand the complex and evolving PRC laws and regulations. For example, we face risks relating to regulatory approvals on offerings conducted\noverseas by and foreign investment in China-based issuers, anti-monopoly regulatory actions, and oversight on cybersecurity and data\nprivacy, which may impact our ability to conduct certain businesses, accept foreign investments, or list on a United States or other\nforeign exchange. In addition to the aforementioned risks, recent actions and regulatory actions by China’s government, such as\nthose related to the use of the variable interest entities, may impact our ability to conduct certain businesses, accept foreign investments,\nor list on a United States or other foreign exchange. The interpretation and enforcement of PRC laws and regulations could limit\nthe legal protection available to you and us, hinder our ability to offer or continue to offer the ADSs, result in a material adverse\neffect on our business operations, and damage our reputation, which might further cause the ADSs to significantly decline in value\nor become worthless. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to Doing Business in China.”\n\n \n\nThe following\ndiagram illustrates our corporate structure, including our principal subsidiaries as of the date of this annual report.\n\n \n\n1\n\n \n\n \n\n**Assets Transfer Between VIE and Other Consolidated\nEntities**\n\n** **\n\nTo date, we have not distributed\nany earnings or settled any amounts owed under the Contractual Arrangements. We do not have any plan to distribute earnings or settle\namounts owed under the VIE agreements in the foreseeable future. We do not have any cash flows or transfers of other asset between the\nVIE and our WFOE for the years ended December 31, 2023, 2024 and 2025, and there is no dividends or distributions that the\nVIE or its subsidiaries have made to our company. As of the date of this annual report, there is no cash flows or transfers of other\nassets among the Company, our Hong Kong subsidiary, our WFOE and the VIE, and there is no dividends or distributions that the VIE or\nits subsidiaries have made to our company. In addition, we have not made any dividends or distributions to U.S. investors.\n\n \n\nWe currently do not have cash\nmanagement policies in place that dictate how funds are transferred between the Company, our Hong Kong subsidiary, our WFOE, the\nVIE, and the investors, including potential U.S. investors. Rather, the funds can be transferred in accordance with the applicable\nPRC laws and regulations. For details, see “—Restrictions on Foreign Exchange and the Ability to Transfer Cash Between Entities,\nAcross Borders and to U.S. Investors.”\n\n \n\n**Restrictions on Foreign Exchange and the Ability\nto Transfer Cash Between Entities, Across Borders and to U.S. Investors**\n\n** **\n\nThe PRC government imposes\ncontrols on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. All\nof our income and income of the VIE is received in Renminbi and shortages in foreign currencies may restrict our ability to pay dividends\nor other payments, or otherwise satisfy our foreign currency denominated obligations, if any. Under existing PRC foreign exchange regulations,\npayments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions,\ncan be made in foreign currencies without prior approval from SAFE as long as certain procedural requirements are met. Approval from\nappropriate government authorities is required if Renminbi is converted into foreign currency and remitted out of China to pay capital\nexpenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose restrictions\non access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends\nin foreign currencies to our shareholders. See also “Item 3. Key Information—3.D. Risk Factors—Risks Related to Doing\nBusiness in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result\nin unfavorable tax consequences to us and our non-PRC shareholders.”\n\n \n\nWe are a holding company,\nand we may rely on dividends and other distributions on equity paid by our PRC subsidiaries like our WFOE for our cash and financing\nrequirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we\nmay incur. Relevant PRC laws and regulations permit the PRC companies to pay dividends only out of their retained earnings, if any, as\ndetermined in accordance with PRC accounting standards and regulations. Additionally, our PRC subsidiary and VIE can only distribute\ndividends upon approval of the shareholders after they have met the PRC requirements for appropriation to the statutory reserves. Under\nPRC laws and regulations, our wholly foreign-owned subsidiaries in China may pay dividends only out of their respective accumulated profits\nas determined in accordance with PRC accounting standards and regulations. In addition, a PRC enterprise is required to set aside at\nleast 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve fund, until the aggregate amount\nof such fund reaches 50% of its registered capital. Our PRC subsidiary may also allocate a portion of its after-tax profits based on\nPRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends.\nAs a result of these and other restrictions under the PRC laws and regulations, the PRC subsidiaries and the VIE are restricted to transfer\na portion of their net assets to us either in the form of dividends, loans or advances. Even though we currently do not require any such\ndividends, loans or advances from our PRC subsidiary and the VIE for working capital and other funding purposes, we may in the future\nrequire additional cash resources from our PRC subsidiary and the VIE due to changes in business conditions, to fund future acquisitions\nand developments, or merely declare and pay dividends to or distributions to our shareholders.\n\n \n\n2\n\n \n\n \n\nTo the extent cash and/or\nassets in the business is in the PRC/Hong Kong or a PRC/Hong Kong entity, such funds or assets may not be available to fund\noperations or for other use outside of the PRC/Hong Kong due to interventions in or the imposition of restrictions and limitations\nimposed by the governmental authorities on the ability of us, our PRC/Hong Kong subsidiaries or the VIE to transfer cash. Any limitation\non the ability of our subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability\nto grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our\nbusiness. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Corporate Structure—We may rely\non dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have,\nand any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability\nto conduct our business.”\n\n \n\nThe following diagram illustrates\nthe typical fund flow among our WFOE, and Qilekang Digital Health.\n\n \n\n** **\n\n**Condensed Consolidating Schedule**\n\n \n\nThe following tables present the summary statements\nof operations for our Company’s VIE and other entities for the periods presented.\n\n \n\n  \nFor the Year Ended December 31, 2025 \n\n  \nParent  \nWFOE  \nHK holding\ncompany  \nVIE and its\nsubsidiaries  \nEliminations  \nConsolidated\ntotal \n\n  \n(RMB in thousands) \n\nNet Revenues \n —  \n —  \n —  \n 399,915  \n —  \n 399,915 \n\nNet loss \n (130,930) \n (130,930) \n (130,930) \n (130,932) \n 392,790  \n (130,932)\n\n \n\n  \nFor the Year Ended December 31,\n2024 \n\n  \nParent  \nWFOE  \nHK holding\ncompany  \nVIE and its\nsubsidiaries  \nEliminations  \nConsolidated\ntotal \n\n  \n(RMB in thousands) \n\nNet Revenues \n —  \n —  \n —  \n 342,558  \n —  \n 342,558 \n\nNet loss \n (37,391) \n (37,391) \n (37,391) \n (37,365) \n 112,173  \n (37,365)\n\n \n\n3\n\n \n\n \n\n  \nFor the Year Ended December 31,\n2023 \n\n  \nParent  \nWFOE  \nHK holding\ncompany  \nVIE and its\nsubsidiaries  \nEliminations  \nConsolidated\ntotal \n\n  \n(RMB in thousands) \n\nNet Revenues \n —  \n —  \n —  \n 304,853  \n —  \n 304,853 \n\nNet loss \n (36,950) \n (36,950) \n (36,950) \n (36,949) \n 110,850  \n (36,949)\n\n \n\nThe following tables present the summary balance\nsheet data for the VIE and other entities as of the dates presented.\n\n \n\n  \nAs of December 31, 2025 \n\n  \nParent  \nWFOE  \nHK holding\ncompany  \nVIE and its\nsubsidiaries  \nEliminations  \nConsolidated\ntotal \n\n  \n(RMB in thousands) \n\nAssets \n   \n   \n   \n   \n   \n  \n\nCash and cash equivalents \n 129  \n 1,000  \n 6  \n 8,445  \n —  \n 9,580 \n\nAccounts receivable, net \n —  \n —  \n —  \n 18,440  \n —  \n 18,440 \n\nOther current assets \n 104,057  \n —  \n —  \n 19,254  \n (46,364) \n 76,947 \n\nNon-current assets \n 993  \n —  \n 990  \n 2,590  \n (1,983) \n 2,590 \n\nTotal assets \n 105,179  \n 1,000  \n 996  \n 48,729  \n (48,347) \n 107,557 \n\nAccounts payable \n —  \n —  \n —  \n 44,821  \n —  \n 44,821 \n\nOther current liabilities \n 350  \n 1  \n 1  \n 219,360  \n (46,364) \n 173,348 \n\nNon-current liabilities: \n 558,809  \n 558,809  \n 558,809  \n 370,686  \n (1,676,427) \n 370,686 \n\nTotal liabilities \n 559,159  \n 558,810  \n 558,810  \n 634,867  \n (1,722,791) \n 588,855 \n\nTotal Mezzanine equity \n —  \n —  \n —  \n —  \n —  \n — \n\nTotal deficit \n (453,980) \n (557,810) \n (557,814) \n (586,138) \n 1,674,444  \n (481,298)\n\nTotal liabilities, mezzanine equity and deficit \n 105,179  \n 1,000  \n 996  \n 48,729  \n (48,347) \n 107,557 \n\n \n\n  \nAs of December 31, 2024 \n\n  \nParent  \nWFOE  \nHK holding\ncompany  \nVIE and its\nsubsidiaries  \nEliminations  \nConsolidated\ntotal \n\n  \n(RMB in thousands) \n\nAssets \n   \n   \n   \n   \n   \n  \n\nCash and cash equivalents \n 55  \n —  \n —  \n 7,597  \n —  \n 7,652 \n\nAccounts receivable, net \n —  \n —  \n —  \n 8,799  \n —  \n 8,799 \n\nOther current assets \n —  \n —  \n —  \n 21,484  \n (438) \n 21,046 \n\nNon-current assets \n —  \n —  \n —  \n 8,730  \n —  \n 8,730 \n\nTotal assets \n 55  \n —  \n —  \n 46,610  \n (438) \n 46,227 \n\nAccounts payable \n —  \n —  \n —  \n 25,346  \n —  \n 25,346 \n\nOther current liabilities \n 438  \n —  \n —  \n 153,799  \n (438) \n 153,799 \n\nNon-current liabilities: \n 667,987  \n 667,987  \n 667,987  \n 366,763  \n (2,003,961) \n 366,763 \n\nTotal liabilities \n 668,425  \n 667,987  \n 667,987  \n 545,908  \n (2,004,399) \n 545,908 \n\nTotal Mezzanine equity \n 1,595,052  \n —  \n —  \n 168,671  \n —  \n 1,763,723 \n\nTotal deficit \n (2,263,422) \n (667,987) \n (667,987) \n (667,969) \n 2,003,961  \n (2,263,404)\n\nTotal liabilities, mezzanine equity and deficit \n 55  \n —  \n —  \n 46,610  \n (438) \n 46,227 \n\n \n\n4\n\n \n\n \n\n  \nAs of December 31, 2023 \n\n  \nParent  \nWFOE  \nHK holding\ncompany  \nVIE and its\nsubsidiaries  \nEliminations  \nConsolidated\ntotal \n\n  \n(RMB in thousands) \n\nAssets \n   \n   \n   \n   \n   \n  \n\nCash and cash equivalents \n 35  \n —  \n —  \n 6,682  \n —  \n 6,717 \n\nAccounts receivable, net \n —  \n —  \n —  \n 28,644  \n —  \n 28,644 \n\nOther current assets \n —  \n —  \n —  \n 24,091  \n (35) \n 24,056 \n\nNon-current assets \n —  \n —  \n —  \n 6,890  \n —  \n 6,890 \n\nTotal assets \n 35  \n —  \n —  \n 66,307  \n (35) \n 66,307 \n\nAccounts payable \n —  \n —  \n —  \n 41,575  \n —  \n 41,575 \n\nOther current liabilities \n 35  \n —  \n —  \n 130,423  \n (35) \n 130,423 \n\nNon-current liabilities: \n 620,946  \n 620,946  \n 620,946  \n 356,620  \n (1,862,838) \n 356,620 \n\nTotal liabilities \n 620,981  \n 620,946  \n 620,946  \n 528,618  \n (1,862,873) \n 528,618 \n\nTotal Mezzanine equity \n 1,499,109  \n —  \n —  \n 158,643  \n —  \n 1,657,752 \n\nTotal deficit \n (2,120,055) \n (620,946) \n (620,946) \n (620,954) \n 1,862,838  \n (2,120,063)\n\nTotal liabilities, mezzanine equity and deficit \n 35  \n —  \n —  \n 66,307  \n (35) \n 66,307 \n\n \n\nThe following tables present the summary cash\nflow data for the VIE and other entities for the periods presented.\n\n \n\n  \nFor the Year Ended December 31, 2025 \n\n  \nParent  \nWFOE  \nHK holding\ncompany  \nVIE and its\nsubsidiaries  \nEliminations  \nConsolidated\ntotal \n\n  \n(RMB in thousands) \n\nNet cash (used in)/provided by operating activities \n (137,070) \n —  \n 4  \n (11,414) \n —  \n (148,480)\n\nNet cash used in investing activities \n (993) \n —  \n (990) \n (1,608) \n 1,983  \n (1,608)\n\nNet cash provided by financing activities \n 140,056  \n 1,000  \n 993  \n 13,871  \n (1,993) \n 153,927 \n\n \n\n  \nFor the Year Ended December 31, 2024 \n\n  \nParent  \nWFOE  \nHK holding\n\ncompany  \nVIE and its\n\nsubsidiaries  \nEliminations  \nConsolidated\n\ntotal \n\n  \n(RMB in thousands) \n\nNet cash provided by/(used in) operating activities \n 25  \n —  \n —  \n (16,156) \n  —  \n (16,131)\n\nNet cash used in investing activities \n —  \n —  \n —  \n (33) \n —  \n (33)\n\nNet cash provided by financing activities \n —  \n —  \n —  \n 17,016  \n —  \n 17,016 \n\n \n\n5\n\n \n\n \n\n  \nFor the Year Ended December 31,\n2023 \n\n  \nParent  \nWFOE  \nHK holding\ncompany  \nVIE and its\nsubsidiaries  \nEliminations  \nConsolidated\ntotal \n\n  \n(RMB in thousands) \n\nNet cash provided by/(used in) operating activities \n 35  \n —  \n —  \n (45,831) \n —  \n (45,796)\n\nNet cash used in investing activities \n —  \n —  \n —  \n (112) \n —  \n (112)\n\nNet cash provided by financing activities \n —  \n —  \n —  \n 50,067  \n —  \n 50,067 \n\n** **\n\n**Implication of the Holding Foreign Companies\nAccountable Act**\n\n** **\n\nPursuant to the Holding\nForeign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public\naccounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or\nADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.\n\n \n\nOn December 16, 2021, the\nPCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered\npublic accounting firms headquartered in mainland China and Hong Kong. On December 15, 2022, the PCAOB removed mainland China and Hong\nKong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.\n\n \n\nEach year, the PCAOB will\ndetermine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.\nIf the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in certain\njurisdictions and we use an accounting firm headquartered in one of such jurisdictions to issue an audit report on our financial statements\nfiled with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F\nfor the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future\nfiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under\nthe HFCAA. For more details, see “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Business and Industry — The\nHolding Foreign Companies Accountable Act, or the HFCAA, and the related regulations continue to evolve. Further implementations and interpretations\nof or amendments to the HFCAA or the related regulations, or a PCAOB determination of its lack of sufficient access to inspect our auditor,\nmight pose regulatory risks to and impose restrictions on us because of our operations in mainland China.”\n\n \n\n6\n\n \n\n \n\n**Permissions Required from the PRC Authorities\nfor Our Operations and Offerings**\n\n** **\n\n**Prerequisite Regulatory Licenses, Permits\nand Approvals**\n\n** **\n\nWe are a Cayman Islands exempted\ncompany and primarily conduct our operations through the VIE and its subsidiaries in China. Our operations in China are governed by laws\nand regulations of China. As of the date of this annual report, in addition to the Business License issued by the relevant department\nof the State Administration Regulation for each of our PRC subsidiaries and the VIE, our relevant PRC subsidiaries and the VIE are required\nto obtain, and have obtained all the following permissions necessary for their operations: (i) Pharmaceutical Operation License,\n(ii) Qualification Certificate for Internet Drug Information Services, (iii) Medical Devices Operation License, (iv) Food\nOperation License, (v) Value-Added Telecommunications Business Operating License, and any other requisite information report, filings\nand approvals by any PRC governmental authority. As of the date of this annual report, none of these permissions have been denied by\nthe applicable PRC governmental authorities. However, the interpretation or implementation of existing laws and regulations may not be\nprecisely predicted and new regulations may come into effect requiring us to obtain additional licenses, permits, filings or approvals\nfor our functions and services in the future. We cannot assure you that we will be able to maintain our existing licenses or obtain new\nones. If the PRC government considers that we were operating without the proper approvals, licenses or permits or promulgates new laws\nand regulations that require additional approvals or licenses or imposes additional restrictions on the operation of any part of our\nbusiness, it has the power, among other things, to levy fines, confiscate our income, revoke our business licenses, and require us to\ndiscontinue our relevant business or impose restrictions on the affected portion of our business. Any of these actions by the PRC government\nmay have a material adverse effect on our business and results of operations, see “Item 3. Key Information—3.D. Risk Factors—Risks\nRelated to Our Business and Industry—Any lack of requisite approvals, licenses or permits applicable to our business may have a\nmaterial and adverse effect on our business, financial condition and results of operations and prospects.”\n\n \n\n**Cybersecurity Review**\n\n** **\n\nOn December 28, 2021,\nthe Cyberspace Administration of China (the “CAC”), and 12 other relevant PRC governmental authorities published the amended\nCybersecurity Review Measures, which came into effect on February 15, 2022. The final Cybersecurity Review Measures provide that\na “network platform operator” that possesses personal information of more than one million users and seeks a listing in a\nforeign country must apply for a cybersecurity review. Further, the relevant PRC governmental authorities may initiate a cybersecurity\nreview against any company if they determine certain network products, services, or data processing activities of such company affect\nor may affect national security. As a network platform operator who possesses personal information of more than one million users for\npurposes of the Cybersecurity Review Measures, we have applied for and completed the cybersecurity review with respect to the listing\nof the ADSs representing our ordinary shares on the Nasdaq pursuant to the Cybersecurity Review Measures. For details of the associated\nrisks, see “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Business and Industry—Our business\ngenerates and processes a large amount of data, and the improper use or disclosure of such data could harm our reputation as well as\nhave a material adverse effect on our business and prospects.”\n\n \n\n7\n\n \n\n \n\n**Overseas Securities Offerings**\n\n** **\n\nOn February 17, 2023,\nthe China Securities and Regulatory Commission, or the CSRC, released the Trial Administrative Measures of the Overseas Securities Offering\nand Listing by Domestic Companies and five ancillary interpretive guidelines, or collectively, the Overseas Listing Trial Measures, which\ncame into effect on March 31, 2023. According to the Overseas Listing Trial Measures, Chinese domestic companies that seek to offer\nand list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC\nand report relevant information. We have completed the required filings with the CSRC for our initial public offering in accordance with\nthe requirements under these measures and the supporting guidelines. The CSRC has concluded the filing procedure and published the filing\nresults on the CSRC website on January 17, 2025. As of the date of this annual report, we have not received any inquiry, notice,\nwarning, sanctions or regulatory objection from the CSRC. However, any future overseas securities offerings and listings conducted by\nus will be subject to the filing requirements with the CSRC under the Overseas Listing Trial Measures and we cannot assure you that we\nwill be able to complete such filling in a timely manner. On February 24, 2023, the CSRC, jointly with other relevant governmental\nauthorities, promulgated the revised Provisions on Strengthening Confidentiality and Archives Management of Overseas Securities Issuance\nand Listing by Domestic Enterprises, or the Confidentiality and Archives Management Provisions, which took effect on March 31, 2023.\nAccording to the Confidentiality and Archives Management Provisions, domestic companies, whether offering and listing securities overseas\ndirectly or indirectly, shall strictly abide the applicable laws and regulations when providing or publicly disclosing, either directly\nor through their overseas listed entities, documents and materials to securities services providers such as securities companies and\naccounting firms or overseas regulators in the process of their overseas offering and listing. If such documents or materials contain\nany state secrets or government authorities work secrets, domestic companies shall obtain the approval from competent governmental authorities\naccording to the applicable laws, and file with the secrecy administrative department at the same level with the approving governmental\nauthority. Since the Confidentiality and Archives Management Provisions was promulgated recently, substantial uncertainties still exist\nwith respect to the interpretation and implementation of such provisions. For details of the associated risks, see “Item 3. Key\nInformation—3.D. Risk Factors—Risks Related to Doing Business in China—The approval or filing of the CSRC or other\nPRC regulatory agencies may be required to maintain our listing status or conduct future overseas offerings under PRC law.”\n\n \n\nIn the case that we, our PRC\nsubsidiaries and the VIE, (i) do not receive or maintain such permissions, approvals or complete other filing procedures, or (ii) inadvertently\nconclude that such permissions, approvals or filing procedures are not required, we may face sanctions by the CSRC or other PRC regulatory\nauthorities, which may include fines and penalties on our operations in China, limitations on our operating privileges in China, restrictions\non or prohibition of the payments or remittance of dividends by our subsidiaries in China, restrictions on or delays to our future financing\ntransactions offshore, or other actions that could have a material and adverse effect on our business, financial condition, results of\noperations, reputation and prospects.\n\n \n\nEnforceability of Civil Liabilities\n\n \n\nWe are incorporated under\nthe laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands to take advantage\nof certain benefits associated with being a Cayman Islands exempted company, such as:\n\n \n\n●political and economic\nstability,\n\n \n\n●an effective judicial\nsystem,\n\n \n\n●a favorable tax\nsystem,\n\n \n\n●the absence of\nforeign exchange control or currency restrictions, and\n\n \n\n●the availability\nof professional and support services.\n\n \n\nHowever, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include but are not limited to:\n\n \n\n●the Cayman Islands\nhas a different body of securities laws as compared to the United States, and these\nsecurities laws provide less protection to investors as compared to the United States;\nand\n\n \n\n●Cayman Islands\ncompanies may not have standing to sue before the federal courts of the United States.\n\n \n\nOur constituent documents\ndo not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between\nus, our officers, directors, and shareholders, be arbitrated.\n\n \n\n8\n\n \n\n \n\nSubstantially all of our operations\nare conducted in China, and substantially all of our assets are located in China. In addition, all of our current directors and executive\nofficers, namely Zhenyang Shi, Li Xu and Guoji Luo, reside within Chinese mainland and most of their assets are located outside the United States.\nAs a result, it may be difficult for a shareholder to effect service of process within the United States upon these individuals,\nor to bring an action against us or these individuals in the United States, or to enforce against us or them judgments obtained\nin United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States\nor any state in the United States.\n\n \n\nWe have appointed Cogency\nGlobal Inc., as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.\n\n \n\nAppleby, our counsel as to\nCayman Islands law, has advised us that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us or\nour directors or officers judgments of U.S. courts predicated upon the civil liability provisions of the federal securities laws\nof the United States or the securities laws of any state in the United States, or (ii) in original actions brought in\nthe Cayman Islands, to impose liabilities against us or our directors or officers that are predicated upon the civil liability provisions\nof the federal securities laws of the United States or the securities laws of any state in the United States, so far as the\nliabilities imposed by those provisions are penal in nature.\n\n \n\nAppleby has informed us that\nalthough there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman\nIslands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on of the merits\nbased on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for\nwhich judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such\njudgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent\nwith a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a\nkind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple\ndamages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings\nare being brought elsewhere.\n\n \n\nHan Kun Law Offices, our counsel\nas to PRC law, has advised us that there is uncertainty as to whether PRC courts would (i) recognize or enforce judgments of United States\ncourts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the\nUnited States or any state in the United States, or (ii) entertain original actions brought in each respective jurisdiction\nagainst us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.\n\n \n\nHan Kun Law Offices has further\nadvised us that the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts\nmay recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties\nbetween China and the country where the judgment is made or on principles of reciprocity between jurisdictions. There exists no treaty\nand few other forms of reciprocity between China and the United States or the Cayman Islands governing the recognition and enforcement\nof foreign judgments as of the date of this annual report. In addition, according to the PRC Civil Procedures Law, 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 law 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 United States or in the Cayman Islands. Under the PRC Civil Procedures Law, foreign\nshareholders may originate actions based on PRC law before a PRC court against a company for disputes relating to contracts or other\nproperty interests, and the PRC court may accept a cause of action based on the laws or the parties’ express mutual agreement in\ncontracts choosing PRC courts for dispute resolution if such foreign shareholders can establish sufficient nexus to China for a PRC court\nto have jurisdiction and meet other procedural requirements, including, among others, that the plaintiff must have a direct interest\nin the case and that there must be a concrete claim, a factual basis, and a cause for the case. The PRC court will determine whether\nto accept the complaint in accordance with the PRC Civil Procedures Law. The foreign shareholder must entrust PRC legal counsel to participate\non behalf of such shareholder. Foreign citizens and companies will have the same rights as PRC citizens and companies in an action unless\nthe home jurisdiction of such foreign citizens or companies restricts the rights of PRC citizens and companies. However, it will be difficult\nfor U.S. shareholders to originate actions against us in China in accordance with PRC laws because we are incorporated under the\nlaws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding our ADSs or Class A ordinary\nshares, to establish a connection to China for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.\n\n \n\n9\n\n \n\n \n\n3.A. [Reserved]\n\n \n\n3.B. Capitalization and Indebtedness\n\n \n\nNot applicable.\n\n \n\n3.C. Reasons for the Offer and Use of Proceeds\n\n \n\nNot applicable.\n\n \n\n3.D. Risk Factors\n\n** **\n\n**Summary of Risk Factors**\n\n \n\nInvesting in our ADSs involves a high degree\nof risks. You should carefully consider all of the information in this annual report before making an investment in our ADSs. Below please\nfind a summary of the principal risks we face, organized under headings.\n\n** **\n\n**Risks Related to Our Business and Industry**\n\n** **\n\nWe face risks and uncertainties\nin realizing our business objectives and executing our strategies, including:\n\n \n\n●The report of each of our current and former independent registered\npublic accounting firms on our consolidated financial statements for the years ended December 31, 2023, 2024 and 2025 includes\nan explanatory paragraph that expresses substantial doubt about our ability to continue as a going concern, and if our business is unable\nto continue, it is likely that investors will lose all of their investment.\n\n \n\n●Maintaining customers’\ntrust in our ecosystem is critical to our success, and any failure to do so could severely\ndamage our reputation and brand.\n\n \n\n●We are in the early\nstage of development with a limited operating history in an emerging and dynamic “Internet\n+ healthcare” industry, and our historical results of operations and financial performance\nare not indicative of future performance.\n\n \n\n●If we are unable\nto compete effectively, our business, financial condition and results of operations may be\nmaterially and adversely affected.\n\n \n\n●Our business generates\nand processes a large amount of data, and the improper use or disclosure of such data could\nharm our reputation as well as have a material adverse effect on our business and prospects.\n\n \n\n●We have incurred\noperating losses in the past, expect to incur operating losses in the future, and may not\nbe able to achieve or maintain profitability.\n\n \n\n●If our solution\ndoes not drive customers’ engagement or if we fail to provide superior customer experience,\nour business and reputation may be materially and adversely affected.\n\n \n\n●Failure to properly\nmanage and create values for various participants in the healthcare value chain may materially\nand adversely affect our business.\n\n \n\n●The digital healthcare\nmarket is immature and volatile, and if it does not develop, if it develops more slowly than\nwe expect, or if our services do not drive user engagement, the growth of our business will\nbe harmed.\n\n \n\n10\n\n \n\n \n\n**Risks Related to Our Corporate Structure**\n\n* *\n\nWe face risks and uncertainties\nregarding our corporate structure, including:\n\n \n\n●If\nthe PRC government deems that the Contractual Arrangements in relation to the VIE do not comply with PRC regulatory restrictions on foreign\ninvestment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we\ncould be subject to severe penalties or be forced to relinquish our interests in those operations.\n\n \n\n●We\nrely on Contractual Arrangements with the VIE and its shareholders for a portion of our business operations, which may not be as effective\nas direct ownership in providing operational control.\n\n \n\n●Any\nfailure by the VIE or its shareholders to perform their obligations under our Contractual Arrangements with them would have a material\nand adverse effect on our business.\n\n \n\n●The\nshareholders of the VIE may have potential conflicts of interest with us, which may materially and adversely affect our business and\nfinancial condition.\n\n \n\n●We\nconduct a part of our business operations in China through the VIE and its subsidiaries by way of our Contractual Arrangements, but our\nContractual Arrangements may not be enforceable under PRC laws.\n\n \n\n●We\nmay rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may\nhave, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our\nability to conduct our business.\n\n \n\n●PRC\nregulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion\nmay delay or prevent us from making loans to our PRC subsidiaries and the VIE or making additional capital contributions to our wholly\nforeign-owned subsidiaries in China, which could materially and adversely affect our liquidity and our ability to fund and expand our\nbusiness.\n\n \n\n●Contractual\nArrangements in relation to the VIE may be subject to scrutiny by the PRC tax authorities and they may determine that we or the VIE owes\nadditional taxes, which could negatively affect our financial condition and the value of your investment.\n\n \n\n●Our\ncurrent corporate structure and business operations may be affected by the Foreign Investment Law.\n\n \n\n●We\nmay lose the ability to use, or otherwise benefit from, the licenses, permits and assets held by the VIE that are critical to the operation\nof our business if the VIE declares bankruptcy or becomes subject to a dissolution or liquidation proceeding.\n\n \n\n11\n\n \n\n** **\n\n**Risks Related to Doing Business in China**\n\n** **\n\nWe are a China-based company\nand we may face risks and uncertainties in doing business in China, including:\n\n \n\n●Changes\nin China’s or global economic, political or social conditions or government policies could have a material and adverse effect on\nour business and operations.\n\n \n\n●The\nPRC governmental authorities’ significant oversight and discretion over our business operation could result in a material adverse\nchange in our operations and the value of our ADSs.\n\n \n\n●Uncertainties\nwith respect to the enforcement of laws and changes in laws and regulations in China could adversely affect us.\n\n \n\n●The\napproval or filing of the CSRC or other PRC regulatory agencies may be required to maintain our listing status or conduct future overseas\nofferings under PRC law.\n\n \n\n●We are subject to consumer protection laws that could require\nus to modify our current business practices and incur increased costs.\n\n \n\n●Fluctuations in exchange rates could have a material and adverse\neffect on our results of operations and the value of your investment.\n\n \n\n●Governmental control of currency conversion may limit our\nability to utilize our revenues effectively and affect the value of your investment.\n\n \n\n**Risks Related to Our ADSs**\n\n** ** \n\n●The\ntrading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.\n\n \n\n●Our\ndual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change\nof control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.\n\n \n\n●Techniques\nemployed by short sellers may drive down the market price of the ADSs.\n\n \n\n●Substantial future sales or perceived potential sales of our\nADSs in the public market could cause the price of our ADSs to decline.\n\n \n\n●Our currently effective memorandum and articles of association\ncontain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares and the ADSs.\n\n \n\n**Risks Related to Our Business and Industry**\n\n** **\n\n**The report of each of our current and former independent registered\npublic accounting firms on our consolidated financial statements for the years ended December 31, 2023, 2024 and 2025 includes an explanatory\nparagraph that expresses substantial doubt about our ability to continue as a going concern, and if our business is unable to continue,\nit is likely that investors will lose all of their investment.**\n\n** **\n\nFor the years ended December 31,\n2023, 2024 and 2025, we have incurred net losses of RMB36.9 million, RMB37.4 million and RMB130.9 million (US$18.7 million),\nrespectively. Our working capital deficit was RMB112.6 million, RMB141.6 million and RMB113.2 million (US$16.2 million)\nas of December 31, 2023, 2024 and 2025, respectively. In addition, we obtained loans from our related parties at interest rate between\n0.00% to 20.00%. See “Item 7. Major Shareholders And Related Party Transactions—7.B. Related Party Transactions—Other\nRelated Party Transactions” for details. Our cash balance and revenues generated are not currently sufficient and cannot be projected\nto cover operating expenses and meet our obligations as they become due for the next twelve months.\n\n \n\nOur current auditor, HYYH CPA.\nLLC, has included in their report on our consolidated financial statements for the year ended December 31, 2025 that there is\n“substantial doubt about our ability to continue as a going concern.” A “going concern” opinion could impair our\nability to finance our operations through the sale of equity, incurring debt, or other financing alternatives.\n\n \n\n12\n\n \n\n \n\nManagement’s plan to\nalleviate the substantial doubt about our ability to continue as a going concern include as follows: (i) on February 6, 2026, we\nobtained a loan in amount of RMB4.0 million from Bank of Communications, which was required to be repaid on September 1, 2026\nand guaranteed by Zhenyang Shi, Li Xu and Qilekang Modern Logistics. The interest rate is 3.2% per annum; (ii) on March 13, 2026, we obtained\na loan in amount of RMB2.4 million from Bank of Jiujiang which was required to be repaid on March 13, 2029 and\nguaranteed by Zhenyang Shi and Qilekang Digital Health. The interest rate is 4.2% per annum; (iii)\non February 5, 2026, the Group obtained a loan in amount of RMB20.0 million from Industrial Bank which was required to be repaid on February\n4, 2027 and guaranteed by Zhenyang Shi, Li Xu, Wanmei Shi, Qilekang Digital Health and Qilekang Modern Logistics. The interest rate is\n3.3% per annum; (iv) we obtained loans from third parties in amount of RMB0.5 million which was required to be repaid on December\n31, 2026 and interest rate of 18% per annum; (v) we obtained loans from a related party in amount of RMB7.2 million due on demand\nwithout interest bearing; and (vi) we are attempting to improve our business profitability, our ability to generate sufficient cash flow\nfrom our operations to meet our operating needs on a timely basis, obtain additional working capital funds through debt and equity financings\nin order to meet our anticipated cash requirements. However, there can be no assurance that these plans and arrangements will be sufficient\nto fund our ongoing capital expenditures, working capital, and other requirements. If we are unable to achieve these goals, our business\nwill be jeopardized and we may not be able to continue. If we ceased operations, it is likely that all of our investors will lose their\ninvestment.\n\n \n\n**Maintaining customers’ trust in our\necosystem is critical to our success, and any failure to do so could severely damage our reputation and brand.**\n\n** **\n\nWe have developed a comprehensive\nplatform that connects users with various healthcare providers and delivers cost-effective and customized healthcare solutions, and have\ncultivated a vibrant ecosystem around it. We have been building our brand name and reputation for our ecosystem as we believe that our\nability to maintain customers’ trust in our ecosystem is critical to our success in the rapidly expanding Internet healthcare market\nin the PRC and globally. Our ability to maintain customers’ trust in our ecosystem is primarily affected by the following factors:\n\n \n\n●our ability to\nmaintain superior customer experience and the quality of services and products provided through\nour platform, including the delivery of care;\n\n \n\n●the breadth of\nofferings of our services and products and their efficacy in addressing our customers’\nneeds and meeting their expectations;\n\n \n\n●the reliability,\nsecurity and functionality of our platform;\n\n \n\n●our ability to\nadopt new technologies or adapt our information infrastructure to changing user requirements\nor emerging industry standards;\n\n \n\n●the strength of\nour consumer protection measures; and\n\n \n\n●our ability to\nincrease brand awareness among existing and potential customers through various marketing\nand promotional activities.\n\n \n\nAny loss of trust in our ecosystem\ncould harm the value of our brand and reputation, result in participants ceasing to utilize our platform as well as reducing the level\nof their activity in our ecosystem, which could materially and adversely affect our business, financial condition and results of operations.\nFurthermore, there can be no assurance that our brand promotion efforts would be effective. Such efforts may be expensive, which may,\nin turn, materially and adversely affect our financial condition and results of operations.\n\n \n\nAny negative review, comment\nor allegation about our company, doctors on our platform, hospital network, service providers in our consumer healthcare business and\ndirect sales suppliers, among others, or services and products offered over our platform by the media, on social networks or other public\nonline forums may harm our brand, reputation and public image. We may also face challenges from others seeking to profit from, or defame,\nour brand. Any of the foregoing may result in loss of potential and existing customers or business partners for our ecosystem and, in\nturn, have a material adverse effect on our business, financial condition, results of operations and prospects.\n\n \n\n**We are in the early stage of development\nwith a limited operating history in an emerging and dynamic “Internet + healthcare” industry, and our historical results\nof operations and financial performance are not indicative of future performance.**\n\n** **\n\nWe operate in the emerging\nand dynamic Internet hospital, Internet chronic disease management and digital healthcare industries in China. These industries are relatively\nnew, and it is uncertain whether such industries would achieve and sustain high levels of demand, consumer acceptance and market reaction.\nWe have experienced continuous growth in 2023, 2024 and 2025. For example, our accumulated registered patients increased from over 2.20 million\nas of December 31, 2023 to over 2.22 million as of December 31, 2024, further to 2.33 million as of December 31, 2025,\nand our accumulated transacting patients increased from approximately 654 thousand to approximately 699 thousand, further to 753 thousand\nin the same periods.\n\n \n\n13\n\n \n\n \n\nAlthough our business has\ngrown in the past, due to our limited operating history, our historical growth and past revenues may not be indicative of our future\nperformance. In addition, we cannot assure you that we can successfully continue to implement our business model. As the market and our\nbusiness develop, we may modify our platform, products and services. These changes may not achieve expected results and may have a material\nand adverse impact on our results of operations and financial condition. We cannot assure you that we will be able to achieve similar\nresults or grow at the same rate as we had in the past or at all. Rather than relying on our historical operating and financial results\nto evaluate us, you should consider our business prospects in light of the risks and difficulties we may encounter as an early stage\ncompany operating in emerging and dynamic industries, including, among other things, our ability to attract and retain users, create\nvalue for participants in our ecosystem and increase monetization, navigate an evolving regulatory environment, provide high-quality\nproducts and satisfactory services, build up our reputation and promote our brand, and anticipate and adapt to changing market conditions.\nWe may not be able to successfully address these risks and difficulties, which could significantly harm our business, results of operations\nand financial condition.\n\n \n\n**If we are unable to compete effectively,\nour business, financial condition and results of operations may be materially and adversely affected.**\n\n** **\n\nWhile the PRC Internet healthcare\nmarket is in an early stage of development, it is, and is expected to be increasingly competitive. Our key competitors include, but are\nnot limited to, pharmaceutical retail companies (such as traditional offline pharmacies and online platforms) and companies that offer\nonline healthcare services. These companies may have greater financial, technical, research and development, marketing, distribution,\nretail and other resources than we do. They may also have longer operating histories, a larger user base or broader and deeper market\ncoverage. As a result, our competitors may be able to respond more quickly and effectively to new or evolving opportunities, technologies,\nstandards or user requirements than us and may have the ability to initiate or withstand significant regulatory changes and industry\nevolvement. Furthermore, when we expand into other markets, we will face competition from new competitors, domestic or foreign, who may\nalso enter markets where we currently operate or will operate.\n\n \n\nIn addition, many operators\nin the healthcare industry have consolidated in recent years to create larger healthcare enterprises with greater bargaining power,\nwhich has resulted in greater pricing pressures. If this consolidation trend continues, it could give the resulting enterprises even\ngreater bargaining power, which may lead to further competitive pressure. New partnerships and strategic alliances in the healthcare\nindustry also can alter market dynamics and adversely impact our businesses and competitive positioning.\n\n \n\nAny significant increase in\ncompetition may have a material adverse effect on our revenue and profitability as well as on our business and prospects. We cannot assure\nyou that we will be able to continually distinguish our products and services from those of our competitors, preserve and improve our\nrelationships with various participants in the healthcare value chain, or increase or even maintain our existing market share. We may\nlose market share, and our financial condition and results of operations may deteriorate significantly if we fail to compete effectively.\n\n \n\n**Our business generates and processes a\nlarge amount of data, and the improper use or disclosure of such data could harm our reputation as well as have a material adverse effect\non our business and prospects.**\n\n** **\n\nOur platform generates and\nprocesses a large amount of personal, transaction, demographic and behavioral data. Sensitive user information in our business operations\nis stored in the Internet data center established and owned by us. Such information includes, but is not limited to, personal information\n(such as user name, cell phone number, delivery address, age and gender), consultation record, order record and activity log. We have\nkept all sensitive user information in our database such as order record and consultation record since inception. We face risks inherent\nin handling large volumes of data and in securing and protecting such data. In particular, we face a number of data-related challenges\nfrom consultations, transactions and other activities on our platform, including:\n\n \n\n●protecting the\ndata in and hosted on our system, including against attacks on our system by external parties\nor improper behavior by our employees;\n\n \n\n●addressing concerns\nrelated to privacy and sharing, safety, security and other factors; and\n\n \n\n●complying with\napplicable laws, rules and regulations relating to the collection, use, disclosure or security\nof personal information, including any requests from regulatory and government authorities\nrelating to such data.\n\n \n\n14\n\n \n\n \n\nAny systems failure or security\nbreach or lapse that results in the unauthorized release of our user data could harm our reputation and brand and, consequently, our\nbusiness, in addition to exposing us to potential legal liability.\n\n \n\nIn the PRC, the rules\ngoverning the collection, use, disclosure or security of personal information are separately stipulated in various laws, regulations\nand rules. On November 7, 2016, the Standing Committee of the PRC National People’s Congress issued the Cyber Security Law of\nthe PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber Security Law, network operators must\nnot, without users’ consent, collect their personal information, and may only collect users’ personal information\nnecessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and\nshall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations.\nThe Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from\nJanuary 1, 2021) provides main legal basis for privacy and personal information infringement claims under the Chinese civil\nlaws. PRC regulators, including the Cyberspace Administration of China, MIIT, and the Ministry of Public Security have been\nincreasingly focused on regulation in the areas of data security and data protection. The PRC regulatory requirements regarding\ncybersecurity are constantly evolving. For instance, various regulatory bodies in China, including the Cyberspace Administration of\nChina, the Ministry of Public Security and the SAMR, have enforced data privacy and protection laws and regulations with varying and\nevolving standards and interpretations.\n\n \n\nOn December 28, 2021,\nthe Cyberspace Administration of China and 12 other relevant PRC governmental authorities published the amended Cybersecurity Review\nMeasures, which came into effect on February 15, 2022. The final Cybersecurity Review Measures provide that a “network platform\noperator” that possesses personal information of more than one million users and seeks a listing in a foreign country must apply\nfor a cybersecurity review. Further, the relevant PRC governmental authorities may initiate a cybersecurity review against any company\nif they determine certain network products, services, or data processing activities of such company affect or may affect national security.\nAs a network platform operator who possesses personal information of more than one million users for purposes of the Cybersecurity Review\nMeasures, we have applied for and completed a cybersecurity review with respect to our overseas listing pursuant to the Cybersecurity\nReview Measures.\n\n \n\nOn June 10, 2021, the\nStanding Committee of the National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security Law, which came\ninto effect in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals\ncarrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data\nin economic and social development, as well as the degree of harm it will cause to national security, public interests, or legitimate\nrights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used.\nThe PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security\nand imposes export restrictions on certain data and information. As uncertainties remain regarding the interpretation and implementation\nof these laws and regulations, we cannot assure you that we will comply with such regulations in all respects and we may be ordered to\nrectify or terminate any actions that are deemed illegal by regulatory authorities. We may also become subject to fines and/or other\nsanctions which may have material adverse effect on our business, operations and financial condition.\n\n \n\nOn August 20, 2021, the\nStanding Committee of the National People’s Congress of China promulgated the PRC Personal Information Protection Law, or the PIPL,\nwhich came into effect in November 2021. In addition to other rules and principles of personal information processing, the PIPL\nspecifically provides rules for processing sensitive personal information. Sensitive personal information refers to personal information\nthat, once leaked or illegally used, could easily lead to the infringement of human dignity or harm to the personal or property safety\nof an individual, including biometric recognition, religious belief, specific identity, medical and health, financial account, personal\nwhereabouts and other information of an individual, as well as any personal information of a minor under the age of 14. Only where there\nis a specific purpose and sufficient necessity, and under circumstances where strict protection measures are taken, may personal information\nprocessors process sensitive personal information. A personal information processor shall inform the individual of the necessity of processing\nsuch sensitive personal information and the impact thereof on the individual’s rights and interests. As uncertainties remain regarding\nthe interpretation and implementation of the PIPL, we cannot assure you that we will comply with the PIPL in all respects and regulatory\nauthorities may order us to rectify or terminate our current practice of collecting and processing sensitive personal information. We\nmay also become subject to fines and/or other penalties which may have material adverse effect on our business, operations and financial\ncondition. While we take various measures to comply with all applicable data privacy and protection laws and regulations, there is no\nguarantee that our current security measures and those of our third-party service providers may always be adequate for the protection\nof our customer, employee or company data; and like all companies, we have experienced data incidents from time to time. In addition,\ngiven the size of our customer base and the types and volume of personal data on our system, we may be a particularly attractive target\nfor computer hackers, foreign governments or cyber terrorists. Unauthorized access to our proprietary internal and customer data may\nbe obtained through break-ins, sabotage, breach of our secure network by an unauthorized party, computer viruses, computer denial-of-service\nattacks, employee theft or misuse, breach of the security of the networks of our third-party service providers, or other misconduct.\nBecause the techniques used by computer programmers who may attempt to penetrate and sabotage our proprietary internal and customer data\nchange frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques. Unauthorized\naccess to our proprietary internal and customer data may also be obtained through inadequate use of security controls. Any of such incidents\nmay harm our reputation and adversely affect our business and results of operations. In addition, we may be subject to negative publicity\nabout our security and privacy policies, systems, or measurements from time to time.\n\n \n\n15\n\n \n\n \n\nIn addition, our terms of\nservice concerning the collection, use and disclosure of user data are posted on our mobile app, WeChat mini program and WeChat Official\nAccount. Currently, we ask for users’ consent to our privacy policy via pop-up windows, and we are working on incorporating additional\nfeatures to further enhance privacy protection, including allowing users to withdraw their consent from in-app channels. Any failure,\nor perceived failure, by us to comply with our privacy policies or any applicable regulatory requirements or privacy protection-related\nlaws, rules and regulations could result in proceedings or actions against us by governmental entities or others. These proceedings or\nactions may subject us to significant penalties and negative publicity, require us to change our business model or practices, increase\nour costs and severely disrupt our business. As we expand our operations, we may be subject to additional laws in other jurisdictions\nwhere our users and business partners of our ecosystem are located. The laws, rules and regulations of other jurisdictions may impose\non us more stringent or conflicting requirements with harsh penalties for non-compliance than those in the PRC, and the compliance with\nsuch requirements could require significant resources and result in substantial costs, which may materially and adversely affect our\nbusiness, financial condition, results of operations and prospects.\n\n \n\nAccording to the Administrative\nMeasures for Internet Diagnosis and Treatment (for Trial Implementation), level three information security protection shall be implemented\nfor internet hospital information systems in accordance with the relevant national laws, regulations and provisions. According to the\nAdministrative Measures for the Hierarchical Protection of Information Security, where the operator or user of an information system\nof level three or above fails to complete the record-filing or examining and approving procedures as required, the public security organ,\nthe state secrecy department and the state cryptography administration shall, according to the division of work among them, order it\nto correct within a certain time limit, failing which, the operator or user shall be given a warning, the superior department in charge\nshall be informed of the relevant situation, and the directly liable person in charge and other directly liable persons shall be penalized\nas advised and the penalty result shall be report in a timely manner. To this end, we have implemented level three information security\nprotection standard for each of our Internet hospital and pharmaceutical supply chain’s information system to achieve full compliance\nwith regulatory requirements.\n\n \n\n**We have incurred operating losses in the\npast, expect to incur operating losses in the future, and may not be able to achieve or maintain profitability.**\n\n** **\n\nWe began commercial operations in 2010 and have experienced net losses,\nnegative cash flows from operations in 2023, 2024 and 2025, and net current liabilities as of December 31, 2023, 2024 and 2025. In\n2023, 2024 and 2025, we had a net loss of RMB36.9 million, RMB37.4 million, and RMB130.9 million (US$18.7 million), respectively.\nDuring the same periods, we had negative operating cash flows of RMB45.8 million, RMB16.1 million and RMB148.5 million\n(US$21.2 million), respectively. Furthermore, we had net current liabilities of RMB112.6 million, RMB141.6 million and\nRMB113.2 million (US$16.2 million) as of December 31, 2023, 2024 and 2025, respectively. We expect our operating expenses to\nincrease in the future as we expand our operations. Furthermore, after the Listing, we may incur additional compliance, accounting, and\nother expenses that we did not incur as a private company. If our revenue does not grow at a greater rate than our expenses, we may not\nbe able to achieve and maintain profitability. We may incur considerable losses in the future for various reasons, many of which may be\nbeyond our control. Additionally, we may encounter unforeseen expenses, operating delays, or other unknown factors that may result in\nlosses in the future. If our cost of sales and expenses continuously exceed our revenue, our business may be materially and adversely\naffected, and we may not be able to achieve or maintain profitability.\n\n \n\n16\n\n \n\n \n\n**If our solution does not drive customers’\nengagement or if we fail to provide superior customer experience, our business and reputation may be materially and adversely affected.**\n\n** **\n\nOur business is highly dependent\non the receptiveness of our customers to our services and products as well as their willingness to use, and to increase the frequency\nand extent of their utilization of, our solution. Their degree of receptiveness to our services and products depends on a number of factors,\nincluding the demonstrated accuracy and efficacy of our offerings compared to those of others, turnaround time, cost-effectiveness, convenience\nand marketing support. In addition, negative publicity concerning our solution or the Internet healthcare market as a whole could limit\nmarket acceptance of our solution, especially that of the online consultation business. Meanwhile, there can be no assurance that our\nefforts and ability to demonstrate the value of our solution and the relative benefits of our services and products over those of our\ncompetitors to our customers would be successful. We may fail to achieve an adequate level of acceptance by our customers of our services\nand products, and we may not be able to effectively expand the registered user base, promote user engagement or convert registered patients\nto transacting patients. Consequently, our business may not develop as expected, or at all, and our business, financial condition or\nresults of operations may be materially and adversely affected.\n\n \n\nThe success of our business\nalso hinges on our ability to provide superior customer experience, which depends on our ability to continue to deliver quality care\nto our users, to maintain the quality of our services and products, to source services and products that are responsive to customer demands,\nand to provide timely and reliable delivery, flexible payment options and superior after-sales services. Such ability, in turn, depends\non a variety of factors beyond our control. In particular, we rely on a number of third parties in the provision of our services and\nproducts. Their failure to provide high-quality customer experience to our customers may adversely affect our customers’ receptiveness\nof, and willingness to utilize, our solution, which may damage our reputation and cause us to lose customers.\n\n \n\nIn addition, we operate a\ncustomer service center to provide real-time assistance to our customers. If our customer service representatives fail to provide satisfactory\nservice, or if waiting times are too long due to high volume of inquiries from customers at peak times, our brand and customer loyalty\nmay be adversely affected. Moreover, any negative publicity or poor feedback on our customer service may harm our brand and reputation\nand, in turn, cause us to lose customers and market share.\n\n \n\n**Failure to properly manage and create values\nfor various participants in the healthcare value chain may materially and adversely affect our business.**\n\n** **\n\nOur results of operations\ndepend on our ability to manage and create values for participants in the healthcare value chain and generate more monetization opportunities\nfor us. We provide these participants, including pharmaceutical companies, healthcare product suppliers and distributors, hospitals and\nmedical professionals, with integrated, smart solutions and services to help them create value. By integrating these solutions into and\nchanneling these participants onto our platform, we allow all participants within the healthcare value chain, namely doctors, patients\nand pharmaceutical companies, to utilize the resources on our platform for all kinds of needs under the healthcare scenario, which in\nturn may increase monetization opportunities for us.\n\n \n\nHowever, we cannot assure\nyou that we are able to continuously manage and create value for such participants, or at all. Those participants may consider our smart\nsolutions and other services ineffective. If we fail to manage or create value for those participants, we may not be able to increase\ntheir engagement and connection with us and deepen our penetration in the healthcare value chain, which in turn may deprive monetization\nvenues for us to drive our revenue growth.\n\n \n\n**The digital healthcare market is immature\nand volatile, and if it does not develop, if it develops more slowly than we expect, or if our services do not drive user engagement,\nthe growth of our business will be harmed.**\n\n** **\n\nThe digital healthcare market\nis relatively new and unproven, and it is uncertain whether it will achieve and sustain high levels of demand, user acceptance and market\nadoption. Our success will depend to a substantial extent on the willingness of users to use, and to increase the frequency and extent\nof their utilization of, our services, as well as on our ability to demonstrate the value of our services to users, hospitals, medical\nprofessionals and other participants in the healthcare value chain. If users or healthcare service providers do not perceive the benefits\nof our services, or if our services do not drive user engagement, then our market may not develop at all, or it may develop more slowly\nthan we expect. Similarly, individual and healthcare industry concerns regarding patient confidentiality and privacy in the context of\ndigital healthcare in general could limit market acceptance of our digital healthcare services. If any of these events occurs, it could\nhave a material adverse effect on our business, financial condition or results of operations.\n\n \n\n17\n\n \n\n \n\n**We may fail to attract or retain sufficient\nusers or medical professionals for our online healthcare services.**\n\n** **\n\nWe offer convenient access\nto a wide spectrum of healthcare services on our platform, which primarily include online consultation and prescription renewal. For\nour online healthcare services, we primarily generate revenue from users paying for our services. Therefore, our ability to acquire and\nretain sufficient users for our online healthcare services is critical to the continued success and growth of such services, which in\nturn primarily depends on the overall experience we provide to our users as well as the actual or perceived effectiveness of our services.\nIn order to attract and retain users for our online healthcare services, we must continue to build our brand and reputation as an effective\nonline healthcare platform, as well as effectively market and precisely target our services to prospective users. To retain and engage\nour user base, we must provide personalized, superior user experience, offer quality services covering a wide range of user demands and\ncultivate users’ stickiness to our platform. However, we cannot assure you that our users will consider their experience satisfactory\nor our services effective. For example, user who do not get satisfactory results following the recommendations from our online consultation\nand prescription renewal service may attribute such failure to the ineffectiveness of our services. In addition, some users may encounter\ntrouble in navigating our platform or experience technical difficulties.\n\n \n\nOn the other hand, we also\nneed to attract and retain sufficient medical professionals to our platform for our online healthcare services. Our medical team is staffed\nby contracted doctors on the platform who are passionate about the digital healthcare industry, possess a user service mindset and are\nwilling to accept challenging and creative tasks. We believe our platform and online healthcare services provide compelling value propositions\nto those medical professionals by offering them an access to Internet traffic and an innovative healthcare venue. However, we cannot\nassure you that such medical professionals would be attracted to or stay at our platform. For example, as our contracted doctors have\nresponsibilities at their hospitals, they may not be willing to set aside additional hours from their busy schedule to participate\nin our online healthcare services. Additionally, they may not share our vision about online healthcare services and may still stick to\ntheir traditional practices.\n\n \n\nIf we fail to address, among\nother things, any of the foregoing challenges, users may become frustrated by or dissatisfied with our online healthcare services, and\nmay leave our platform without making purchases, and existing users may discontinue using our online healthcare services. Furthermore,\nif we fail to attract or retain sufficient number of medical professionals, our medical services may not further develop and we may not\nbe able to provide satisfactory services or user experience. As a result, our business, results of operations and financial condition\ncould be materially and adversely affected.\n\n \n\n**We may become subject to medical liability\nclaims in connection with our online healthcare services, which could cause us to incur significant expenses and be liable for significant\ndamages if any claim is not covered by insurance.**\n\n** **\n\nWe face risks of medical liability\nclaims against our contracted doctors on the platform and us in connection with our online healthcare services. In particular, our contracted\ndoctors may provide sub-standard services, mishandle sensitive information, engage in other misconduct or commit medical malpractice,\nwhich could subject us to medical liability claims. We do not carry insurance covering medical malpractice claims and professional liability\ninsurance for doctors on our platform in relation to the provision of online hospital services over our platform.** **Professional\nliability insurance premiums can reach a considerable amount and may increase significantly in the future, particularly as we expand\nour services. As a result, adequate professional liability insurance may not be available to contracted doctors or us in the future on\ncommercially acceptable terms, or at all.\n\n \n\nAny claims made against us\nthat are not fully covered by insurance could be costly to defend against, result in substantial damage awards against us and divert\nthe attention of our management and contracted doctors from our operations, which could have a material adverse effect on our business,\nfinancial condition, results of operations and reputation.\n\n \n\n18\n\n \n\n \n\n**We may be subject to penalties or disputes\nagainst us for failure to manage our doctors on our platform.**\n\n** **\n\nThe practice of doctors is\nstrictly regulated under PRC laws, rules and regulations. Doctors who practice at medical institutions must hold practicing licenses\nand may only practice within the scope of their licenses and at the specific medical institutions as stated in their licenses. As advised\nby our PRC Legal Adviser, Han Kun Law Offices, under applicable PRC regulations, a doctor is required to register the medical institutions\nat which he or she practices in his or her license. If a doctor is found practicing at a medical institution not registered in his or\nher license, the doctor would be subject to regulatory penalties, from warning to suspension of practice and, in the worst-case scenario,\nrevocation of licenses. A doctor practicing in multiple institutions must apply to register or file with competent in-charge administrative\nauthorities and can only have the right to prescribe medicine at the registered or filed practicing institution. If the doctor issues\na prescription in a medical institution not registered in his or her license, the relevant medical institution would also be subject\nto regulatory penalties and, in the worst-case scenario, revocation of the medical institution’s Practicing License for Medical\nInstitutions.\n\n \n\nWe cannot assure you that\ndoctors on our platform will complete the registration and relevant government procedures in a timely manner, or at all, or that doctors\non our platform will not practice outside the permitted scope of their respective licenses or strictly take their individual responsibilities\nunder the applicable laws and regulations in connection with medical services, especially Internet healthcare services. Meanwhile, if\ndoctors on our platform are found to have deficient registration or found to be practicing beyond the scope permitted by relevant authorities,\nthey may be disciplined and lose their practicing licenses. In the event that the multi-institution practices of doctors on our platform\nare in breach of their contractual obligations owed to other institutions, such as non-compete obligations, we may be exposed to indemnity\nor other legal liabilities if we are deemed to have aided these breaches, and are therefore susceptible to legal disputes and potential\ndamages. As a result, we may no longer be able to employ them in offering our online consultation and prescription renewal service, which\ncould materially and adversely affect our business. In addition, there can be no assurance that we could timely find qualified replacements\non commercially reasonable terms, or at all.\n\n \n\nAs of the date of this annual\nreport, we have implemented policies to ensure our practicing contracted doctors are permitted to issue the prescription as required\nunder the relevant PRC regulations. Nevertheless, there can be no assurance that all of such medical professionals will strictly abide\nby these policies and that the relevant healthcare administrative authorities would not retrospectively find deficiency in the registration\nof these medical professionals and subject the relevant medical professionals and/or us to penalties, which could materially and adversely\naffect our business.\n\n \n\n**Our business involves sale of prescription\ndrugs that is subject to stringent scrutiny, which may expose us to risks and challenges.**\n\n** **\n\nSale of prescription drugs\nin China shall be subject to stringent scrutiny. In particular, under the Supervision and Administration of Circulation of Pharmaceuticals\npromulgated by the CFDA in 2007, a pharmaceutical manufacture or operation enterprise shall not sell prescription drugs directly to the\npublic by post or over internet, and the enterprise in violation of such restriction shall be instructed to rectify, given a disciplinary\nwarning, and imposed a fine of not more than two times the value of the pharmaceuticals sold, but not more than RMB30,000. However, the\nnewly revised Drug Administration Law abolishes the restriction on online sale of prescription drugs and adopts the principle of keeping\nonline and offline sales consistent except that none of the drugs subject to the State’s special control may be sold online, such\nas vaccines, blood products, narcotic drugs, psychotropic drugs, toxic drugs for medical use, radioactive drugs and pharmaceutical precursor\nchemicals. In August 2022, NMPA published the Measures for the Supervision and Administration of Online Pharmaceuticals Sales or\nthe Measures for Online Pharmaceuticals Sales which have become effective since December 1, 2022, aiming to enhance the supervision\nof online pharmaceutical sales and related platform services. The Measures for Online Pharmaceuticals Sales provides specific and explicit\nrules for the online sales of prescription drugs, which is perceived to be more conducive to online prescription drug sellers including\nus, but also provides certain requirements that we shall meet. The Measures for Online Pharmaceuticals Sales provides that, among others,\nonline prescription drug sellers shall (i) ensure the accuracy and reliability of the source of e-prescription, (ii) keep records\nof any e-prescription for at least five (5) years and no less than one (1) year after the expiration date of the prescription\ndrugs, and (iii) disclose safety warnings including “prescription drugs should only be purchased and used with prescriptions\nand guidance of licensed pharmacists” when displaying information of prescription drugs. On September 27, 2023, the SAMR issued\nthe Regulations on Quality Supervision of Drug Distribution and Use, which came into effect on January 1, 2024. These Regulations provide\nthat that drug retail operators who sell prescription drugs shall be equipped with pharmacists or other pharmaceutical professionals\nwho have obtained qualification certification in accordance with the law and are suitable for the scope and types of their business.\nThe Measures for Online Pharmaceuticals Sales and the Regulations on Quality Supervision of Drug Distribution and Use are relatively\nnew and its implement provisions may be subject to change with substantial uncertainty and we will closely monitor and assess the trajectory\nof the rule-making process. It remains uncertain that our platform is and will be in full compliance with the relevant laws and regulations\nor any new laws and regulations that may be enacted in the future, which are evolving and subject to uncertainties. Any failure to comply\nwith such laws and regulations may subject us to disciplinary warnings and administrative penalties, which may in turn materially and\nadversely affect our business, reputation, and financial condition.\n\n \n\n19\n\n \n\n \n\n**Failure of doctors on our platform to provide\nadequate and proper medical services on our platform may have a material and adverse effect on our reputation, business and results of\noperations.**\n\n** **\n\nDoctors on our platform and\nour other employees may provide sub-standard services, mishandle sensitive information, engage in other misconduct or commit medical\nmalpractice, which could subject us to medical liability claims. We do not carry and pay for any professional liability insurance covering\nmedical malpractice claims for doctors that provide prescription renewal services on our platform. Adequate professional malpractice\ninsurance coverage may not be available to doctors on our platform or us in the future on commercially acceptable terms, or at all.\n\n \n\nOur business, financial condition,\nresults of operations and reputation may be materially and adversely affected if any such claims are made against us or our medical professionals\nin connection with these actions that are not fully covered by insurance. With respect to contracted doctors as they often work remotely,\nwe have limited control over them as well as the quality of their online healthcare consultation services. There can be no assurance\nthat our risk management procedures will be sufficient to monitor their performance and control the quality of their work. In the event\nthat our contracted doctors fail to comply with the contractual obligations and applicable laws in relation to the provision of our online\nconsultation services, our user experience could deteriorate, and we may suffer as a result of any actual or alleged misconduct by them,\nwhich could materially and adversely affect our business, financial condition, results of operations and reputation.\n\n \n\n**We may not be able to develop our existing\ninformation infrastructure and technologies or recoup the investments we have made for such development, and failure to continue to innovate\nor adopt new technologies or adapt our platform to changing user requirements or emerging industry standards may materially and adversely\naffect our business, financial condition, results of operations and prospects.**\n\n** **\n\nThe digital healthcare industry\nis characterized by rapidly changing technology, evolving industry standards and regulatory requirements, introductions of new services\nand products as well as changing customer demands. We are also subject to other changes and developments of the Internet healthcare,\nInternet, healthcare and other industries in which we operate. These changes and developments may require us to continue to innovate,\nand failure to do so would have a material adverse effect on our business, financial condition and results of operations.\n\n \n\nTo remain competitive, we\nmust continue to enhance and improve the responsiveness, functionality and features of our platform. We may need to constantly upgrade\nour information infrastructure to provide increased scale, improved performance and additional built-in functionality of our platform\nand to keep pace with our business development, which may require significant investments in time and resources, including adding new\nhardware, updating software and recruiting and training new engineering personnel. Failure to improve our information infrastructure\naccordingly may materially affect our ability to adopt new services and products, and could result in unanticipated system disruptions,\nslow response times and impaired quality of our users’ and other participants’ experiences, which may, in turn, materially\nand adversely affect our business, financial condition, results of operation, prospects and reputation. We invested during 2023, 2024\nand 2025, and are expected to continually invest, significant amounts in upgrading our information infrastructure and developing our\ntechnologies, especially in artificial intelligence and healthcare-related AI applications. We are likely to recognize costs associated\nwith these investments earlier than some of the anticipated benefits and the return on these investments may be lower, or may develop\nmore slowly, than we expected. We may not be able to recover our capital expenditures or investments, in part or in full, or the recovery\nof these capital expenditures or investments may take longer than expected. As a result, the carrying value of the related assets may\nbe subject to an impairment charge, which may materially and adversely affect our financial condition and results of operations.\n\n \n\n20\n\n \n\n \n\nIn addition, our success will\ndepend, in part, on our ability to identify, develop, acquire or license leading technologies useful in our business and respond to technological\nadvances and emerging industry standards and practices, such as mobile Internet, in a cost-effective and timely way. In the future, we\nplan to recruit more research and development personnel in software engineering, data science, artificial intelligence and other fields\nto further strengthen our in-house research and development capabilities and in turn enhance our medical big data analyses and supply\nchain. If we are unable to develop technologies successfully or adapt in a cost-effective and timely manner in response to changing market\nconditions or user requirements, whether for technical, legal, financial or other reasons, our business, prospects, financial condition\nand results of operations may be materially and adversely affected.\n\n \n\n**Our self-developed technologies are complex\nand may contain undetected errors or may not operate properly, which could adversely affect our business, financial condition and results\nof operations.**\n\n** **\n\nOur self-developed technology\nplatform provides our users and other participants in our ecosystem with the ability to conduct a variety of actions essential to the\noperations of our business and the delivery of our solution. Self-developed technology development is time-consuming, expensive and complex,\nand may involve unforeseen difficulties. We may encounter technical obstacles, and we may discover additional problems that prevent our\ntechnologies from operating properly and consequently adversely affect our information infrastructure and other aspects of our business\nwhere our technologies are applied. If our solution does not function reliably or fails to achieve customers’ and business partners’\nexpectations in terms of performance, we may lose existing, or fail to attract new, customers or business partners, which may damage\nour reputation and adversely affect our business.\n\n \n\nMoreover, data services are\ncomplex, and those we offer may develop or contain undetected defects or errors. Material performance problems, defects or errors in\nour existing or new software and applications and services may arise in the future and may result from interface between our solution\nand systems and data that we did not develop and the function of which is beyond our control or undetected in our testing. These defects\nand errors, and any failure by us to identify and address them, could result in loss of revenue or market share, diversion of development\nresources, harm to our reputation and increased service and maintenance costs. Defects or errors may discourage existing or potential\ncustomers from utilizing our solution. Correction of defects or errors could prove to be impossible or impracticable. The costs incurred\nin correcting any defects or errors may be substantial and could have a material adverse effect on our business, financial condition\nand results of operations.\n\n \n\n**Failure to maintain optimal inventory levels\ncould increase our operating costs or lead to unfulfilled customer orders, either of which could have a material and adverse effect on\nour business, financial condition, results of operations and prospects.**\n\n** **\n\nWe need to ensure optimal\ninventory levels for our business. To that end, we carry out inventory counts on a monthly basis at our storages. We also constantly\nmonitor our potential obsolete products and are allowed to return products close to their expiration date to our suppliers.\n\n \n\nDespite our inventory management\nefforts, there can be no assurance that these monitoring and related measures would be effective in ensuring fulfillment of our customers’\norders. Consequently, we are exposed to inventory risk as a result of rapid changes in product life cycles, changing consumer preferences,\nuncertainty of product developments and launches, manufacturer back orders and other related problems as well as the volatile economic\nenvironment in the PRC. There can be no assurance that we can accurately predict these trends and events and avoid over-stocking\nor under-stocking of products. Furthermore, demand for products could change significantly between the time when the products are ordered\nand the time when they are ready for delivery. When we begin to sell a new product, it is particularly difficult to forecast product\ndemand accurately. We may be unable to sell such inventory in sufficient quantities or during the relevant sales seasons. Inventory levels\nin excess of customer demand may result in inventory write-downs, expiration of products or an increase in inventory holding costs and\na potential negative effect on our liquidity. Conversely, if we underestimate customer demand or if our suppliers fail to provide products\nto us or deliver products to our customers in a timely manner, we may experience inventory shortages, which may, in turn, result in unfulfilled\ncustomer orders, leading to an adverse effect on our customer relationships. Our failure to maintain proper inventory levels may have\na material and adverse effect on our business, financial condition, results of operations and prospects.\n\n \n\n21\n\n \n\n \n\n**We may be subject to liability for content\navailable in our ecosystem that is alleged to be factually incorrect, socially destabilizing, obscene, defamatory, libelous or otherwise\nunlawful.**\n\n** **\n\nChina has enacted laws and\nregulations governing Internet access and the distribution of products, services, news, advertisements, information, audio-video programs\nand other content through the Internet. In particular, our advertising business is subject to relevant laws and regulations in the PRC. Even\nthough we implement measures to review advertising materials in light of the relevant laws and regulations as well as our internal guidelines\nbefore they are published on our platform, such measures may not be effective and may still subject us to potential liabilities. Our\nbusiness, financial condition and results of operations may suffer as a result. In addition, the Internet content providers and Internet\npublishers are prohibited from posting or displaying over the Internet any content that, among other things, violates PRC laws and regulations,\nimpairs the national dignity of China or the public interest, or is obscene, superstitious, frightening, gruesome, offensive, fraudulent\nor defamatory. In November 2016, China promulgated the Cyber Security Law, which came into effect on June 1, 2017 and amended\non January 1, 2026, to protect cyberspace security and order. The Cyber Security Law tightens control of cyber security and sets forth\nvarious security protection obligations for network operators. If any of our Internet information were deemed by the PRC government to\nviolate any content restrictions, we would not be able to continue to display such content and could become subject to penalties, including\nconfiscation of income, fines, suspension of business and revocation of required licenses, which could materially and adversely affect\nour business, financial condition and results of operations. We may also be subject to potential liability for any unlawful actions by\nusers of the websites we operate or for content we distribute that is deemed inappropriate. It may be difficult to determine the type\nof content that may result in liability to us, and if we are found to be liable, we may be prevented from operating these websites in\nChina.\n\n \n\nIn addition, claims may be\nbrought against us for defamation, libel, negligence, copyright, patent or trademark infringement, tort (including personal injury),\nother unlawful activity or other theories and claims based on the nature and content of information posted on our mobile portals, including\nnews feeds, product reviews and message boards, by our participants such as our users and suppliers, among others. Regardless of the\noutcome of such a dispute or lawsuit, we may suffer from negative publicity and reputational damage as a result, which may adversely\naffect our business.\n\n \n\n**We have a limited number of key suppliers.**\n\n** **\n\nFor the year ended December\n31, 2025, two suppliers, namely Dongguan Chaoyang Pharmaceutical Co., Ltd and Guangzhou Guoying Pharmaceutical Co., Ltd., collectively\naccounted for 63.4% of our total purchases. We are currently expanding our supplier base to further enhance the coverage of our product\noffering. However, we cannot assure you that the supplier concentration will decrease, and we may continue to rely on other major suppliers\nin the future. Any significant delay in delivery, the inability of our key suppliers to meet their quantity and/or quality obligations\nor the unavailability of alternative suppliers could hinder our business plan, which could, in turn, have a material adverse effect on\nour business, financial condition and results of operations.\n\n \n\n**Any lack of requisite approvals, licenses\nor permits applicable to our business may have a material and adverse effect on our business, financial condition and results of operations\nand prospects.**\n\n** **\n\nOur business is subject to\ngovernmental supervision and regulation by various PRC governmental authorities, including, but not limited to, the MOFCOM, the PRC Ministry\nof Industry and Information Technology, or the MIIT, and the NHC, National Medical Products Administration, or the NMPA, the PRC State\nAdministration for Market Regulation, or the SAMR, the CAC, and the corresponding local regulatory authorities. Such government authorities\npromulgate and enforce laws and regulations that cover a variety of business activities that our operations concern, such as provision\nof Internet information, online healthcare services, online and offline retail, sales and online operation of pharmaceutical and healthcare\nproducts, sales of food, and Internet advertisement, among other things. These regulations in general regulate the entry into, the permitted\nscope of, as well as approvals, licenses, permits, filings and registrations for, the relevant business activities.\n\n \n\nIn addition to obtaining necessary\napprovals, licenses and permits for conducting our business, we must comply with relevant laws and regulations. Our businesses, such\nas online pharmaceutical sale and online healthcare services, are subject to various and complex laws and regulations, extensive government\nregulations and supervision. There may be certain new requirements under relevant laws and regulations from time to time, and even if\nwe become aware of new requirements, due to uncertainties in their interpretations and implementation, it will be difficult for us to\ndetermine what actions or omissions would be deemed as violations of applicable laws and regulations. We may also not be able to respond\nto evolving laws and regulations and take appropriate action in time to adjust our business model. As a result, we may be in violation\nor non-compliance with such laws and regulations.\n\n \n\n22\n\n \n\n \n\nMoreover, our online hospital\nservices are subject to governmental supervision and regulation relating to both general medical institution and online hospital. In\nparticular, according to the Administrative Measures for Internet Diagnosis and Treatment (for Trial Implementation) by the NHC on July 17,\n2018, Internet-based diagnosis services shall only provide re-diagnoses service after confirming that the patients have been diagnosed\nwith one or more types of such common or chronic diseases in physical medical institutions. In addition, pursuant to the Administrative\nRegulations on Medical Institutions amended by the State Council on May 1, 2022 and its implementation rules, and the Administrative\nMeasures for Internet Diagnosis and Treatment (for Trial Implementation), medical institutions including online hospitals shall carry\nout diagnosis and treatment activities according to the approved and registered medical subjects. If a medical institution carries out\nthe online re-diagnoses business with respects to certain common and chronic diseases, the doctors in such medical institution shall\nreview the patients’ medical records, and after confirming that the patients have been diagnosed with one or more types of such\ncommon or chronic diseases in physical medical institutions, may offer re-diagnoses service to such patients for the same diagnostic\nresults. We believe we are largely compliant with the existing applicable laws and regulations. However, it remains uncertain that our\nonline hospital services are and will be in full compliance with the relevant laws and regulations, which are evolving and subject to\nchanges. In addition, we have established and implemented platform policies to manage the behaviors of our doctors comply with applicable\nlaws and regulations, but we cannot assure you that the practice of our doctors and the patients will follow these requirements under\nsuch policy. Any failure to comply with such laws and regulations or any misconduct or even fraud of our doctors and patients could result\nin administrative penalties against us which could materially and adversely affects our business, results of operations, financial condition\nand prospects.\n\n \n\nDue to the uncertainties in\nthe regulatory environment of the industries in which we operate, there can be no assurance that we have obtained or applied for or completed\nall the approvals, permits, licenses, filings and registrations required for conducting our business and all activities in the PRC, or\nthat we would be able to maintain or renew or pass the annual inspections (as applicable) of our existing approvals, permits and licenses\nor obtain any new approvals, permits and licenses or complete filings and registrations in a timely manner if required by any future\nlaws or regulations. If we fail to obtain and maintain approvals, licenses or permits or complete filings and registrations required\nfor our business, or to comply with relevant laws and regulations, we could be subject to liabilities, fines, penalties and operational\ndisruptions, or we could be required to modify our business model, which could materially and adversely affect our business, financial\ncondition and results of operations.\n\n \n\n**We are subject to a variety of laws and\nother obligations regarding data protection, and any failure to comply with applicable laws and obligations could have a material and\nadverse effect on our business, financial condition and results of operations.**\n\n** **\n\nWe are required by privacy\nand data protection laws in China to ensure the confidentiality, integrity and availability of the information of our users, customers\nand other data, which is also essential to maintaining their confidence in our online services. However, the interpretation and application\nof such laws in China are often uncertain and in flux.\n\n \n\nIn addition to Cyber Security\nLaw, the PRC Data Security Law and the PRC Personal Information Protection Law and other relevant laws and administrative regulations,\nthe PRC governmental authorities also formulated certain specific standards and rules on data protection. The SAMR, and the PRC Standardization\nAdministration jointly issued the Standard of Information Security Technology — Personal Information Security Specification\n(2020 edition), which took effect on October 1, 2020. Pursuant to this standard, any person or entity who has the authority or right\nto determine the purposes for and methods of using or processing personal information is considered a personal information controller.\nSuch personal information controller is required to collect information in accordance with applicable laws, and except in certain specific\nevents that are expressly exempted in the standard, prior to collecting such data, the information provider’s consent is required.\nFurthermore, the CAC issued the Provisions on the Cyber Protection of Children’s Personal Information, which took effect on October 1,\n2019. According to these provisions, no person or entity is allowed to produce, release, or disseminate information that infringes upon\nthe personal information security of children aged below 14. Network operators collecting, storing, using, transferring, or disclosing\nchildren’s personal information are required to enact special protections for such information.\n\n \n\n23\n\n \n\n \n\nIn addition to the laws and\nregulations, the PRC government may also carry out special rectifications on the illegal collection and use of any personal data. For\nexample, the Announcement of Launching Special Crackdown Against Illegal Collection and Use of Personal Information by Mobile Apps was\nissued with effect on January 23, 2019 and commenced coordinated efforts among the CAC, the MIIT, the PRC Ministry of Public Security,\nand the SAMR to combat the illegal collection and use of personal information by mobile apps throughout China. On October 31, 2019,\nthe MIIT also issued the Notice on the Special Rectification of Mobile Apps Infringing Users’ Rights and Interests, pursuant to\nwhich application providers were required to promptly rectify issues that the MIIT designated as infringing application users’\nrights such as collecting personal information in violation of PRC regulations and setting obstacles for user account deactivation. In\nJuly 2020, the MIIT issued the Notice on Conducting Special Rectification Actions in Depth Against the Infringement upon Users’\nRights and Interests by Applications, to rectify the following issues: (i) illegal collection and use of personal information of\nusers by an application and a software development kit, (ii) setting up obstacles and frequently harassing users, (iii) cheating\nand misleading users, and (iv) inadequate implementation of application distribution platforms’ responsibilities.\n\n \n\nThe above laws and regulations\nand recent events and pronouncements indicate greater oversight by Chinese regulators in terms of data protection and cybersecurity.\nSuch laws, regulations and associated interpretation and implementation are evolving rapidly and may place restrictions on our business\noperations and the manner in which we interact with our patients.\n\n \n\nThere remain uncertainties\nregarding further interpretation and implementation of those laws and regulations. For example, it should be noted that “core data”\nand “important data” are important concepts in the PRC Data Security Law. The scopes of these concepts are yet to be determined\nand need more interpretation from the competent governmental authorities. If the enacted version of the draft measures mandates clearance\nof cybersecurity review and other specific actions to be completed by companies like us, we face uncertainties as to whether we should\nobtain such clearance as a listed company in the United States and whether such clearance can be timely obtained, or at all. In\nearly July 2021, regulatory authorities in China launched cybersecurity investigations with regard to several China-based companies\nthat are listed in the United States. The relevant regulatory authorities in China continue to monitor the websites and apps in\nrelation to the protection of personal data, privacy and information security, and may impose additional requirements from time to time.\nThe relevant regulatory authorities also publicize, from time to time, their monitoring results and require relevant enterprises listed\nin such notices to rectify non-compliance. If any of our mobile apps are not in compliance with these regulations, we could be subject\nto penalties, including revocation of our business licenses and permits. In addition, compliance with any additional laws could be expensive\nand any failure to comply with applicable cybersecurity, privacy, and data protection laws and regulations could result in proceedings,\npenalties and legal liabilities against us. As a result, our business, financial condition, and results of operations could be materially\nand adversely affected. Besides, any negative publicity about our platform’s safety or privacy protection mechanism and policy\ncould harm our public image and reputation.\n\n \n\n**We, our directors, senior management or\nshareholders may from time to time become party to litigation, other legal or administrative disputes and proceedings that may materially\nand adversely affect our reputation, business, financial condition or results of operations.**\n\n** **\n\nOur business operations entail\nsubstantial litigation and regulatory risks, including the risk of lawsuits and other legal actions relating to medical disputes, fraud\nand misconduct, sales and user services and control procedures deficiencies, as well as the protection of personal and confidential information\nof our users and business partners, among others. We may be subject to claims and lawsuits in the ordinary course of our business, and\nwe may also be subject to inquiries, inspections, investigations and proceedings by relevant regulatory and other governmental agencies.\nActions brought against us may result in settlements, injunctions, fines, penalties or other results adverse to us that could harm our\nbusiness, financial condition, results of operations and reputation. Even if we are successful in defending ourselves against these actions,\nthe costs of such defense may be significant to us. A significant judgment or regulatory action against us or a material disruption in\nour business arising from adverse adjudications in proceedings against our directors, officers or employees would have a material adverse\neffect on our liquidity, business, financial condition, results of operations, reputation and prospects. In addition, events or activities\nattributed to our directors or senior management, and related publicity, whether or not justified, may affect their ability or willingness\nto continue to serve our company or dedicate their efforts to our company and negatively affect our brand and reputation, resulting in\nan adverse effect on our business, operating results and financial condition. Furthermore, our directors, senior management and shareholders\nmay from time to time be subject to regulatory inquiries, investigations, actions, proceedings and/or negative publicity or otherwise\nface potential liability in relation to commercial, securities or other matters, which may negatively impact our reputation and brand.\nRecently, it came to our attention that an indirect shareholder of our company received a notice of criticism from the Shanghai Stock\nExchange for its failure to timely and accurately disclose certain information as a company listed on the Shanghai Stock Exchange. We\nbelieve that such incident will not have a material adverse impact on our reputation, business, financial condition or results of operations.\n\n \n\n24\n\n \n\n \n\n**We may not have sufficient insurance coverage\nto cover our business risks, which could expose us to significant costs and business disruptions.**\n\n** **\n\nWe have obtained or caused\nrelevant counterparties to obtain insurance to cover certain potential risks and liabilities, such as professional liability insurance\nfor our doctors in connection with their provision of medical consultation services over our platform, and product liability insurance\nfor us with respect to certain products sold under our direct sale model. However, we may not be able to acquire any insurance for certain\ntypes of risks such as business liability or service disruption insurance for all of our operations in the PRC, and our coverage may\nnot be adequate to compensate for all losses that may occur, particularly with respect to loss of business or operations. Any business\ndisruption, litigation, regulatory action, outbreak of epidemic disease or natural disaster could also expose us to substantial costs\nand diversion of resources. There can be no assurance that our insurance coverage is sufficient to prevent us from any loss or that we\nwill be able to successfully claim our losses under our current insurance policies on a timely basis, or at all. If we incur any loss\nthat is not covered by our insurance policies, or the compensated amount is significantly less than our actual loss, our business, financial\ncondition and results of operations could be materially and adversely affected.\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 (which we have ownership or\nlegal rights to use) as critical to our success, and we rely on a combination of intellectual property laws and contractual arrangements,\nincluding confidentiality, invention assignment and non-compete agreements with our employees and others, to protect our proprietary\nrights. Although we are not aware of any copycat websites that attempt to cause confusion or diversion of traffic from us at the moment,\nwe may become an attractive target to such attacks in the future because of our brand recognition in online retail, pharmaceutical and\nInternet healthcare industries in China. Despite these measures, any of our intellectual property rights could be challenged, invalidated,\ncircumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages. In addition,\nthere can be no assurance that our patent applications will be approved, that any issued patents will adequately protect our intellectual\nproperty, or that such patents will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable.\nFurther, because of the rapid pace of technological change in our industry, parts of our business rely on technologies developed or licensed\nby third parties, and we may not be able to obtain or continue to obtain licenses and technologies from these third parties on reasonable\nterms, or at all.\n\n \n\nIt may often take a long time\nor high cost to register, maintain and enforce intellectual property rights in China. Statutory laws and regulations are subject to judicial\ninterpretation and enforcement and may not be applied consistently due to different and varying applications and interpretations in different\nparts of China. Confidentiality, invention assignment and non-compete agreements may be breached by counterparties, and there may not\nbe adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property\nrights or to enforce our contractual rights in China. Policing any unauthorized use of our intellectual property is difficult and costly,\nand the steps we take may be inadequate to prevent the infringement or misappropriation of our intellectual property. In the event that\nwe resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion\nof our managerial and financial resources, and could put our intellectual property at risk of being invalidated or narrowed in scope.\nWe can provide no assurance that we will prevail in such litigation, and even if we do prevail, we may not obtain a meaningful recovery.\nIn addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any\nfailure in maintaining, protecting or enforcing our intellectual property rights could have a material adverse effect on our business,\nfinancial condition and results of operations.\n\n \n\n25\n\n \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 would not infringe upon or otherwise violate patents, copyrights or other intellectual\nproperty rights held by third parties. We have been, and from time to time in the future may be, subject to legal proceedings and claims\nrelating to the intellectual property rights of others. In addition, there may be other third-party intellectual property that is infringed\nby our products, services or other aspects of our business. There could also be existing patents of which we are not aware that our products\nmay inadvertently infringe. There can be no assurance that holders of patents purportedly relating to some aspect of our technology platform\nor business, if any such holders exist, would not seek to enforce such patents against us in the PRC or any other jurisdictions as applicable.\nFurthermore, the application and interpretation of PRC patent laws and the procedures and standards for granting patents in the PRC are\nstill evolving, and there can be no assurance that PRC courts or regulatory authorities would agree with our analysis. If we are found\nto have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be\nprohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. In\naddition, we may incur significant expenses, and may be forced to divert management’s time and other resources from our business\nand operations to defend against these third-party infringement claims, regardless of their merits. Successful infringement or licensing\nclaims made against us may result in significant monetary liabilities and may materially disrupt our business and operations by restricting\nor prohibiting our use of the intellectual property in question, which may materially and adversely affect our business, financial condition\nand results of operations.\n\n \n\nIn addition, we use open-source\nsoftware in connection with our products and services. Companies that incorporate open-source software into their products and services\nhave, from time to time, faced claims challenging the ownership of open-source software and compliance with open-source license terms.\nAs a result, we could be subject to suits by parties claiming ownership of what we believe to be open-source software or noncompliance\nwith open-source licensing terms. Some open-source software licenses may require users who distribute open-source software as part of\ntheir software to publicly disclose all or part of the source code to such software and make available any derivative works of the open-source\ncode on unfavorable terms or at no cost. Any requirement to disclose our source code or pay damages for breach of contract could be harmful\nto our business, results of operations and financial condition.\n\n \n\n**Security breaches and attacks against our\nsystems and network, and any potential resultant breach or failure to otherwise protect confidential and proprietary information, could\ndamage our reputation and adversely affect our business, financial condition and results of operations.**\n\n** **\n\nWe rely heavily on technology,\nparticularly the Internet, to provide high-quality online services. However, our technology operations are vulnerable to disruptions\narising from human error, natural disasters, power failure, computer viruses, spam attacks, unauthorized access and other similar events.\nDisruptions to, or instability of, our technology or external technology that supports the offering of our online services and products\ncould materially harm our business and reputation.\n\n \n\nAlthough we have employed\nsignificant resources to develop security measures against breaches, our cybersecurity measures may not detect or prevent all attempts\nto compromise our systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks,\nsocial engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored\nin and transmitted by our systems or that we otherwise maintain. Breaches of our cybersecurity measures could result in unauthorized\naccess to our systems, misappropriation of information or data, deletion or modification of user information, or a denial-of-service\nor other interruption to our business operations. As techniques used to obtain unauthorized access to or sabotage systems change frequently\nand may not be known until launched against us, we may be unable to anticipate, or implement adequate measures to protect against, these\nattacks. As of the date of this annual report, we had not been subject to these types of attacks that had materially and adversely affected\nour business operations. However, there can be no assurance that we would not in the future be subject to such attacks that may result\nin material damages or remediation costs. If we are unable to avert these attacks and security breaches, we could be subject to significant\nlegal and financial liability, our reputation would be harmed and we could sustain substantial revenue loss from lost sales and user\ndissatisfaction.\n\n \n\nIn addition, we may not have\nthe resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Cyber-attacks may target\nus, our users or other participants of our ecosystem, or the information infrastructure on which we depend. Actual or anticipated attacks\nand risks may cause us to incur significantly higher costs, including costs to deploy additional personnel and network protection technologies,\ntrain employees, and engage third-party experts and consultants. Cybersecurity breaches may harm our reputation and business, and materially\nand adversely affect our financial condition and results of operations.\n\n \n\n26\n\n \n\n \n\n**User growth and activity on mobile devices\ndepends upon effective use of mobile operating systems, networks and standards that we do not control.**\n\n** **\n\nPurchases using mobile devices\nby consumers generally, and by our users specifically, have increased significantly, and we expect this trend to continue. To optimize\nthe online hospital visitation experience, we may need to attract our users to download mobile apps or follow our WeChat official account\nfor their particular devices as opposed to accessing our sites from an Internet browser on their mobile device. As new mobile devices\nand platforms are released, it is difficult to predict the problems we may encounter in developing applications for these alternative\ndevices and platforms, and we may need to devote significant resources to the development, support and maintenance of such applications.\nIn addition, our future growth and our results of operations could suffer if we experience difficulties in the future in integrating\nthe mobile apps that we operate into mobile devices or if problems arise with our relationships with providers of mobile operating systems\nor mobile app download stores, if the mobile apps we operate receive unfavorable treatment compared to competing apps on the download\nstores, or if we face increased costs to distribute or have users use mobile apps that we operate. We are further dependent on the interoperability\nof the sites we operate with popular mobile operating systems that we do not control, such as iOS and Android, and any changes in such\nsystems that degrade the functionality of our sites or give preferential treatment to competitive products could adversely affect the\nusage of our sites on mobile devices. In the event that it is more difficult for our users to access and use our sites on their mobile\ndevices, or if our users choose not to access or to use our sites on their mobile devices or to use mobile products that do not offer\naccess to our sites, our user growth could be harmed and our business, financial condition and operating results may be adversely affected.\n\n \n\n**Our operations depend on the performance\nof the Internet infrastructure and fixed telecommunications networks in China, as well as the effectiveness of mobile operating systems\nand networks.**\n\n** **\n\nAlmost all access to mobile\nand Internet in China is maintained through state-owned telecommunication operators under the administrative control and regulatory supervision\nof the MIIT. We primarily rely on a limited number of telecommunication service providers to provide us with data communications\ncapacity through local telecommunications lines and Internet data centers to host our servers. We have limited access to alternative\nnetworks or services in the event of disruptions, failures or other problems with China’s public communications networks, such\nas mobile, Internet or the fixed telecommunications networks. With the expansion of our business, we may be required to upgrade our technology\nand infrastructure to keep up with the increasing traffic on our platform. We cannot assure you that the public communications infrastructure\nin China will be able to support the demands associated with the continued growth in usage. In addition, we have no control over the\ncosts of the services provided by public communications service providers. If the prices we pay for their services rise significantly,\nour financial performance may be adversely affected. Furthermore, if mobile access fees or other charges to mobile users increase, our\nuser traffic may decline and our business may be harmed.\n\n \n\n**We may not be able to conduct our marketing\nactivities cost-effectively and we are subject to limitations in promoting our business.**\n\n** **\n\nWe have incurred significant\nexpenses on a variety of different marketing and brand promotion efforts designed to enhance our brand recognition and increase sales\nof our services and products. However, our brand promotion and marketing activities may not be well received by customers and may not\nresult in the levels of sales that we anticipate. Meanwhile, marketing approaches and tools in the PRC Internet healthcare market are\nevolving, which may further require us to enhance our marketing approaches and experiment with new marketing methods to keep pace with\nindustry developments and customer preferences. Failure to refine our existing marketing approaches or to introduce new marketing approaches\nin a cost-effective manner could reduce our market share and materially and adversely affect our financial condition, results of operations\nand profitability.\n\n \n\n**We are subject to limitations in promoting\nhealthcare-related services and products.**\n\n** **\n\nWe are subject to certain\nlimitations in promoting healthcare-related services and products. Doctors on our platform and other relevant parties in the provision\nof our medical and wellness services have to comply with rules and regulations that restrict the promotion or dissemination of information\nabout the professional healthcare services and practice provided by licensed doctors, and the publication or marketing efforts for the\npredominant purpose of promoting the products or services of doctors to customers or potential customers. Such restrictions may affect\nour ability to further enhance our brand recognition or secure new business opportunities in the future.\n\n \n\n27\n\n \n\n \n\nUnder PRC laws and regulations,\nall advertisements published online containing drug names, applicable symptoms treated by such drugs (major functions) or other drug-related\ncontent, and advertisements published online containing medical device names and the applicable scope, performance, structure and composition,\nfunction and other contents relevant to medical device are subject to examination by relevant government authorities. We are prohibited\nfrom publishing advertisements of prescription drugs on the websites that we operate and must ensure that any advertisement of medical\ntreatment, drugs or medical devices does not include any assertion or guarantee as to the function and safety or any statement of curative\nrate and effectiveness of such medical treatment, drugs or medical devices. Any violation of advertisement-related laws and regulations\nmay subject us to fine, or even suspension of our business or revocation of our business license.\n\n \n\nMeanwhile, during 2021 and\n2022, we engaged in a series of Internet and building advertising campaigns with several advertisers to enhance our customer recognition\nand brand loyalty in Guangdong Province and first-tier cities in China. Such campaigns involve online keyword and advertorial promotions\nand building and elevator advertisements. However, there can be no assurance that the relevant regulatory authorities would not determine\nany certain of our historical methods is in violation of relevant PRC advertising laws and regulations or find us in violation of relevant\nPRC advertising laws and regulations, which may in turn subject us to regulatory penalties and further adversely affect our business\nand prospects.\n\n \n\n**If we fail to rectify and maintain an effective\nsystem of internal control over financial reporting, we may be unable to accurately report our financial results, meet our reporting\nobligations or prevent fraud.**\n\n** **\n\nPrior to our initial public\noffering, we had been a private company with limited accounting and financial reporting personnel and other resources with which to address\nour internal controls and procedures. Our management has not completed an assessment of the effectiveness of our internal control over\nfinancial reporting, and our independent registered public accounting firm has not conducted an audit of our internal control over financial\nreporting. However, in the course of management’s preparation and our independent registered public accounting firm’s audits\nof our consolidated financial statements included elsewhere in this annual report, three material weaknesses were identified in our internal\ncontrol over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board,\nor PCAOB, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting,\nsuch that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented\nor detected on a timely basis. The material weaknesses identified are our (i) lack of sufficient accounting and financial reporting personnel\nwith requisite knowledge and experience in application of U.S. GAAP and SEC rules, (ii) lack of financial reporting policies and procedures\nthat are commensurate with U.S. GAAP and SEC reporting requirements, and (iii) lack of proper control of the Company’s system logical\naccess security and system change management. This has resulted in a number of accounting errors and omissions. We are in the process\nof implementing a number of measures to address the material weaknesses and deficiencies that have been identified. See “Item 15.\nControls And Procedures—Internal Control Over Financial Reporting.” However, we cannot assure you that these measures may\nfully address the material weaknesses and deficiencies in our internal control over financial reporting or that we may conclude that\nthey have been fully remediated.\n\n \n\nWe are a public company in\nthe United States that are subject to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. The Sarbanes-Oxley Act requires,\namong other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting. Section 404\nof the Sarbanes-Oxley Act, or Section 404, also requires that we include a report from management on the effectiveness of our internal\ncontrol over financial reporting in our annual report on Form 20-F beginning with our second annual report on Form 20-F after\nbecoming a public company. In addition, once we cease to be an “emerging growth company” as such term is defined in the JOBS\nAct, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial\nreporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management\nconcludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting\nits own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which\nour controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition,\nour reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable\nfuture. We may be unable to timely complete our evaluation testing and any required remediation.\n\n \n\nIf we fail to maintain adequate\nand effective internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we\nmay not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404.\nIn addition, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our\nfinancial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported\nfinancial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in\nthe trading price of our ADSs. 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. We may also be required to restate our financial statements from prior periods.\n\n \n\n28\n\n \n\n \n\n**If our risk management system is not adequate\nor effective, and if it fails to detect potential risks in our business as intended, our business, financial condition and results of\noperations could be materially and adversely affected.**\n\n** **\n\nWe have established our internal\ncontrol system, such as an organizational framework, policies and procedures that are designed to monitor and control potential risk\nareas relevant to our business operations. However, due to the inherent limitations in the design and implementation of our risk management\nsystem, our risk management system may not be sufficiently effective in identifying, managing and preventing all risks if external circumstances\nchange substantially or extraordinary events take place.\n\n \n\nFurthermore, our new business\ninitiatives may give rise to additional risks that are currently unknown to us, despite our efforts to anticipate such issues. If our\nrisk management system fails to detect potential risks in our business as intended or is otherwise exposed to weaknesses and deficiencies,\nour business, financial condition and results of operations could be materially and adversely affected.\n\n \n\nOur risk management also depends\non effective implementation by our employees. There can be no assurance that such implementation by our employees will always function\nas intended or such implementation will not involve any human errors, mistakes or intentional misconduct. If we fail to implement our\npolicies and procedures in a timely manner, or fail to identify risks that affect our business with sufficient time to plan for contingencies\nfor such events, our business, financial condition and results of operations could be materially and adversely affected, particularly\nwith respect to the maintenance of our relevant approvals and licenses granted by governments.\n\n \n\n**Our success depends on the continued efforts\nof our senior management and key employees. If one or more of our senior management or key employees were unable or unwilling to continue\nin their present positions, our business may be severely disrupted.**\n\n** **\n\nOur future success depends\nheavily upon the continued services of our senior management and our key employees in various corporate functions, who have contributed\nsignificantly to our current achievements. Accordingly, we believe that our ability to attract and retain key personnel is a critical\nfactor in our competitiveness. Competition for these individuals could require us to offer higher compensation and other benefits in\norder to attract and retain them, which could increase our operating expenses and, in turn, materially and adversely affect our financial\ncondition and results of operations. If we are unable to attract or retain the personnel required to achieve our business objectives,\nour business could be severely disrupted.\n\n \n\nOur key employees are subject\nto non-competition arrangements and confidentiality terms that prohibit them from disclosing company confidential and proprietary information.\nHowever, we cannot assure you that such arrangements can be fully and legally enforced. If any of our senior management or other key\npersonnel joins or establishes a competing business, we may lose some of our customers, which may have a material adverse effect on our\nbusiness.\n\n \n\nWe do not maintain key-person\ninsurance for members of our management team. If we lose the services of any senior management, we may not be able to identify suitable\nor qualified replacements, and may incur additional expenses to recruit and train new personnel, which could severely disrupt our business\nand prospects and prolong our expansion strategies and plans. Furthermore, if any of our executive officers joins a competitor or forms\na competing company, we may lose a significant number of our existing pharmacy users and consumers and potentially lose our substantial\nresearch and development achievements, which could have a material adverse effect on our business, financial condition, results of operations\nand prospects.\n\n \n\n**If we are unable to recruit, train and\nretain qualified personnel or if we fail to do so in a cost-efficient manner, our business may be materially and adversely affected.**\n\n** **\n\nWe intend to hire additional\nqualified employees to support our business operations and planned expansion. Our future success depends, to a significant extent, on\nour ability to recruit, train and retain qualified personnel, particularly healthcare, technical, fulfillment, marketing and other operational\npersonnel with experience in the online retail industry and pharmaceutical industry.\n\n \n\nSince our industry is characterized\nby high demand and intense competition for talent and labor, we can provide no assurance that we will be able to attract or retain qualified\nstaff or other highly skilled employees that we will need to achieve our strategic objectives. We have observed an overall tightening\nof the labor market and an emerging trend of shortage of labor supply. Failure to obtain stable and dedicated personnel may lead to underperformance\nof our operation. Labor costs in China have increased with China’s economic development, particularly in the large cities where\nwe operate our business. Therefore, to maintain and enhance our competitiveness, we may from time to time need to adjust certain elements\nof our operations in response to evolving economic conditions and business needs. Any failure to address these risks and uncertainties\ncould materially and adversely affect our financial performance and prospects of achieving profitability, which could have a material\nadverse impact on our business development, financial conditions and results of operations. In addition, our ability to train and integrate\nnew employees into our operations may also be limited and may not meet the demand for our business growth on a timely fashion, or at\nall, and rapid expansion may impair our ability to maintain our corporate culture.\n\n \n\n29\n\n \n\n \n\n**We may not be able to detect or prevent\nfraud or other misconduct committed by our employees or third parties.**\n\n** **\n\nFraud or other misconduct\nby our employees, such as unauthorized business transactions, bribery and breach of our internal policies and procedures, or by third\nparties, such as breach of law, may be difficult to detect or prevent. It could subject us to financial loss and sanctions imposed by\ngovernmental authorities while seriously damaging our reputation. This may also impair our ability to effectively attract prospective\nusers, develop customer loyalty, obtain financing on favorable terms and conduct other business activities.\n\n \n\nIn particular, we may face\nrisks with respect to fictitious or other fraudulent activities over our online hospital. For example, our users may engage in fictitious\ntransactions by submitting false prescription to purchase prescription drugs on our platform. Users may also provide false information\nto medical professional on our online healthcare services in order to obtain prescriptions that they are not supposed to get. There can\nbe no assurance that the measures we have implemented to detect and reduce the occurrence of fraudulent activities would be effective\nin combating fraudulent transactions or improving overall satisfaction among our direct sales suppliers and customers. In addition to\nfraudulent transactions with legitimate customers, our suppliers under direct sales may also engage in fictitious or “phantom”\ntransactions with themselves or collaborators in order to artificially inflate their ratings on our online hospital, reputation and search\nresults rankings. This activity may harm other third parties by enabling the perpetrating direct sales supplier to be favored over legitimate\nones, may harm our customers by deceiving them into believing that a supplier is more reliable or trusted than that supplier actually\nis, and result in inflated GMV from our online hospitals.\n\n \n\nOur risk management systems,\ninformation technology systems and internal control procedures are designed to monitor our operations and overall compliance. However,\nwe may be unable to identify non-compliance or suspicious transactions promptly, or at all. Furthermore, it is not always possible to\ndetect and prevent fraud or other misconduct committed by our employees or third parties, and the precautions we take to prevent and\ndetect such activities may not be effective. Therefore, we are subject to the risk that fraud or other misconduct may have previously\noccurred but was undetected, or may occur in the future. This may materially and adversely affect our business, financial condition and\nresults of operations.\n\n \n\n**We rely on assumptions and estimates to\ncalculate certain key operating metrics, and inaccuracies in such metrics may harm our reputation and adversely affect our business.**\n\n** **\n\nCertain key operating metrics,\nsuch as the number of mature doctors, doctors issuing prescriptions, contracted doctors, and transacting patients, and the number of\nSKUs, and prescriptions issued in this annual report are calculated using our internal data that have not been independently verified\nby third parties.** **While these numbers are based on what we believe to be reasonable calculations for the applicable\nperiods of measurement, there are inherent challenges in measuring usage and user engagement across our large user base. In addition,\nour key operating metrics are derived and calculated based on different assumptions and estimates, and you should be cautious of such\nassumptions and estimates when assessing our operating performance.\n\n \n\nOur measures of user growth\nand user engagement may differ from estimates published by third parties or from similarly titled metrics used by our competitors due\nto differences in data availability, sources and methodology. If third parties do not perceive our user metrics to be accurate representations\nof our user base or user engagement, or if we discover material inaccuracies in our user metrics, our reputation may be harmed and third\nparties may be less willing to allocate their resources or spending to us, which could adversely affect our business and operating results.\n\n \n\n30\n\n \n\n \n\n**We may need additional capital but may\nnot be able to obtain such on favorable terms or at all.**\n\n** **\n\nWe may require additional\ncash resources if we incur operating losses or for future growth and development of our business, including any investments or acquisitions\nwe may decide to pursue. If our cash resources are insufficient to satisfy our cash requirements, we may seek to issue additional equity\nor debt securities or obtain new or expanded credit facilities. Our ability to obtain external financing in the future is subject to\na variety of uncertainties, including our future financial condition, results of operations, cash flows, share price performance, liquidity\nof international capital and lending markets and the PRC governmental regulations over foreign investment and the PRC healthcare industry,\nincluding the digital healthcare industry. In addition, incurring indebtedness would subject us to increased debt service obligations\nand could result in operating and financing covenants that would restrict our operations. There can be no assurance that financing would\nbe available in a timely manner or in amounts or on terms favorable to us, or at all. Any failure to raise needed funds on terms favorable\nto us, or at all, could severely restrict our liquidity as well as have a material adverse effect on our business, financial condition\nand results of operations. Moreover, any issuance of equity or equity-linked securities could result in significant dilution to our existing\nshareholders.\n\n \n\n**We are not in full compliance with PRC\nlabor laws and regulations, including but not limited to labor, social insurance and housing provident fund.**\n\n** **\n\nUnder PRC labor laws and regulations,\nwe are required to compensate our employees and make social insurance and housing provident funds contributions on our own behalf for\nthe benefit of our employees in full and on time. The amount we are required to contribute for each of our employees under such plan\nshould be calculated based on the employee’s actual salary level of previous year and be subject to a minimum and maximum level\nas from time to time prescribed by local authorities. However, we have not been in full compliance with such laws and regulations in\nthe past. For example, we did not pay social insurance and housing provident fund for some of our employees in accordance with their\nactual wage bases. The unpaid social insurance and housing provident fund was RMB2.6 million, RMB2.6 million and RMB2.7 million\n(US$0.4 million) for the years ended December 31, 2023, 2024 and 2025, respectively.\n\n \n\nAlthough we have not received\nany order or notice from the local authorities nor any claims or complaints from our current and former employees regarding our non-compliance\nin this regard, we cannot assure you that we will not be subject to any order to rectify non-compliance in the future, nor can we assure\nyou that there are no, or will not be any, employee complaints regarding past due wages, social insurance payment or housing provident\nfund contributions against us, or that we will not receive any claims in respect of past due wages, social insurance payment or housing\nprovident fund contributions under the PRC laws and regulation. In addition, we may incur additional costs to comply with such laws and\nregulations by the PRC Government or relevant local authorities, and we may also incur surcharges and penalties for overdue payments.\nAny such development could materially and adversely affect our business, financial condition and results of operations.\n\n \n\nOur PRC subsidiaries engaged\nthird-party human resources agencies to pay social insurance and housing provident funds for some of their employees. As of the date of\nthis annual report, our PRC subsidiaries had not received any notice from the local authorities or any claim or request from these employees\nin this regard. Under the agreements between the third-party human resources agencies and our relevant subsidiaries, the third-party human\nresources agencies have the obligations to pay social insurance and housing provident funds contributions for our relevant employees.\nHowever, if the human resource agencies fail to pay the social insurance or housing provident fund contributions for and behalf of our\nemployees as required under applicable PRC laws and regulations or if our practice of having third-party human resources agencies to make\nsocial insurance and housing provident fund contributions for some of our employees is challenged by the government authorities, we may\nbe subject to penalties imposed by the local social insurance authorities and the local housing provident fund management centers for\nfailing to discharge our obligations in relation to payment of social insurance and housing provident funds as an employer.\n\n \n\n31\n\n \n\n \n\n**Failure to renew our current leases or locate\ndesirable alternatives for our facilities could materially and adversely affect our business.**\n\n** **\n\nWe lease properties for our\noffices and other corporate facilities. We may not be able to successfully extend or renew such leases upon expiration of the current\nterm on commercially reasonable terms or at all, and may therefore be forced to relocate our affected operations. This could disrupt our\noperations and result in significant relocation expenses, which could materially and adversely affect our business, financial condition\nand results of operations. In addition, we compete with other businesses for premises at certain locations or of desirable sizes. As a\nresult, even though we could extend or renew our leases, rental payments may significantly increase as a result of the high demand for\nthe leased properties. In addition, we may not be able to locate desirable alternative sites for our facilities as our business continues\nto grow and failure in relocating our affected operation could materially and adversely affect our business and operations.\n\n \n\n**Any catastrophe, including natural disasters,\npublic health crises, political crises, or other extraordinary events, could have a negative impact on our business operations.**\n\n \n\nWe are vulnerable to natural\ndisasters and other calamities. Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, wars, riots, terrorist attacks\nor similar events could cause severe disruption to our daily operations, and may even require a temporary closure of our facilities. Our\nbusiness could also be adversely affected by the effects of Ebola virus diseases, H1N1 flu, H7N9 flu, avian flu, severe acute respiratory\nsyndrome (SARS), 2019 Coronavirus Disease (COVID-19) or other epidemics. Our business operation could be disrupted if any of our employees\nare suspected of having any of the aforementioned epidemics or another contagious disease or condition, since it could require our employees\nto be quarantined or our offices to be disinfected. In addition, our business, financial condition, results of operations and prospects\ncould be materially and adversely affected to the extent that any of these epidemics harms the Chinese economy and the business operations\nof our customers and business partners in general.\n\n \n\n**We may be subject to legal proceedings in\nthe ordinary course of our business. If the outcomes of these proceedings are adverse to us, or if we fail to comply with obligations\nunder the corresponding enforcement notices on time, our business and results of operations may be materially and adversely affected.**\n\n** **\n\nWe may be subject to regulatory\nactions, litigation, disputes or claims of various types brought by relevant regulatory authorities or our competitors, users, content\ncreators, employees, or other third parties against us in the ordinary course of our business. Such regulatory actions, disputes, allegations,\ncomplaints, or legal proceedings may damage our reputation, evolve into litigations or otherwise have a material adverse impact on our\nreputation and business. Litigation is expensive, may subject us to the risk of significant damages, requires significant managerial resources\nand attention, and could materially and adversely affect our business, financial condition, and results of operations. The outcomes of\nactions we institute may not be successful or favorable to us. Lawsuits against us may also generate negative publicity that significantly\nharms our reputation, which may adversely affect our user base. As a publicly-listed company, we may also face additional exposure to\nclaims and lawsuits inside and outside China, including securities law class actions. See “—We and certain of our directors\nand officers have been named as defendants in a putative shareholder class action lawsuit, and may, from time to time, be the subject\nof shareholder class action lawsuits, which could have a material adverse impact on our business, financial condition, results of operations,\ncash flows and reputation.”\n\n \n\n**We and certain of our directors and officers\nhave been named as defendants in a putative shareholder class action lawsuit, and may, from time to time, be the subject of shareholder\nclass action lawsuits, which could have a material adverse impact on our business, financial condition, results of operations, cash flows\nand reputation.**\n\n** **\n\nWe will have to defend against\na putative shareholder class action lawsuit described in “Item 8. Financial Information—8.A. Consolidated Statements and Other\nFinancial Information—Litigation,” including any appeals of such lawsuit should our initial defense be unsuccessful. We are\ncurrently unable to estimate the possible outcome or loss or possible range of loss, if any, associated with the resolution of the lawsuit.\nThere can be no assurance that we will be able to prevail in our defense or reverse any unfavorable judgment on appeal, and we may decide\nto settle lawsuits on unfavorable terms. Any adverse outcome of this lawsuit, including any plaintiff’s appeal of the judgment in\nthe lawsuit, could result in payment of substantial monetary damages or fines, and thus have a material adverse effect on our business,\nfinancial condition, results of operations, cash flows and reputation.\n\n \n\nWe and our directors or officers\nmay, from time to time, be a target for lawsuits in the future, including putative class action lawsuits brought by shareholders and\nlawsuits against our directors and officers as a result of their position in other public companies. The existence of such lawsuits and\nany adverse outcome of these lawsuits, including any appeal of a judgment, could have a material adverse effect on our business, financial\ncondition, results of operations, cash flows, reputation as well as the trading price of our securities. In addition, there can be no\nassurance that our insurance carriers will cover all or part of the defense costs, or any liabilities that may arise from these matters.\nThe litigation process may utilize a significant portion of our resources and divert management’s attention from the day-to-day\noperations of our company, all of which could harm our business. We also may be subject to claims for indemnification related to these\nmatters, and we cannot predict the impact that indemnification claims may have on our business or financial results.\n\n \n\n32\n\n \n\n \n\n**We may grant share-based awards in the future,\nwhich may result in increased share-based compensation expenses and have an adverse effect on our future profitability.**\n\n** **\n\nIn February 2025, we adopted\nthe 2025 Share Incentive Plan, or the 2025 Plan, for the purpose of granting share-based compensation awards to selected directors, employees\nand other eligible persons to incentivize their performance and align their interests with ours. The maximum aggregate number of Class\nA ordinary shares which may be issued pursuant to all awards under the 2025 Plan is 3,317,204. As of the date of this annual report, all\nshare awards for an aggregate of 3,317,204 Class A ordinary shares have been granted and have vested pursuant to the 2025 Plan.\n\n \n\nWe believe the granting of\nshare-based compensation is of significant importance to our ability to attract and retain key personnel and employees, and we may grant\nshare-based compensation awards in the future. As a result, we may incur expenses associated with share-based compensation, which may\nhave a material and adverse effect on our financial condition and results of operations. Our ability to attract or retain highly skilled\nemployees may be adversely affected by declines in the perceived value of our equity or equity awards. Furthermore, there are no assurances\nthat the number of shares reserved for issuance under our share incentive plan will be sufficient to grant equity awards adequate to recruit\nnew employees and to compensate existing employees. In case we decide to reserve and issue additional shares under our share incentive\nplan, your interests in our company will be further diluted by such issuance.\n\n \n\n**The Holding Foreign Companies Accountable\nAct, or the HFCAA, and the related regulations continue to evolve. Further implementations and interpretations of or amendments to the\nHFCAA or the related regulations, or a PCAOB determination of its lack of sufficient access to inspect our auditor, might pose regulatory\nrisks to and impose restrictions on us because of our operations in mainland China.**\n\n \n\nPursuant to the HFCAA, if\nthe SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections\nby the PCAOB because of a position taken by an authority in the foreign jurisdiction for two consecutive years, the SEC will prohibit\nour shares or ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.\n\n \n\nOn December 16, 2021,\nthe PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered\npublic accounting firms headquartered in mainland China and Hong Kong. On December 15, 2022, the PCAOB removed mainland China\nand Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.\n\n \n\nEach year, the PCAOB will\ndetermine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.\nIf the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland\nChina and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial\nstatements filed with the SEC, we would be identified as a “Commission-Identified Issuer” following the filing of the annual\nreport on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded\non a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a “Commission-Identified\nIssuer” for two consecutive years in the future. If our shares and ADSs are prohibited from trading in the United States,\nthere is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of\nthe United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell\nor purchase our ADSs when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the\nprice of our ADSs. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all,\nwhich would have a material adverse impact on our business, financial condition, and prospects.\n\n \n\n33\n\n \n\n** **\n\n**Risks Related to Our Corporate Structure**\n\n** **\n\n**If the PRC government deems that the Contractual\nArrangements in relation to the VIE do not comply with PRC regulatory restrictions on foreign investment in the relevant industries,\nor if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or\nbe forced to relinquish our interests in those operations.**\n\n** **\n\nForeign ownership of certain\nof our businesses including value-added telecommunication services and medical institutions is subject to restrictions under current\nPRC laws and regulations. For example, foreign investors are not allowed to own more than 50% of the equity interests in a value-added\ntelecommunication service provider (excluding e-commerce, domestic multi-party communications, data collection and transmission services\nand call centers).\n\n \n\nWe are a Cayman Islands exempted\ncompany and our WFOE is considered as a foreign-invested enterprise. Accordingly, our WFOE is not eligible to provide value-added telecommunication\nservices, services as internet hospitals or provide certain other restricted services related to our businesses. As a result, we will\nconduct such business activities through the VIE in the PRC, Qilekang Digital Health.\n\n \n\nQilekang Digital Health is\n9.96% owned by Mr. Zhenyang Shi, our Chairman and Chief Executive Officer, and 4.01% owned by Ms. Li Xu, our Financial Manager.\nMr. Zhenyang Shi and Ms. Li Xu are PRC citizens. We entered into a series of Contractual Arrangements with Qilekang Digital Health\nand its shareholders (except for Zhongke Baiyun and General Technology), which enable us to:\n\n \n\n●exercise effective\ncontrol over Qilekang Digital Health;\n\n \n\n●receive substantially\nall of the economic benefits of Qilekang Digital Health; and\n\n \n\n●have an exclusive\noption to purchase all or part of the equity interests in Qilekang Digital Health when and\nto the extent permitted by PRC law.\n\n \n\nBecause of these Contractual\nArrangements, we have control over and are the primary beneficiary of Qilekang Digital Health and hence consolidate its financial results\nas the VIE under U.S. GAAP. For a detailed discussion of these Contractual Arrangements, see “Item 4. Information on\nThe Company—4.C. Organizational Structure—Contractual Arrangements with The VIE and Its Shareholders.” However, we\ncould not assure you that we could assert contractual control over the assets of the VIE and its PRC subsidiaries which conduct all of\nour operations. If we could not assert our contractual control rights over the assets of the VIE and its PRC subsidiaries as a result\nof any determinations, changes or interpretations of relevant laws and regulations by the PRC government, we may not be able to conduct\nour business and operations, and our financial condition and results of operations would be adversely affected and the market price of\nour ordinary shares may decline in value or become worthless.\n\n \n\nIn the opinion of our PRC\nLegal Adviser, (i) the ownership structures of the VIE and Guangzhou WFOE in China that have entered** **into Contractual\nArrangements with the VIE, Qilekang Digital Health, are not in violation of mandatory provisions of applicable PRC laws and regulations\ncurrently in effect; and (ii) the Contractual Arrangements between Guangzhou WFOE and the VIE and its shareholders (except for Zhongke\nBaiyun and General Technology) governed by PRC laws are valid, binding and enforceable, and will not result in any violation of PRC laws\nor regulations currently in effect. However, such contractual arrangements have not been tested in any of the PRC courts. Our PRC Legal\nAdviser has also advised us that there are substantial uncertainties regarding the interpretation and application of current and future\nPRC laws, regulations and rules; accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of our PRC\nLegal Adviser. It is uncertain whether any other new PRC laws or regulations relating to VIE structures will be adopted or if adopted,\nwhat they would provide. If we or the VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain\nor maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action\nin dealing with such violations or failures, including:\n\n \n\n●revoking the business\nand/or operating licenses of the VIE and PRC subsidiaries;\n\n \n\n●shutting down our\nservices or blocking our apps/websites;\n\n \n\n●discontinuing or\nrestricting our operations, or the conduct of any transactions between certain of the VIE\nand PRC subsidiaries;\n\n \n\n34\n\n \n\n \n\n●imposing fines,\nconfiscating the income from the VIE, or imposing other requirements with which we or the\nVIE may not be able to comply;\n\n \n\n●requiring us to\nrestructure our ownership structure or operations, including terminating the Contractual\nArrangements with the VIE and deregistering the equity pledges of the VIE, which in turn\nwould affect our ability to consolidate, derive economic interests from, or exert effective\ncontrol over the VIE;\n\n \n\n●restricting or\nprohibiting our use of the proceeds of any of our financing outside China to finance our\nbusiness and operations in China; or\n\n \n\n●taking other regulatory\nor enforcement actions that could be harmful to our business;\n\n \n\nThe imposition of any of\nthese penalties would result in a material and adverse effect on our ability to conduct our business. In addition, it is unclear what\nimpact the PRC government actions would have on us and on our ability to consolidate the financial results of the VIE in our combined\nfinancial statements, if the PRC governmental authorities were to find our legal structure and Contractual Arrangements to be in violation\nof PRC laws and regulations. If the imposition of any of these government actions causes us to lose our right to direct the activities\nof the VIE or our right to receive substantially all the economic benefits and residual returns from the VIE and we are unable to restructure\nour ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of the\nVIE in our combined financial statements. Either of these results, or any other significant penalties that might be imposed on us in\nthis event, would have a material adverse effect on our financial condition and results of operations.\n\n \n\n**We rely on Contractual Arrangements with\nthe VIE and its shareholders for a portion of 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 VIE and its shareholders to operate the business in areas where foreign ownership\nis restricted, including but not limited to value-added telecommunication services and other restricted services. For a description of\nthese Contractual Arrangements, see “Item 4. Information on The Company—4.C. Organizational Structure—Contractual Arrangements\nwith The VIE and Its Shareholders.” These Contractual Arrangements may not be as effective as direct ownership in providing us\nwith control over the VIE.\n\n \n\nIf we had direct ownership\nof the VIE, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of such entity, which\nin turn could effect changes, subject to any applicable fiduciary obligations, at the management level. However, under the current Contractual\nArrangements, we rely on the performance by the VIE and its shareholders of their obligations under the contracts to exercise control\nover the VIE. The shareholders of the VIE may not act in the best interests of our company or may not perform their obligations\nunder these contracts. Such risks exist throughout the period in which we intend to operate our business through the Contractual Arrangements\nwith the VIE. We may replace the shareholders of the VIE at any time pursuant to our Contractual Arrangements with the VIE and its\nshareholders. However, if any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these\ncontracts through the operations of PRC law and courts and therefore will be subject to requirements under the PRC legal system. See\n“—Any failure by the VIE or its shareholders to perform their obligations under our Contractual Arrangements with them would\nhave a material and adverse effect on our business.” Therefore, our Contractual Arrangements with the VIE may not be as effective\nin ensuring our control over the relevant portion of our business operations as direct ownership would be.\n\n \n\n**Any failure by the VIE or its shareholders\nto perform their obligations under our Contractual Arrangements with them would have a material and adverse effect on our business.**\n\n** **\n\nIf the VIE or its shareholders\nfail to perform their respective obligations under the Contractual Arrangements, we may have to incur substantial costs and expend additional\nresources to enforce such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specific performance\nor injunctive relief, and claiming damages, which we cannot assure you will be sufficient or effective under PRC laws. For example, if\nthe shareholders of the VIE were to refuse to transfer their equity interest in the VIE to us or our designee when we exercise the purchase\noption pursuant to these Contractual Arrangements, or if they were otherwise to act in bad faith toward us, we may have to take legal\nactions to compel them to perform their contractual obligations. In addition, if any third parties claim any interest in such shareholders’\nequity interests in the VIE, our ability to exercise shareholders’ rights according to the Contractual Arrangements may be impaired.\nIf these or other disputes between the shareholders of the VIE and third parties were to impair our control over the VIE, our ability\nto consolidate the financial results of the VIE would be affected, which would in turn result in a material adverse effect on our business,\noperations and financial condition.\n\n \n\n35\n\n \n\n \n\nAll the agreements under\nour Contractual Arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. Accordingly,\nthese contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures.\nThe legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. See “—Risks\nRelated to Doing Business in China—Uncertainties with respect to the enforcement of laws and changes in laws and regulations in\nChina could adversely affect us.” Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements\nin the context of a VIE should be interpreted or enforced under PRC law, and as a result it may be difficult to predict how an arbitration\npanel would view such contractual arrangements. As a result, requirements under the PRC legal system could limit our ability to enforce\nthese Contractual Arrangements. Additionally, under PRC laws, rulings by arbitrators are final, parties cannot appeal the arbitration\nresults in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing\nparties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require\nadditional expenses and delay.\n\n \n\nIn the event we are unable\nto enforce our Contractual Arrangements or if we suffer significant delay or other obstacles in the process of enforcing the Contractual\nArrangements, we may not be able to exert effective control over the VIE, and the ability to conduct our businesses may be negatively\naffected, which may have a material and adverse effect on our financial condition and results of operations.\n\n \n\n**The shareholders of the VIE may have potential\nconflicts of interest with us, which may materially and adversely affect our business and financial condition.**\n\n** **\n\nThe shareholders of the VIE\nmay have potential conflicts of interest with us. These shareholders may breach, or cause the VIE to breach, or refuse to renew, the\nexisting Contractual Arrangements we have with them and the VIE, which would have a material and adverse effect on our ability to effectively\ncontrol the VIE and receive substantially all the economic benefits from it. For example, the shareholders may be able to cause our agreements\nwith the VIE to be performed in a manner adverse to us by, among other things, failing to remit payments due under the Contractual Arrangements\nto us on a timely basis. We cannot assure you that when conflicts of interest arise, any or all of these shareholders will act in the\nbest interests of our company or such conflicts will be resolved in our favor.\n\n \n\nCurrently, we do not have\nany arrangements to address potential conflicts of interest between these shareholders and our company. If we cannot resolve any conflict\nof interest or dispute between us and the shareholders of the VIE, we would have to rely on legal proceedings, which could result in\ndisruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.\n\n \n\n**We conduct a part of our business operations\nin China through the VIE and its subsidiaries by way of our Contractual Arrangements, but our Contractual Arrangements may not be enforceable\nunder PRC laws.**\n\n** **\n\nAll the agreements that constitute\nour Contractual Arrangements with the VIE, its shareholders are governed by PRC laws and provide for the resolution of disputes through\narbitration in the PRC. Accordingly, these agreements would be interpreted in accordance with PRC laws, and disputes would be resolved\nin accordance with PRC legal procedures, but an arbitration proceeding is not as formal as a court proceeding and the arbitrator may\napply PRC law in a manner different from a court. The requirements under the PRC legal system could limit our ability to enforce the\nContractual Arrangements. Meanwhile, there are very few precedents and formal guidelines as to how contractual arrangements in the context\nof a VIE should be interpreted or enforced under PRC laws. Such contractual arrangements have not been tested in any of the PRC courts.\nThere remain significant uncertainties regarding the ultimate outcome of such arbitration should it become necessary. In addition, under\nPRC laws, rulings by arbitrators are final and parties cannot appeal arbitration results in court unless such rulings are revoked or\ndetermined unenforceable by a competent court. If the losing parties fail to carry out the arbitration awards within a prescribed time\nlimit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings,\nwhich would require additional expenses and delay. We may have to incur substantial costs and expend significant resources to enforce\nsuch arrangements in reliance on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming\ndamages, which we cannot assure you will be effective. If we are unable to enforce the Contractual Arrangements, or if we suffer significant\ntime delays or other obstacles in the process of enforcing them, it would be very difficult to exert effective control over the VIE and\nits subsidiaries, and our ability to conduct a part of our business and our financial condition and results of operations may be adversely\naffected.\n\n \n\nTherefore, in the event of\na breach of any agreements constituting the Contractual Arrangements by the VIE, its subsidiaries and/or shareholders, we may not be\nable to exert effective control over the VIE due to the inability to enforce the Contractual Arrangements, which could adversely affect\nour ability to conduct a part of our business.\n\n \n\n36\n\n \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\nour PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.**\n\n** **\n\nWe are a holding company,\nand we may rely on dividends and other distributions on equity paid by our PRC subsidiaries like our WFOE for our cash and financing\nrequirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we\nmay incur. If these subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their\nability to pay dividends or make other distributions to us. In addition, the PRC tax authorities may require our WFOE or any other relevant\nPRC subsidiary to adjust its taxable income under the Contractual Arrangements it currently has in place with the VIE in a manner that\nwould materially and adversely affect its ability to pay dividends and other distributions to us. See “—Contractual Arrangements\nin relation to the VIE may be subject to scrutiny by the PRC tax authorities and they may determine that we or the VIE owes additional\ntaxes, which could negatively affect our financial condition and the value of your investment.”\n\n \n\nUnder PRC laws and regulations,\nour wholly foreign-owned subsidiaries in China may pay dividends only out of their respective accumulated profits as determined in accordance\nwith PRC accounting standards and regulations. In addition, a PRC enterprise is required to set aside at least 10% of its accumulated\nafter-tax profits each year, if any, to fund certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its\nregistered capital. Our PRC subsidiary may also allocate a portion of its after-tax profits based on PRC accounting standards to employee\nwelfare and bonus funds at their discretion. These reserves are not distributable as cash dividends.\n\n \n\nIn response to the persistent\ncapital outflow in China and the RMB’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s\nBank of China and SAFE promulgated a series of capital control measures in early 2017, including stricter vetting procedures for domestic\ncompanies to remit foreign currency for overseas investments, dividends payments and shareholder loan repayments. The PRC governmental\nauthorities may continue to strengthen its capital controls, and more restrictions and substantial vetting process may be put forward\nby SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on the ability\nof our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow,\nmake investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.\nSee also “—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income\ntax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.”\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 or prevent us from making loans\nto our PRC subsidiaries and the VIE or making additional capital contributions to our wholly foreign-owned subsidiaries in China, which\ncould materially and adversely affect our liquidity and our ability to fund and expand our business.**\n\n** **\n\nWe are an offshore holding\ncompany conducting our operations in China through our PRC subsidiaries and VIE. We may make loans to our PRC subsidiaries and VIE\nsubject to the approval from governmental authorities and limitation of amount, or we may make additional capital contributions to our\nwholly foreign-owned subsidiaries in China. Furthermore, loans by us to our PRC subsidiary to finance its activities cannot exceed the\ndifference between their respective total project investment amount and registered capital or 2.5 times of their net worth, and capital\ncontributions to our PRC subsidiary are subject to the requirement of making necessary filings in the Foreign Investment Comprehensive\nManagement Information System and registration with other governmental authorities in China.\n\n \n\n37\n\n \n\n \n\nAny loans to our wholly foreign-owned\nsubsidiaries in China, which are treated as foreign-invested enterprises under PRC law, are subject to PRC regulations and foreign exchange\nloan registrations. For example, loans by us to our wholly foreign-owned subsidiaries in China to finance their activities cannot exceed\nstatutory limits, i.e. the difference between its total amount of investment and its registered capital, or certain amount calculated\nbased on elements including capital or net assets and the cross-border financing leverage ratio or the Macro-prudential Management Mode,\nunder relevant PRC laws and the loans must be registered with the local counterpart of the State Administration of Foreign Exchange,\nor SAFE, or filed with SAFE in its information system. We may also provide loans to the VIE or other domestic PRC entities under the\nMacro-prudential Management Mode. According to the Circular of the PBOC and the State Administration of Foreign Exchange on Adjusting\nthe Macro-prudent Adjustment Parameter for Cross-border Financing issued on March 11, 2020, the limit for the total amount of foreign\ndebt under the Macro-prudential Management Mode is increased to two and a half times from two times of their respective net assets. Moreover,\nany medium or long-term loan to be provided by us to the VIE or other domestic PRC entities must also be registered with the NDRC.\n\n \n\nWe may also decide to finance\nour wholly foreign-owned subsidiaries in China by means of capital contributions. These capital contributions shall go through record-filing\nprocedures from competent administration for market regulation. SAFE issued the Circular on the Management Concerning the Reform of the\nPayment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect on June 1,\n2015. SAFE Circular 19 allows for the use of RMB converted from the foreign currency-denominated capital for equity investments in the\nPRC provided that such usage shall fall into the scope of business of the foreign-invested enterprise, which will be regarded as the\nreinvestment of foreign-invested enterprise. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated\nregistered capital of a foreign-invested enterprise to be used for equity investments within the PRC, it also reiterates the principle\nthat RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used\nfor purposes beyond its business scope. Thus, it is unclear whether the SAFE will permit such capital to be used for equity investments\nin the PRC in actual practice. The SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing\nthe Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016 and most\nrecently amended on December 4, 2023, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition\nagainst using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted\nloans to a prohibition against using such capital to grant loans to non-associated enterprises. Violations of SAFE Circular 19 and SAFE\nCircular 16 could result in administrative penalties. In addition, SAFE promulgated the Circular Regarding Further Promotion of the Facilitation\nof Cross-Border Trade and Investment on October 23, 2019, or SAFE Circular 28, pursuant to which all foreign-invested enterprises\ncan make equity investments in the PRC with their capital funds in accordance with the law. As SAFE Circular 28 is new and the relevant\ngovernment authorities have broad discretion in interpreting the regulation, it is unclear whether SAFE will permit such capital funds\nto be used for equity investments in the PRC in actual practice.\n\n \n\nDue to the restrictions imposed\non loans in foreign currencies extended to any PRC domestic companies, we are not likely to make such loans to the subsidiaries of our\nwholly foreign-owned subsidiaries in China and the VIE, each a PRC domestic company. Meanwhile, we are not likely to finance the activities\nof the VIE by means of capital contributions given the restrictions on foreign investment in the businesses that are currently conducted\nby the VIE.\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 record-filings on a timely basis, if at all, with respect to future\nloans to our PRC subsidiaries or the VIE or future capital contributions by us to our wholly foreign-owned subsidiaries in China. As\na result, uncertainties exist as to our ability to provide prompt financial support to our PRC subsidiaries or VIE when needed. If we\nfail to complete such registrations or record-filings, our ability to use foreign currency, including the proceeds we received from our\ninitial public offering, and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and\nadversely affect our liquidity and our ability to fund and expand our business.\n\n \n\n38\n\n \n\n \n\n**Contractual Arrangements in relation to\nthe VIE may be subject to scrutiny by the PRC tax authorities and they may determine that we or the VIE owes additional taxes, which\ncould negatively affect our financial condition and the value of your investment.**\n\n** **\n\nUnder applicable PRC laws\nand regulations, transactions among related parties may be subject to audit or challenge by the PRC tax authorities. If the PRC tax authorities\ndeem the transactions between the PRC subsidiaries and the VIE in China, and their respective shareholders were not entered into on an\narm’s-length basis and resulted in deferral or underpayment in taxes, they are entitled to make special tax adjustments which might\nresult in the increase of the VIE’s tax liabilities. If the tax authorities conduct special tax adjustments, they might impose\nlate payment fees and other penalties for the underpaid taxes. Our financial position could be adversely affected if the VIE’s\ntax liabilities increase or if they are required to pay late payment fees and other penalties.\n\n \n\n**Our current corporate structure and business\noperations may be affected by the Foreign Investment Law.**\n\n** **\n\nOn March 15, 2019, the\nNPC promulgated the Foreign Investment Law or the FIL, which has become effective on January 1, 2020 and replaced the outgoing laws\nregulating foreign investment in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative Joint Venture Law and the Wholly\nForeign-owned Enterprise Law, as well their implementation rules and ancillary regulations, or the Outgoing FIE Laws. See “Item\n4. Information on The Company—4.B. Business Overview—Regulation—Regulations relating to Foreign Investment.”\n\n \n\nMeanwhile, the Implementation\nRules to the PRC Foreign Investment Law came into effect as of January 1, 2020, which clarified and elaborated the relevant provisions\nof the Foreign Investment Law. However, uncertainties still exist in relation to interpretation and implementation of the FIL, especially\nin regard to, including, among other things, the nature of VIE contractual arrangements and specific rules regulating the organization\nform of foreign-invested enterprises within the five-year transition period. While FIL does not define contractual arrangements as a\nform of foreign investment explicitly, it has a catch-all provision under definition of “foreign investment” that includes\ninvestments made by foreign investors in the PRC through other means as provided by laws, administrative regulations or the State Council,\nwe cannot assure you that future laws and regulations will not provide for contractual arrangements as a form of foreign investment.\nTherefore, there can be no assurance that our control over the VIE through Contractual Arrangements will not be deemed as foreign investment\nin the future. In the event that any possible implementing regulations of the FIL, any other future laws, administrative regulations\nor provisions deem contractual arrangements as a way of foreign investment, or if any of our operations through contractual arrangements\nis classified in the “restricted” or “prohibited” industry in the future “negative list” under the\nFIL, our Contractual Arrangements may be deemed as invalid and illegal, and we may be required to unwind the Contractual Arrangements\nand/or dispose of any affected business. Also, if future laws, administrative regulations or provisions mandate further actions to be\ntaken with respect to existing Contractual Arrangements, we may face substantial uncertainties as to whether we can complete such actions\nin a timely manner, or at all. Furthermore, under the FIL, foreign investors or the foreign investment enterprise should be imposed legal\nliabilities for failing to report investment information in accordance with the requirements. In addition, the FIL provides that foreign\ninvested enterprises established according to the existing laws regulating foreign investment may maintain their structure and corporate\ngovernance within a five-year transition period, which means that we may be required to adjust the structure and corporate governance\nof certain of our PRC subsidiaries in such transition period. Failure to take timely and appropriate measures to cope with any of these\nor similar regulatory compliance challenges could materially and adversely affect our current corporate structure, corporate governance,\nfinancial condition and business operations.\n\n \n\n**We may lose the ability to use, or otherwise\nbenefit from, the licenses, permits and assets held by the VIE that are critical to the operation of our business if the VIE declares\nbankruptcy or becomes subject to a dissolution or liquidation proceeding.**\n\n** **\n\nThe VIE and its subsidiaries\nare holding or in the future may hold certain licenses, permits and assets that are critical to the operation of our business, including\nbut not limited to Pharmaceutical Operation License, Qualification Certificate for Internet Drug Information Services, Medical Devices\nOperation License, Food Operation License, Value-Added Telecommunications Business Operating License, and intellectual property, to operate\nour business. If the VIE goes bankrupt and all or part of their assets become subject to liens or rights of third-party creditors, we\nmay be unable to continue some or all of our business activities we currently conduct through the Contractual Arrangements, which could\nmaterially and adversely affect our business, financial condition and results of operations. Under the Contractual Arrangements, the\nVIE may not, in any manner, sell, transfer, mortgage or dispose of its material assets or legal or beneficial interests in the material\nbusiness without Guangzhou WFOE’s prior consent. In addition, if the VIE undergoes a voluntary or involuntary liquidation proceeding,\nindependent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business,\nwhich could materially and adversely affect our business, financial condition and results of operations.\n\n \n\n39\n\n \n\n \n\n**Risks Related to Doing Business in China**\n\n** **\n\n**Changes in China’s or global economic,\npolitical or social conditions or government policies could have a material and adverse effect on our business and operations.**\n\n** **\n\nSubstantially all of our\noperations are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced\nto a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as\na whole.\n\n \n\nThe Chinese economy differs\nfrom the economies of most developed countries in many respects, including the amount of government involvement, level of development,\ngrowth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing\nthe utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of\nimproved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government.\nIn addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies.\nThe Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling\npayment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries\nor companies.\n\n \n\nWhile the Chinese economy\nhas experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the\neconomy, and the rate of growth has been slowing. The Chinese government has implemented various measures to encourage economic growth\nand guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may unexpectedly have a negative\neffect on us. For example, our financial condition and results of operations may be unexpectedly and adversely affected by government\ncontrol over capital investments.\n\n \n\nIn addition, the global macroeconomic\nenvironment is facing challenges. For example, the continuing conflict between Russia and Ukraine, and the new conflict between Israel\nand Hamas, have significantly impacted global economic markets. We cannot predict the progress or outcome of the situation in Russia\nand Ukraine, or in Israel and Gaza, as the conflict and governmental reactions continue to evolve. Prolonged unrest, intensified military\nactivities, and more extensive economic or trade sanctions impacting Russia and Ukraine could have a material adverse effect on the global\neconomy, and such effect could in turn have a material adverse effect on our operations, financial condition, liquidity and business\noutlook.\n\n \n\n**The PRC governmental authorities’\nsignificant oversight and discretion over our business operation could result in a material adverse change in our operations and the\nvalue of our ADSs.**\n\n** **\n\nWe conduct our business primarily\nthrough our PRC subsidiaries and the VIE. Our operations in China are governed by PRC laws and regulations. The PRC governmental authorities\nhave significant oversight and discretion over the conduct of our business, and they may influence our operations and hinder our ability\nto offer or continue to offer the ADSs, which could result in an adverse change in our operation and/or the value of our ADSs. Any such\naction to regulate the operations of our PRC subsidiaries and the VIE could significantly limit or hinder our ability to offer or continue\nto offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.\nFor more details, see “—The approval or filing of the CSRC or other PRC regulatory agencies may be required to maintain our\nlisting status or conduct future overseas offerings under PRC law.”\n\n \n\nIn addition, implementation\nof industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline. Therefore,\ninvestors of our company and our business face potential risk from actions taken by the PRC governmental authorities affecting our business.\n\n \n\n40\n\n \n\n \n\n**Uncertainties with respect to the enforcement\nof laws and changes in laws and regulations in China could adversely affect us.**\n\n** **\n\nWe conduct our business primarily\nthrough our PRC subsidiaries and VIE in China. Our operations in China are governed by PRC laws and regulations. Our PRC subsidiaries\nand VIE in China are subject to laws and regulations applicable to foreign investment in China. The PRC legal system is a civil law system\nbased on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential\nvalue. We face uncertainties in terms of enforcement of PRC laws, regulations and rules, which may increase our difficulties in strict\ncompliance with all regulatory requirements and limit legal protections available to us and our investors, including you.\n\n \n\nFrom time to time, we may\nhave to resort to administrative and court proceedings to enforce our legal rights. Any administrative and court proceedings in China\nmay be resulting in substantial costs and diversion of resources and management attention, and we cannot predict the outcome of administrative\nand court proceedings.\n\n \n\nThe PRC government has oversight\nand discretion over the conduct of our business, and it may implement stricter requirements and urge us to adjust accordingly, which\ncould result in a material adverse change in our operation and/or the value of our ADSs. Also, the PRC government has recently indicated\nan intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers.\nAny such action could limit or hinder our ability to offer or continue to offer securities to investors. In addition, implementation\nof industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline or, in\nextreme cases, become worthless.\n\n \n\n**The approval or filing of the CSRC or other\nPRC regulatory agencies may be required to maintain our listing status or conduct future overseas offerings under PRC law.**\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 Trial Measures,\nwhich became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated No. 1 to No. 5\nSupporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of Overseas Listings\nby Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively, the\nGuidance Rules and Notice. The Trial Measures stimulate that overseas securities offerings and listing by PRC companies, either in direct\nor indirect form, shall be filed with the CSRC (“CSRC Filing”). Under the Trial Measures and the Guidance Rules and Notice,\nno overseas offering and listing shall be made by PRC companies, whether in direct or indirect form, where such offering and listing\nis explicitly prohibited by provisions in laws, administrative regulations and relevant state rules, including the Market Access Negative\nList (2022 Edition) issued by the National Development and Reform Commission, or NDRC, and MOFCOM, the Guiding Opinions of the State\nCouncil on Establishing a Sound System of Joint Incentives for Honesty and Joint Punishments for Dishonesty to Accelerate the Development\nof Social Integrity, and other laws, administrative regulations and relevant state provisions that restrict or prohibit listing and financing\nin the areas of industrial policy, production safety and industry supervision. PRC companies intending overseas offering and listing\nare required to obtain regulatory opinions, filings or approvals from government authorities of correspondent industries, if applicable,\nfor CSRC Filing. The Trial Measures also stipulate that no overseas offering and listing shall be made where the intended securities\noffering and listing may endanger national security as reviewed and determined by competent government authorities under the State Council\nin accordance with PRC law. PRC companies intending overseas offering and listing shall strictly comply with relevant laws, administrative\nregulations and rules concerning national security in spheres of foreign investment, cybersecurity, data security and etc. If the intended\noverseas offering and listing necessitates a national security review, relevant security review procedures shall be completed before\nthe application for such offering and listing is submitted to any overseas parties such as securities regulatory agencies and trading\nvenues. A PRC company that seeks to offer and list securities in overseas markets shall, as required by competent government authorities\nunder the State Council, take measures such as timely rectification, commitment and divestiture of relevant business and assets, to eliminate\nor avert any impact on national security resulting from such overseas offering and listing. The Trial Measures also state that, any post-listing\nfollow-on offering by an issuer in the same overseas market, including issuance of shares, convertible notes and other similar securities,\nshall be subject to filing requirement within three business days after the completion of the offering. Therefore, any of our future\nofferings and listings of our securities in an overseas market will be subject to the filing requirements under the Trial Measures. If\nwe fail to complete the filing procedures with the CSRC for any future overseas securities offering, we may face sanctions by the CSRC,\nwhich may include fines and penalties, limitations on our operating privileges in the PRC, restrictions on or prohibition of the payments\nor remittance of dividends by our subsidiaries in the PRC, restrictions on or delays to our future overseas securities offerings, or\nother actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and\nprospects, as well as the trading price of the ADSs.\n\n \n\n41\n\n \n\n \n\nOn February 24, 2023, the\nCSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China\njointly issued the Provisions on Strengthening the Confidentiality and Archive Management Work Relating to the Overseas Securities Offering\nand Listing, or the Confidentiality Provisions, which came into effect on March 31, 2023 with the Trial Measures. The Confidentiality\nProvisions require that, among other things, (a) a domestic company that plans to, either directly or through its overseas listed entity,\npublicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas\nregulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval\nfrom competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic\ncompany that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals and\nentities including securities companies, securities service providers and overseas regulators, any other documents and materials that,\nif leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable\nnational regulations. For more details of the Trail Measures and the Confidentiality Provisions, please refer to “Item 4. Information\non The Company—4.B. Business Overview—Regulation—Regulations Relating to M&A Rules and Overseas Listing.”\n\n \n\nWe cannot guarantee that\nnew rules or regulations promulgated in the future will not impose any additional requirement on us. If there are any other approvals,\nfilings and/or other administration procedures to be obtained from or completed with any other PRC regulatory agencies as required by\nany new laws and regulations for any of our future offerings or listings of securities overseas, we cannot assure you that we can obtain\nthe required approval or complete the required filings or other regulatory procedures in a timely manner, or at all. Any failure to obtain\nthe relevant approvals or complete the filings and other relevant regulatory procedures may subject us to regulatory actions or other\nsanctions from such PRC regulatory agencies, which may have a material adverse effect on our business, financial condition and results\nof operations, as well as our ability to complete any future overseas securities offering.\n\n \n\nFurthermore, numerous regulations,\nguidelines and other measures have been or are expected to be adopted under the umbrella of or in addition to the Cybersecurity Law,\nData Security Law and Personal Information Protection Law, including (i) the Measures for the Security Assessment for Cross-border\nTransfer of Personal Information (Draft for Comments) published by the Cyberspace Administration of China, or CAC, in 2019, which may,\nupon enactment, require security review before transferring personal information out of China, (ii) the amended Cybersecurity Review\nMeasures published on December 28, 2021, which came into effect on February 15, 2022, provide that a “network platform\noperator” that possesses personal information of more than one million users and seeks a listing in a foreign country must apply\nfor a cybersecurity review, and (iii) the Measures for the Security Assessment of Cross-border Data Transfer, which came into effect\non September 1, 2022, provide that certain types of data processors transferring important data or personal information collected\nand generated during operations within the territory of the PRC to an overseas recipient must apply for security assessment of cross-border\ndata transfer. As a network platform operator who possesses personal information of more than one million users for purposes of the Cybersecurity\nReview Measures, we previously had applied for and completed the cybersecurity review with respect to the listing of the ADSs on the\nNasdaq pursuant to the Cybersecurity Review Measures. As of the date of this annual report, we have not been subject to any administrative\npenalties by the CAC for violation of any regulations and policies issued by the CAC.\n\n \n\nThere are significant uncertainties\nwith respect to the interpretation and implementation of the aforementioned laws and regulations. In addition, the CSRC or other regulatory\nauthorities may later promulgate new rules or explanations requiring that we obtain additional approvals or complete additional filing\nor other regulatory procedures for maintaining our listing status or conducting future overseas offerings. Although we intend to fully\ncomply with the then effective relevant laws and regulations applicable to any securities offerings we may conduct, there are uncertainties\nwith respect to whether we will be able to fully comply with requirements to obtain any permissions and approvals from, or complete any\nfiling or other regulatory procedures with, PRC authorities that may be in effect in the future. As a result, our business, prospects,\nfinancial condition, reputation, and the trading price of the ADSs may be materially and adversely affected.\n\n \n\n42\n\n \n\n \n\n**We are subject to consumer protection laws\nthat could require us to modify our current business practices and incur increased costs.**\n\n** **\n\nWe are subject to numerous\nPRC laws and regulations that regulate retailers generally or govern online retailers specifically, such as the Consumer Protection Law.\nIf these regulations were to change or if we or our suppliers were to violate them, the costs of certain products or services could increase,\nor we could be subject to fines or penalties or suffer reputational harm, which could reduce demand for the products or services offered\non our platform and hurt our business and results of operations. For example, the amended Consumer Protection Law, which became effective\nin March 2014, further strengthens the protection of consumers and imposes more stringent requirements and obligations on business\noperators, especially on businesses that operate on the Internet. Pursuant to the Consumer Protection Law, except for certain types of\nproducts (such as drugs), consumers are generally entitled to return goods purchased within seven days upon receipt without giving\nany reasons if they purchased the goods over the Internet. Consumers whose interests have been damaged due to their purchase of goods\nor acceptance of services on online marketplace platforms may claim damages from merchants or service providers. Where the operators\nof an online marketplace platform are unable to provide the real names, addresses and valid contact details of the merchants or service\nproviders, the consumers may also claim damages from the operators of the online marketplace platforms. Operators of online marketplace\nplatforms that know or should have known that merchants or service providers use their platforms to infringe upon the legitimate rights\nand interests of consumers but fail to take necessary measures must bear joint and several liability with the merchants or service providers.\nMoreover, if business operators deceive consumers or knowingly sell substandard or defective products, they should not only compensate\nconsumers for their losses, but also pay additional damages equal to three times the price of the goods or services. Legal requirements\nare frequently changed and subject to interpretation, and we are unable to predict the ultimate cost of compliance with these requirements\nor their effect on our operations. We may be required to make significant expenditures or modify our business practices to comply with\nexisting or future laws and regulations, which may increase our costs and materially limit our ability to operate our business.\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 Renminbi against\nthe U.S. dollar and other currencies fluctuates, is subject to changes resulting from the PRC government’s policies and depends\nto a large extent on domestic and international economic and political developments as well as supply and demand in the local market.\nIn July 2005, the PRC government changed its decades-old policy of pegging the value of Renminbi to the U.S. dollar, and Renminbi\nappreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010,\nthis appreciation halted and the exchange rate between Renminbi and the U.S. dollar remained within a narrow band. Since June 2010,\nRenminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. With the development of the foreign exchange\nmarket and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce\nfurther changes to the exchange rate system and we cannot assure you that Renminbi will not appreciate or depreciate significantly in\nvalue against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy\nmay impact the exchange rate between Renminbi and the U.S. dollar in the future.\n\n \n\nSignificant revaluation of\nthe Renminbi may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars\nwe received from our initial public offering and will receive in any future offerings into Renminbi for our operations, appreciation\nof the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely,\nif we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs\nor for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar\namount available to us. As of the date of this annual report, we have not entered into any hedging transactions in an effort to reduce\nour exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability\nand effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. All of these factors\ncould materially and adversely affect our business, financial condition, results of operations, and prospects, and could reduce the value\nof, and dividends payable on, our ADSs in foreign currency terms.\n\n \n\n43\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 RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We\nreceive substantially all of our revenues in RMB. Under our current corporate structure, our company in the Cayman Islands may rely\non dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign exchange\nregulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions,\ncan be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. Therefore, our\nwholly foreign-owned subsidiaries in China are able to pay dividends in foreign currencies to us without prior approval from SAFE, subject\nto the condition that the remittance of such dividends outside of the PRC complies with certain procedures under PRC foreign exchange\nregulation, such as the overseas investment registrations by our shareholders or the ultimate shareholders of our corporate shareholders\nwho are PRC residents. But approval from or registration with appropriate government authorities or delegated banks is required where\nRMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated\nin foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current\naccount transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our\nforeign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.\n\n \n\n**PRC regulations establish complex procedures\nfor some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions\nin China.**\n\n** **\n\nPRC regulations and rules\nconcerning mergers and acquisitions including the Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors,\nor the M&A Rules, established additional procedures and requirements that could make merger and acquisition activities by foreign\ninvestors more time consuming and complex. For example, the M&A Rules require that the MOFCOM be notified in advance of any change-of-control\ntransaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned,\n(ii) such transaction involves factors that have or may have impact on the national economic security, or (iii) such transaction\nwill lead to a change in control of a domestic enterprise which holds famous trademarks or PRC time-honored brands. Moreover, the Anti-Monopoly\nLaw requires that the anti-trust governmental authority shall be notified in advance of any concentration of undertaking if certain thresholds\nare triggered. In addition, the security review rules issued by the MOFCOM that became effective in September 2011 specify that\nmergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions\nthrough which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns\nare subject to strict review by the MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by\nstructuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring\ncomplementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such\ntransactions could be time consuming, and any required approval processes, including obtaining approval from the MOFCOM or its local\ncounterparts or other relevant government agencies may delay or inhibit our ability to complete such transactions. It is unclear whether\nour business would be deemed to be in an industry that raises “national defense and security” or “national security”\nconcerns. However, the MOFCOM or other government agencies may publish explanations in the future determining that our business is in\nan industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into\ncontractual control arrangements with target entities, may be closely scrutinized or prohibited. Our ability to expand our business or\nmaintain or expand our market share through future acquisitions would as such be materially and adversely affected.\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 wholly foreign-owned subsidiaries\nin China to liability or penalties, limit our ability to inject capital into these subsidiaries, limit these subsidiaries’ ability\nto increase their registered capital or distribute profits to us, or may otherwise adversely affect us.**\n\n** **\n\nThe Notice on Issues Relating\nto the Administration of Foreign Exchange in Fund-Raising and Round-Trip Investment Activities of Domestic Residents Conducted via Offshore\nSpecial Purpose Companies, or SAFE Circular 75, requires PRC residents to register with the relevant local branch of SAFE before\nestablishing or controlling any company outside of China, referred to as an offshore special purpose company, for the purpose of raising\nfunds from overseas to acquire or exchange the assets of, or acquiring equity interests in, PRC entities held by such PRC residents and\nto update such registration in the event of any significant changes with respect to that offshore company. SAFE promulgated the Circular\non Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment\nthrough Special Purpose Vehicles, or SAFE Circular 37, in July 2014, which replaced SAFE Circular 75. SAFE Circular 37 requires\nPRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore\nentity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests\nin domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.”\nThe term “control” under SAFE Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making\nrights acquired by the PRC residents in the offshore special purpose vehicles or PRC companies by such means as acquisition, trust, proxy,\nvoting rights, repurchase, convertible bonds or other arrangements. SAFE Circular 37 further requires amendment to the registration in\nthe event of any changes with respect to the basic information of the special purpose vehicle, such as changes in a PRC resident individual\nshareholder, name or operation period; or any significant changes with respect to the special purpose vehicle, such as increase or decrease\nof capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. If the shareholders\nof the offshore holding company who are PRC residents do not complete their registration with the local SAFE branches, the PRC subsidiaries\nmay be prohibited from distributing their profits and proceeds from any reduction in capital, share transfer or liquidation to the offshore\ncompany, and the offshore company may be restricted in its ability to contribute additional capital to its PRC subsidiaries. Moreover,\nfailure to comply with SAFE registration and amendment requirements described above could result in liability under PRC law for evasion\nof applicable foreign exchange restrictions. In February 2015, SAFE issued the Circular on Further Simplifying and Improving the\nPolicies Concerning Foreign Exchange Control on Direct Investment, or SAFE Circular 13, which took effect on June 1, 2015.\nSAFE Circular 13 has delegated to the qualified banks the authority to register all PRC residents’ investment in “special\npurpose vehicle” pursuant to SAFE Circular 37, except that those PRC residents who have failed to comply with SAFE Circular\n37 will remain to fall into the jurisdiction of the local SAFE branch and must make their supplementary registration application with\nthe local SAFE branch.\n\n \n\n44\n\n \n\n \n\nThe PRC residents who we\nknow hold direct or indirect interest in our company have completed the necessary applications, filings and amendments as required under\nSAFE Circular 37 and other related rules. However, we may not be informed of the identities of all the PRC residents holding direct or\nindirect interest in our company, and we cannot provide any assurance that these PRC residents will comply with our request to make or\nobtain any applicable registrations or comply with other requirements under SAFE Circular 37 or other related rules. The failure or inability\nof our PRC resident shareholders to comply with the registration procedures set forth in these regulations may subject us to fines and\nlegal sanctions, restrict our cross-border investment activities, limit the ability of our wholly foreign-owned subsidiaries in China\nto distribute dividends and the proceeds from any reduction in capital, share transfer or liquidation to us, and we may also be prohibited\nfrom injecting additional capital into these subsidiaries. Moreover, failure to comply with the various foreign exchange registration\nrequirements described above could result in liability under PRC law for circumventing applicable foreign exchange restrictions. As a\nresult, our business operations and our ability to distribute profits to you could be materially and adversely affected.\n\n \n\n**Our business benefits from certain financial\nincentives and discretionary policies granted by local governments. Expiration of, or changes to, these incentives or policies would\nhave an adverse effect on our results of operations.**\n\n** **\n\nIn the past, local governments\nin China granted certain financial incentives from time to time to our PRC subsidiaries or VIE as part of their efforts to encourage\nthe development of local businesses. The timing, amount and criteria of government financial incentives are determined within the sole\ndiscretion of the local government authorities and cannot be predicted with certainty before we actually receive any financial incentive.\nWe generally do not have the ability to influence local governments in making these decisions. Local governments may decide to reduce\nor eliminate incentives at any time. We cannot assure you of the continued availability of the government incentives currently enjoyed\nby our PRC subsidiaries or VIE. Any reduction or elimination of incentives would have an adverse effect on our results of operations.\n\n \n\n**If we are classified as a PRC resident\nenterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.**\n\n** **\n\nUnder the Enterprise Income\nTax Law of the PRC, or the EIT Law, and its implementation rules, an enterprise established outside of the PRC with “de facto management\nbody” within 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. On April 22,\n2009, the State Administration of Taxation, or the SAT, issued the Notice of the State Administration of Taxation on Issues Concerning\nthe Determination of Chinese-Controlled Enterprises Registered Overseas as Resident Enterprises on the Basis of Their Bodies of Actual\nManagement, known as SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management\nbody” of a PRC-controlled enterprise that is incorporated offshore is located in China. According to SAT Circular 82, an offshore\nincorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of\nhaving its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only\nif all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC;\n(ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations\nor personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and\nshareholder 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\n45\n\n \n\n \n\nAlthough SAT Circular 82\nonly applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals\nor foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management\nbody” text should be applied in determining the tax resident status of all offshore enterprises. If the PRC tax authorities determine\nthat we should be classified as a PRC resident enterprise for PRC tax purposes, our global income will be subject to income tax at a\nuniform rate of 25%, which may have a material adverse effect on our financial condition and results of operations. Notwithstanding the\nforegoing provision, the EIT Law also provides that, if a PRC resident enterprise directly invests in another PRC resident enterprise,\nthe dividends received by the investing PRC resident enterprise from the invested PRC resident enterprise are exempted from income tax,\nsubject to certain conditions. However, it remains unclear how the PRC tax authorities will interpret the PRC tax resident treatment\nof an offshore company with indirect ownership interests in PRC resident enterprises through intermediary holding companies.\n\n \n\nMoreover, if the PRC tax\nauthorities determine that our company is a PRC resident enterprise for PRC enterprise income tax purposes, gains realized on the sale\nor other disposal of our Shares may be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises, or 20% in the case of\nnon-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources.\nAny such tax may reduce the returns on your investment in our Shares.\n\n \n\n**We face uncertainties with respect to indirect\ntransfers of equity interests in PRC resident enterprises by their non-PRC holding companies, and heightened scrutiny over acquisition\ntransactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.**\n\n** **\n\nThe SAT has issued several\nrules and notices to tighten the scrutiny over acquisition transactions in recent years, including the Notice on Strengthening Administration\nof Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises issued in December 2009, or SAT Circular 698, the Notice\non Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises promulgated issued in March 2011, or SAT Circular 24,\nand the Notice on Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises issued in February 2015,\nor SAT Circular 7. Pursuant to these rules and notices, if a non-PRC resident enterprise indirectly transfers PRC taxable properties,\nreferring to properties of an establishment or a place in the PRC, real estate properties in the PRC or equity investments in a PRC tax\nresident enterprise, by disposing of equity interest in an overseas holding company, such indirect transfer should be deemed as a direct\ntransfer of PRC taxable properties and gains derived from such indirect transfer may be subject to the PRC withholding tax at a rate\nof up to 10%. SAT Circular 7 sets out several factors to be taken into consideration by tax authorities in determining whether an indirect\ntransfer has a reasonable commercial purpose. An indirect transfer satisfying all the following criteria will be deemed to lack reasonable\ncommercial purpose and be taxable under PRC law: (i) 75% or more of the equity value of the intermediary enterprise being transferred\nis derived directly or indirectly from the PRC taxable properties; (ii) at any time during the one-year period before the indirect\ntransfer, 90% or more of the asset value of the intermediary enterprise (excluding cash) is comprised directly or indirectly of investments\nin the PRC, or 90% or more of its income is derived directly or indirectly from the PRC; (iii) the functions performed and risks\nassumed by the intermediary enterprise and any of its subsidiaries that directly or indirectly hold the PRC taxable properties are limited\nand are insufficient to prove their economic substance; and (iv) the foreign tax payable on the gain derived from the indirect transfer\nof the PRC taxable properties is lower than the potential PRC income tax on the direct transfer of such assets. Nevertheless, the indirect\ntransfer falling into the safe harbor available under SAT Circular 7 may not be subject to PRC tax and the scope of the safe harbor includes\nqualified group restructuring as specifically set out in SAT Circular 7, public market trading and tax treaty exemptions.\n\n \n\n46\n\n \n\n \n\nIn October 2017, the\nSAT released the Public Notice Regarding Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Public\nNotice 37, effective from December 2017. SAT Public Notice 37 replaced a series of important circulars, including but not limited\nto SAT Circular 698, and revised the rules governing the administration of withholding tax on China-source income derived by a non-resident\nenterprise. SAT Public Notice 37 provides for certain key changes to the current withholding regime, for example, the withholding obligation\nfor a non-resident enterprise deriving dividend arises on the date on which the payment is actually made rather than on the date of the\nresolution that declared the dividends.\n\n \n\nUnder SAT Circular 7 and\nSAT Public Notice 37, the entities or individuals obligated to pay the transfer price to the transferor are the withholding agents\nand must withhold the PRC income tax from the transfer price if the indirect transfer is subject to the PRC enterprise income tax. If\nthe withholding agent fails to do so, the transferor should report to and pay the tax to the PRC tax authorities. In the event that neither\nthe withholding agent nor the transferor fulfills their obligations under SAT Circular 7 and SAT Public Notice 37, according to\nthe applicable law, apart from imposing penalties such as late payment interest on the transferor, the tax authority may also hold the\nwithholding agent liable and impose a penalty of 50% to 300% of the unpaid tax on the withholding agent. The penalty imposed on the withholding\nagent may be reduced or waived if the withholding agent has submitted the relevant materials in connection with the indirect transfer\nto the PRC tax authorities in accordance with SAT Circular 7.\n\n \n\nHowever, as there is a lack\nof clear statutory interpretation, we face uncertainties on the reporting and consequences on future private equity financing transactions,\nshare exchange or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises,\nor sale or purchase of shares in other non-PRC resident companies or other taxable assets by us. Our company and other non-resident enterprises\nin our group may be subject to filing obligations or being taxed if our company and other non-resident enterprises in our group are transferors\nin such transactions, and may be subject to withholding obligations if our company and other non-resident enterprises in our group are\ntransferees in such transactions. For the transfer of shares in our company by investors that are non-PRC resident enterprises, our PRC\nsubsidiaries may be requested to assist in the filing under the rules and notices. As a result, we may be required to expend valuable\nresources to comply with these rules and notices or to request the relevant transferors from whom we purchase taxable assets to comply,\nor to establish that our company and other non-resident enterprises in our group should not be taxed under these rules and notices, which\nmay have a material adverse effect on our financial condition and results of operations. There is no assurance that the tax authorities\nwill not apply the rules and notices to our offshore restructuring transactions where non-PRC residents were involved if any of such\ntransactions were determined by the tax authorities to lack reasonable commercial purpose. As a result, we and our non-PRC resident investors\nmay be at risk of being taxed under these rules and notices and may be required to comply with or to establish that we should not be\ntaxed under such rules and notices, which may have a material adverse effect on our financial condition and results of operations or\nsuch non-PRC resident investors’ investments in us. We have conducted acquisition transactions in the past and may conduct additional\nacquisition transactions in the future. We cannot assure you that the PRC tax authorities will not, at their discretion, adjust any capital\ngains and impose tax return filing obligations on us or require us to provide assistance for the investigation of PRC tax authorities\nwith respect thereto. Heightened scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential\nacquisitions we may pursue in the future.\n\n \n\n**Any failure or perceived failure by us\nto comply with the enacted Anti-Monopoly Guidelines for Internet Platforms and other anti-monopoly laws and regulations may result in\ngovernmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on our business,\nfinancial condition and results of operations.**\n\n** **\n\nThe PRC anti-monopoly enforcement\nagencies have in recent years strengthened enforcement under the PRC Anti-monopoly Law. In March 2018, the SAMR was formed\nas a new governmental agency to take over, among other things, the anti-monopoly enforcement functions from the relevant departments\nunder the MOFCOM, the NDRC and the SAIC, respectively. Since its inception, the SAMR has continued to strengthen anti-monopoly enforcement.\nOn February 7, 2021, the Antimonopoly Commission of the State Council officially promulgated the Guidelines to Anti-Monopoly in\nthe Field of Platform Economy, or the Anti-Monopoly Guidelines for Platform Economy. The Anti-Monopoly Guidelines for Platform Economy\nprohibits certain monopolistic acts of internet platforms so as to protect market competition and safeguard interests of users and undertakings\nparticipating in internet platform economy, including without limitation, prohibiting platforms with dominant position from abusing their\nmarket dominance (such as discriminating customers in terms of pricing and other transactional conditions using big data and analytics,\ncoercing counterparties into exclusivity arrangements, using technology means to block competitors’ interface, favorable positioning\nin search results of goods displays, using bundle services to sell services or products, compulsory collection of unnecessary user data).\nIn addition, the Anti-Monopoly Guidelines for Platform Economy also reinforces antitrust merger review for internet platform related\ntransactions to safeguard market competition and expressly stipulates that any merger or acquisitions involving variable interest entities\nfalls within the scope of merger control review if the filing thresholds are met. As the Anti-Monopoly Guidelines for Platform Economy\nwas newly promulgated, we are uncertain to estimate its specific impact on our business, financial condition, results of operations and\nprospects. We cannot assure you that our business operations comply with such regulations and authorities’ requirements in all\nrespects. If any non-compliance is raised by relevant authorities and determined against us, we may be subject to fines and other\npenalties.\n\n \n\n47\n\n \n\n \n\n**It may be difficult for overseas regulators\nto conduct investigations or collect evidence within China.**\n\n** **\n\nShareholder claims or regulatory\ninvestigation that are common in jurisdictions outside China 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 United States or other jurisdictions may not be efficient in the absence of mutual and practical cooperation\nmechanism. Furthermore, according to Article 177 of the PRC Securities Law which became effective in March 2020, no overseas\nsecurities regulator is allowed to directly conduct investigations or evidence collection activities within the PRC territory, and without\nthe consent by the Chinese securities regulatory authorities and the other competent governmental agencies, no entity or individual may\nprovide documents or materials related to securities business to any foreign party. While detailed interpretation of or implementation\nrules under the article have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigations\nor evidence collection activities within China and the potential obstacles for information provision may further increase difficulties\nfaced by you in protecting your interests. See also “—Risks Related to Our ADSs—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\nIslands law” for risks associated with investing in us as a Cayman Islands company.\n\n \n\n**A severe or prolonged downturn in the global\neconomy could materially and adversely affect our business, financial condition, and results of operations.**\n\n** **\n\nThe global macroeconomic\nenvironment is facing challenges. The growth rate of the global economy has gradually slowed in recent years and the trend may continue.\nThere is considerable uncertainty over the long-term effects of the monetary and fiscal policies adopted by the central banks and financial\nauthorities of some of the world’s leading economies, including the United States and China. Unrest, terrorist threats and\nthe potential for war in the Middle East and elsewhere may increase market volatility across the globe. There have also been concerns\non the relationship among China and other countries, including the surrounding Asian countries, which may potentially have economic effects.\nIn particular, there is significant uncertainty about the future relationship between the major economies with respect to trade policies,\ntreaties, government regulations and tariffs. Economic conditions in China are sensitive to global economic conditions, as well as changes\nin domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged\nslowdown in the global economy may materially and adversely affect our business, results of operations, and financial condition. In addition,\ncontinued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs.\n\n \n\n**Risks Related to Our ADSs**\n\n** **\n\n**The trading price of the ADSs is likely\nto be volatile, which could result in substantial losses to investors.**\n\n** **\n\nThe trading price of the\nADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and\nindustry factors, including the performance and fluctuation of the market prices of other companies with business operations located\nmainly in China that have listed their securities in the United States. In addition to market and industry factors, the price and\ntrading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following:\n\n \n\n●actual or anticipated\nvariations in our revenues, earnings, cash flow, and changes or revisions of our expected\nresults;\n\n \n\n●fluctuations in\noperating metrics;\n\n \n\n48\n\n \n\n \n\n●announcements of\nnew investments, acquisitions, strategic partnerships, or joint ventures by us or our competitors;\n\n \n\n●announcements of\nnew products and services and expansions by us or our competitors;\n\n \n\n●changes in financial\nestimates by securities analysts;\n\n \n\n●announcements of\nstudies and reports relating to the quality of our product and service offerings or those\nof our competitors;\n\n \n\n●changes in the\neconomic performance or market valuations of other online hospitals, pharmaceutical supply\nchain and offline retail pharmacy companies;\n\n \n\n●conditions in China’s\ndigital healthcare market;\n\n \n\n●detrimental negative\npublicity about us, our competitors, or our industry;\n\n \n\n●additions or departures\nof key personnel;\n\n \n\n●release of lock-up\nor other transfer restrictions on our outstanding equity securities or sales of additional\nequity securities;\n\n \n\n●regulatory developments\naffecting us or our industry;\n\n \n\n●general economic\nor political conditions in China or elsewhere in the world;\n\n \n\n●fluctuations of\nexchange rates between the RMB and the U.S. dollar; and\n\n \n\n●potential litigation\nor regulatory investigations.\n\n \n\nAny of these factors may\nresult in large and sudden changes in the volume and price at which the ADSs will trade. Furthermore, the stock market in general experiences\nprice and volume fluctuations that are often unrelated or disproportionate to the operating performance of companies like us. These broad\nmarket and industry fluctuations may adversely affect the market price of our ADSs. Volatility or a lack of positive performance in our\nADS price may also adversely affect our ability to retain key employees, most of whom have been granted equity incentives.\n\n \n\nIn the past, shareholders\nof public companies have often brought securities class action suits against 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\n49\n\n \n\n \n\n**If securities or industry analysts cease\nto publish research or reports about our business, or if they adversely change their recommendations regarding the ADSs, the market price\nfor the ADSs and trading volume could decline.**\n\n** **\n\nThe trading market for the\nADSs will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts\nwho cover us downgrade the ADSs, the market price for the ADSs would likely decline. If one or more of these analysts cease to cover\nus or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn, could cause the market\nprice or trading volume for the ADSs to decline.\n\n \n\n**Our dual-class voting structure will limit\nyour ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders\nof our Class A ordinary shares and ADSs may view as beneficial.**\n\n** **\n\nOur authorized share capital\nconsists of Class A ordinary shares and Class B ordinary shares (with certain shares remaining unissued, with power for our\ndirectors to issue such classes of shares as they think fit). Holders of Class A ordinary shares will be entitled to one vote per\nshare, while holders of Class B ordinary shares will be entitled to 20 votes per share. Each Class B ordinary share is convertible\ninto one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares are not convertible into Class B\nordinary shares under any circumstances.\n\n \n\nAs of March 31, 2026, Mr. Zhenyang\nShi, our Chairman and Chief Executive Officer, and Ms. Li Xu, our Chief Financial Officer, beneficially own all of our issued and outstanding\nClass B ordinary shares, which constitute approximately 9.1% of our total issued and outstanding ordinary shares. Mr. Zhenyang Shi,\nas a result of his sole voting power and an irrevocable voting proxy granted by Ms. Li Xu, beneficially own all of our issued Class B\nordinary shares and collectively be able to exercise 72.8% of the aggregate voting power of our total issued and outstanding ordinary\nshares.\n\n \n\nAs a result of the dual-class\nshare structure, the delegation of voting rights and the concentration of ownership, Mr. Zhenyang Shi will continue to have considerable\ninfluence over matters such as decisions regarding mergers and consolidations, election of directors, and other significant corporate\nactions. Such holders of Class B ordinary shares may take actions that are not in the best interest of us or our other shareholders.\nThis concentration of ownership may discourage, delay, or prevent a change in control of our company, which could have the effect of\ndepriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our company and may reduce\nthe price of our ADSs. This concentrated control will limit your ability to influence corporate matters and could discourage others from\npursuing any potential merger, takeover, or other change of control transactions that holders of Class A ordinary shares and ADSs\nmay view as beneficial.\n\n \n\n**Techniques employed by short sellers may\ndrive down the market price of the ADSs.**\n\n** **\n\nShort selling is the practice\nof selling securities that a 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. Short sellers hope 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 short sellers expect to pay less in that purchase than\nthey received in the sale. As it is in short sellers’ interest for the price of the security to decline, many short sellers publish,\nor arrange for the publication of, negative opinions and allegations regarding the relevant issuer and its business prospects in order\nto create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the\npast, led to selling of shares in the market.\n\n \n\n50\n\n \n\n \n\nWe have not been the subject\nof short selling, however, we may be subject to short seller attacks from time to time in the future. If we were to become the subject\nof any unfavorable allegations, whether such allegations are proven to be true or untrue, we may have to expend a significant amount\nof resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks,\nwe may be constrained in the manner in which we can proceed against the relevant short sellers by principles of freedom of speech, applicable\nstate law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could divert management’s\nattention from the day-to-day operations of our company. Even if such allegations are ultimately proven to be groundless, allegations\nagainst us could severely impact the market price of our ADSs and our business operations.\n\n \n\n**We currently do not expect to pay dividends\nin the foreseeable future. Therefore, you must rely on price appreciation of our ADSs for 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\ndo not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ADSs as a source\nfor any future dividend income.\n\n \n\nOur board of directors has\ncomplete discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders\nmay by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands\nlaw, a Cayman Islands company may pay a dividend out of either profit or share premium account or distributable capital reserve resulting\nfrom contributed surplus, provided that in no circumstances may a dividend be paid if this would result in the company being unable to\npay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends,\nthe timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements\nand surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions\nand other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend\nentirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain\nthe price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire\ninvestment in our ADSs.\n\n \n\n**Substantial future sales or perceived potential\nsales of our ADSs in the public market could cause the price of our ADSs to decline.**\n\n** **\n\nSales of our ADSs in the\npublic market, or the perception that these sales could occur, could cause the market price of our ADSs to decline. The ADSs sold in\nour initial public offering are freely transferable without restriction or additional registration under the Securities Act, and shares\nheld by our existing shareholders may also be sold in the public market in the future, subject to the restrictions in Rule 144 and Rule\n701 under the Securities Act and the applicable lock-up agreements. We cannot predict what effect, if any, market sales of securities\nheld by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the\nmarket price of the ADSs.\n\n \n\n**Our currently effective memorandum and\narticles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary\nshares and the ADSs.**\n\n** **\n\nOur fourth amended and restated\nmemorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us\nto engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to\nsell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company\nin a tender offer or similar transaction. Our board of directors has the authority, without further action by our shareholders, to issue\npreference shares in one or more series and to fix their designations, powers, preferences, privileges and relative participating, optional\nor special rights and the qualifications, limitations, or restrictions, including dividend rights, conversion rights, voting rights,\nterms of redemption, and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares,\nincluding Class A ordinary shares represented by ADSs. Preference shares could be issued quickly with terms calculated to delay\nor prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue\npreference shares, the price of the ADSs may fall and the voting and other rights of the holders of our ordinary shares and the ADSs\nmay be materially and adversely affected.\n\n \n\n51\n\n \n\n \n\n**The voting rights of holders of ADSs are\nlimited by the terms of the deposit agreement, and you may not be able to exercise your right to direct the voting of the underlying\nClass A ordinary shares represented by your ADSs.**\n\n** **\n\nHolders of ADSs do not have\nthe same rights as our registered shareholders. As a holder of ADSs, you will not have any direct right to attend general meetings of\nour shareholders or to cast any votes at such meetings.\n\n \n\nYou will only be able to\nexercise the voting rights attached to the Class A ordinary shares underlying your ADSs indirectly by giving voting instructions to the\ndepositary in accordance with the provisions of the deposit agreement. Where any matter is to be put to a vote at a general meeting,\nthen upon receipt of your voting instructions, the depositary will try, as far as is practicable, to vote the underlying Class A ordinary\nshares represented by your ADSs in accordance with your instructions. You will not be able to directly exercise any right to vote with\nrespect to the underlying Class A ordinary shares unless you cancel and withdraw the shares and become the registered holder of such\nshares prior to the record date for the general meeting.\n\n \n\nWhen a general meeting is\nconvened, you may not receive sufficient advance notice of the meeting to withdraw the Class A ordinary shares represented by your ADSs\nand become the registered holder of such shares to allow you to attend the general meeting and to vote directly with respect to any specific\nmatter or resolution to be considered and voted upon at the general meeting. In addition, under our fourth amended and restated memorandum\nand articles of association, for the purposes of determining those shareholders who are entitled to attend and vote at any general meeting,\nour directors may close our register of members and/or fix in advance a record date for such meeting, and such closure of our register\nof members or the setting of such a record date may prevent you from withdrawing the underlying Class A ordinary shares represented by\nyour ADSs and from becoming the registered holder of such shares prior to the record date, so that you would not be able to attend the\ngeneral meeting or to vote directly. Where any matter is to be put to a vote at a general meeting, upon our instruction the depositary\nwill notify you of the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you that you will receive\nthe voting materials in time to ensure that you can instruct the depositary to vote the underlying Class A ordinary shares represented\nby your ADSs.\n\n \n\nIn addition, the depositary\nand its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions.\nThis means that you may not be able to exercise your right to direct how the underlying Class A ordinary shares represented by your ADSs\nare voted and you may have no legal remedy if the underlying Class A ordinary shares represented by your ADSs are not voted as you requested.\nIn addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting.\n\n \n\nFurther, under the deposit\nagreement for the ADSs, if you do not vote, the depositary will give us a discretionary proxy to vote the Class A ordinary shares\nunderlying your ADSs at shareholders’ meetings unless:\n\n \n\n●we have instructed the depositary that we do not wish a discretionary\nproxy to be given;\n\n \n\n●we have informed the depositary that there is substantial opposition\nas to a matter to be voted on at the meeting;\n\n \n\n●a matter to be voted on at the meeting would have a material\nadverse impact on shareholders; or\n\n \n\n●the voting at the meeting is to be made on a show of hands.\n\n \n\nThe effect of this discretionary\nproxy is that you cannot prevent our Class A ordinary shares underlying your ADSs from being voted, except under the circumstances\ndescribed above. This may adversely affect your interests and make it more difficult for shareholders to influence the management of\nour company. Holders of our Class A ordinary shares are not subject to this discretionary proxy.\n\n \n\n**You may not receive cash dividends if the\ndepositary decides it is impractical to make them available to you.**\n\n** **\n\nThe depositary will pay cash\ndistributions on the ADSs only to the extent that we decide to distribute dividends on our ordinary shares or other deposited securities,\nand we do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. To the extent that there\nis a distribution, the depositary has agreed to pay you the cash dividends or other distributions it or the custodian receives on our\nshares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the\nnumber of shares your ADSs represent. However, the depositary may, at its discretion, decide that it is inequitable or impractical to\nmake a distribution available to any holders of ADSs. For example, the depositary may determine that it is not practicable to distribute\ncertain property through the mail, or that the value of certain distributions may be less than the cost of mailing them. In these cases,\nthe depositary may decide not to distribute such property to you.\n\n \n\n52\n\n \n\n \n\n**You may be subject to limitations on transfer\nof your ADSs.**\n\n** **\n\nYour ADSs are transferable\non the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient\nin connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including\nin connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of\nADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays.\nThe depositary may refuse to deliver, transfer or register transfers of the ADSs generally when our share register or the books of the\ndepositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of\nany government or governmental body, or under any provision of the deposit agreement, or for any other reason.\n\n \n\n**You may experience dilution of your holdings\ndue to future equity issuance and your inability to participate in rights offerings.**\n\n** **\n\nWe may, from time to time,\ndistribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute\nrights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt\nfrom registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities\nAct. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights\nto lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file\na registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared\neffective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings\nas a result.\n\n \n\nIn addition, as Class B\nordinary shares could only be held by Mr. Zhenyang Shi and Ms. Li Xu and their trust or any other entity established for bona fide\nestate planning purposes for the benefits of or on behalf of each immediate family member of Mr. Zhenyang Shi and Ms. Li Xu according\nto our fourth amended and restated memorandum and articles of association, future issuances of Class B ordinary shares may be dilutive\nto the holders of ADSs and holders of Class A ordinary shares, particularly with respect to their voting power.\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\nIslands law.**\n\n** **\n\nWe are an exempted company\nincorporated under the laws of the Cayman Islands. As a result, it may be difficult for investors to effect service of process within\nthe United States upon our directors or officers, or enforce judgments obtained in the United States courts against our directors or\nofficers.\n\n \n\nOur corporate affairs are\ngoverned by our fourth amended and restated memorandum and articles of association which became effective immediately prior to completion\nof our initial public offering (as the same may be supplemented or amended from time to time), the Companies Act (As Revised) of the\nCayman Islands (as the same may be supplemented or amended from time to time), and the common law of the Cayman Islands. We are subject\nto the federal securities laws of the United States. The rights of shareholders to take action against our directors, actions by our\nminority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the\ncommon law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent\nin the Cayman Islands as well as from the English common law, the decisions of whose courts are of persuasive authority, but are not\nbinding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands\nlaw are different from what they would be under statutes or judicial precedents in some jurisdictions in the United States. In particular,\nthe Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware,\nmay have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have\nstanding to initiate a shareholders derivative action in a federal court of the United States.\n\n \n\n53\n\n \n\n \n\nWe have been advised by Appleby, our Cayman Islands\nlegal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United\nStates predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original\nactions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal\nsecurities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. Although\nthere is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will\nrecognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the\nprinciple that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment\nhas been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be\nfinal and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands\njudgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of\nwhich is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held\nto be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought\nelsewhere.\n\n \n\nAs a result of all of the above,\nour public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of\nour board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.\nFor a discussion of significant differences between the provisions of the Companies Act of the Cayman Islands and the laws applicable\nto companies incorporated in the United States and their shareholders, see “Item 10. Additional Information—10.B. Memorandum\nand Articles of Association—Differences in Corporate Law.”\n\n \n\n**Certain judgments obtained against us by\nour shareholders may not be enforceable.**\n\n** **\n\nWe are a Cayman Islands exempted\ncompany and all of our assets are located outside of the United States. Our current operations are conducted in China. In addition,\nall of our current directors and officers, namely Zhenyang Shi, Li Xu and Guoji Luo, reside within Chinese mainland and most of their\nassets are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or\nagainst these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal\nsecurities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China\nmay render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding\nthe relevant laws of the Cayman Islands and China, see “Item 3. Key Information—Enforceability of Civil Liabilities.”\n\n \n\n**ADSs holders may not be entitled to a jury\ntrial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in\nany such action.**\n\n** **\n\nThe deposit agreement governing\nthe ADSs representing our Class A ordinary shares provides that, to the fullest extent permitted by law, ADS holders waive the right to\na jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit\nagreement, including any claim under the U.S. federal securities laws. If we or the depositary opposed a jury trial demand based\non the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance\nwith the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection\nwith claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However,\nwe believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State\nof New York, which govern the deposit agreement, by a federal or state court in the City of New York, which has nonexclusive\njurisdiction over matters arising under the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial\nwaiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waive the right to a jury trial.\nWe believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding\nthe jury waiver provision before entering into the deposit agreement.\n\n \n\nIf you or any other holders\nor beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement\nor the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury\ntrial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us or the depositary, lead\nto increased costs to bring a claim, limited access to information and other imbalances of resources between such holder and us, or limit\nsuch holder’s ability to bring a claim in a judicial forum that such holder finds favorable. If a lawsuit is brought against us\nor the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be\nconducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including\nresults that could be less favorable to the plaintiff(s) in any such action.\n\n \n\n54\n\n \n\n \n\nNevertheless, if this jury\ntrial waiver provision is not permitted by applicable law, an action could proceed under the terms of the deposit agreement with a jury\ntrial. No condition, stipulation or provision of the deposit agreement or ADSs shall relieve us or the depositary from our respective\nobligations to comply with the Securities Act and the Exchange Act nor serve as a waiver by any holder or beneficial owner of ADSs\nof compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.\n\n \n\n**An ADS holder’s right to pursue claims\nagainst the depositary is limited by the terms of the deposit agreement.**\n\n** **\n\nUnder the deposit agreement,\nthe federal or state courts in the City of New York will have jurisdiction to hear and determine any suit, action, or proceeding and to\nsettle any dispute between the depositary bank and us that may arise out of or in connection with the deposit agreement. Holders and beneficial\nowners of our ADSs, by holding an ADS or an interest therein, understand and irrevocably agree that any legal suit, action, or proceeding\nagainst or involving us or the depositary, arising out of or based upon the deposit agreement, ADSs, or the transactions contemplated\nthereby or by virtue of ownership thereof, may only be instituted in a state or federal court in the City of New York, and a holder of\nour ADSs will have irrevocably waived any objection which such holder may have to the laying of venue of any such proceeding in, and irrevocably\nsubmitted to the exclusive jurisdiction of, such courts in any such suit, action, or proceeding. However, the enforceability of similar\nfederal court choice of forum provisions in other companies’ organizational documents has been challenged in legal proceedings in\nthe United States, and it is possible that a court could find this type of provision to be inapplicable or unenforceable. Accepting\nor consenting to this forum selection provision does not represent you are waiving compliance with the U.S. federal securities laws\nand the rules and regulations promulgated thereunder. Furthermore, investors cannot waive compliance with the U.S. federal securities\nlaws and rules and regulations promulgated thereunder.\n\n \n\n**As a company incorporated in the Cayman\nIslands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly\nfrom the Nasdaq listing standards.**\n\n** **\n\nAs a Cayman Islands exempted\ncompany listed on the Nasdaq, we are subject to the Nasdaq Stock Market’s corporate governance listing standards. However, the Nasdaq\nlisting standards permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate\ngovernance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq listing standards.\n\n \n\nWe are permitted to elect to rely on home country practice to be exempted\nfrom the Nasdaq corporate governance requirements. We currently follow and intend to continue to follow Cayman Islands corporate governance\npractices in lieu of the corporate governance requirements of the Nasdaq that listed companies must: (i) have a compensation committee\ncomprised solely of independent directors; (ii) have a nominating and corporate governance committee comprised solely of independent directors;\n(iii) have regularly scheduled executive sessions with only independent directors; and (ii) hold an annual meeting of shareholders no\nlater than one year after the end of the issuer’s fiscal year-end. In the future, we may rely on other exemptions provided by Nasdaq.\nAs a result, our shareholders may be afforded less protection than they would otherwise enjoy if we complied fully with the Nasdaq listing\nstandards.\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\ncompanies.**\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 rules under the Exchange Act requiring the filing with\nthe SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;\n\n \n\n●the sections of the Exchange Act regulating the solicitation\nof proxies, consents, or authorizations in respect of a security registered under the Exchange Act;\n\n \n\n55\n\n \n\n \n\n●the sections of the Exchange Act regulating the liability for\ninsiders who profit from trades made in a short period of time;\n\n \n\n●the selective disclosure rules by issuers of material nonpublic\ninformation under Regulation FD; and\n\n \n\n●certain audit committee independence requirements in Rule\n10A-3 of the Exchange Act.\n\n \n\nWe are required to file an annual report on Form 20-F within four months\nof the end of each fiscal year. In addition, we intend to publish our results on a semi-annual basis through press releases, distributed\npursuant to the rules and regulations of the Nasdaq Stock Market. Press releases relating to financial results and material events are\nalso furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC is less extensive\nand less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded\nthe same protections or information that would be made available to you were you investing in a U.S. domestic issuer.\n\n \n\n**We are an emerging growth company within\nthe meaning of the Securities Act and may take advantage of certain reduced reporting requirements.**\n\n** **\n\nWe are an “emerging growth\ncompany,” as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public\ncompanies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation\nrequirements of Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we remain an emerging growth company. As a\nresult, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information\nthey may deem important.\n\n \n\n**We are a “controlled company”\nwithin the meaning of the Nasdaq rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide\nprotection to shareholders of other companies.**\n\n** **\n\nFollowing the completion of\nour initial public offering, we are a “controlled company” as defined under the Nasdaq rules because Mr. Zhenyang Shi\nholds more than 50% of the voting power for the election of directors. For so long as we remain a controlled company, we may rely on certain\nexemptions from the corporate governance rules, such as the requirement that our board of directors have a compensation committee and\nnominating and corporate governance committee composed entirely of independent directors. As a result, you will not have the same protection\nafforded to shareholders of companies that are subject to these corporate governance requirements. Even if we cease to be a controlled\ncompany, we may still rely on exemptions available to foreign private issuers, including being able to adopt home country practices in\nrelation to corporate governance matters. See “—As a company incorporated in the Cayman Islands, we are permitted to adopt\ncertain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq listing standards.”\n\n \n\n**There can be no assurance that we will not\nbe a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could subject\nU.S. investors in our ADSs or Class A ordinary shares to significant adverse U.S. federal income tax consequences.**\n\n** **\n\nWe will be classified as a\npassive foreign investment company (“PFIC”) for U.S. federal income tax purposes for any taxable year if, after applying\napplicable look-through rules, either (a) 75% or more of our gross income for such year consists of certain “passive income,”\nor (b) 50% or more of the value of our assets (determined on the basis of a quarterly average) during such year is attributable to\nassets that produce or are held for the production of passive income (the “asset test”).\n\n \n\nAlthough the law in this regard\nis not entirely clear, we treat the VIE and its subsidiaries as being owned by us for U.S. federal income tax purposes because we control\ntheir management decisions and are entitled to substantially all of the economic benefits associated with them. As a result, we consolidated\ntheir results of operations in our consolidated U.S. GAAP financial statements.\n\n \n\nAssuming that we are the owner\nof the VIE and its subsidiaries for U.S. federal income tax purposes, and based on our current and anticipated market capitalization and\nthe historical and current composition of our income and assets, including goodwill and other unbooked intangibles not reflected on our\nbalance sheet, we do not expect to be a PFIC for U.S. federal income tax purposes for the current taxable year. If it were determined,\nhowever, that we are not the owner of the VIE for U.S. federal income tax purposes, we may be treated as a PFIC for the current and future\ntaxable years. While we do not expect to be or become a PFIC, no assurance can be given in this regard because the determination of whether\nwe will be or become a PFIC for any taxable year is a fact intensive determination made annually.\n\n \n\n56\n\n \n\n \n\nChanges in the composition\nof our income or composition of our assets may cause us to be or become a PFIC for the current or subsequent taxable years. Fluctuations\nin the market price of our ADSs may also cause us to be or become classified as a PFIC for the current or future taxable years because\nthe value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined\nby reference to the market price of our ADSs from time to time (which may be volatile). Among other matters, if our market capitalization\nis less than anticipated or subsequently declines, we may become a PFIC for the current or future taxable years because our liquid\nassets and cash (which are for this purpose considered assets that produce passive income) may then represent a greater percentage of\nour overall assets. Further, while we believe our classification methodology and valuation approach are reasonable, it is possible that\nthe IRS may challenge our classification or valuation of our goodwill and other unbooked intangibles, which may result in our being or\nbecoming a PFIC for the current or one of more future taxable years.\n\n \n\nCertain adverse U.S. federal\nincome tax consequences could apply to a U.S. Holder (as defined in “Item 10. Additional Information—10.E. Taxation—United States\nFederal Income Tax Considerations) if we are treated as a PFIC for any taxable year during which such U.S. Holder holds our ADSs\nor Class A ordinary shares. U.S. Holders should consult their tax advisors about the potential application of the PFIC rules\nto their investment in our ADSs or Class A ordinary shares. For further discussion, see “Item 10. Additional Information—10.E.\nTaxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations.”\n\n \n\n**We incur increased costs as a result of\nbeing a public company, particularly after we cease to qualify as an “emerging growth company.”**\n\n** **\n\nWe are a public company and incur significant legal, accounting and\nother expenses that we did not incur as a private company. Changing laws, regulations and standards relating to corporate governance and\npublic disclosure, including regulations implemented by the SEC and the Nasdaq, may increase legal and financial compliance costs and\nmake some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations and, as a result,\ntheir application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. We intend to invest\nresources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative\nexpenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities.\n\n \n\nIn addition, as a public\ncompany, we have appointed independent directors and have adopted policies regarding internal controls and disclosure controls and\nprocedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain\ndirector and officer liability insurance with acceptable policy limits and coverage, should we decide to obtain such insurance. It\nmay also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. If,\nnotwithstanding our efforts to comply with new laws, regulations and standards, we fail to comply, regulatory authorities may\ninitiate legal proceedings against us and our business may be harmed.\n\n \n\nIn addition, as an emerging\ngrowth company, we will still incur expenses in relation to management assessment according to requirements of Section 404 of\nthe Sarbanes-Oxley Act of 2002. After we are no longer an “emerging growth company,” we expect to incur significant\nadditional expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the\nSarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC.\n\n \n\n**If we cannot continue to satisfy the listing\nrequirements and other rules of the Nasdaq Global Market, our ADSs may be delisted, which could negatively impact the price of our ADSs\nand your ability to sell them.**\n\n \n\nOur ADSs are listed on the\nNasdaq Global Market. We cannot assure you that our ADSs will continue to be listed on the Nasdaq Global Market. In order to maintain\nour listing on the Nasdaq GlobalMarket, we are required to comply with certain rules of the Nasdaq Global Market, including those regarding\nminimum bid price, minimum market value of publicly held shares, and various additional requirements.\n\n \n\nOn January 29, 2026, we received\na written notification from the staff of the Listing Qualifications Department of the Nasdaq Stock Market LLC (“Nasdaq”),\nindicating that for the last 33 consecutive business days, the closing bid price of our ADSs was below the minimum bid price requirement\nof US$1.00 per share set forth in Nasdaq Listing Rule 5450(a)(1). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we are provided with\na compliance period of 180 calendar days from the date of the notification, or until July 28, 2026, to regain compliance with Nasdaq’s\nminimum bid price requirement. If we are unable to satisfy the Nasdaq Global Market criteria for maintaining our listing, our ADSs could\nbe subject to delisting.\n\n \n\nIf the Nasdaq subsequently delists our ADSs from\ntrading, we could face significant consequences, including:\n\n \n\n \n●\na limited availability for market quotations for our ADSs;\n\n \n \n \n\n \n●\nreduced liquidity with respect to our ADSs;\n\n \n \n \n\n \n●\na determination that our ADSs are a “penny stock,” which will require brokers trading in our ADSs to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our ADSs;\n\n \n \n \n\n \n●\nlimited amount of news and analyst coverage; and\n\n \n \n \n\n \n●\na decreased ability to issue additional securities or obtain additional financing in the future. \n\n \n\n57"}