{"url_path":"/sec/raasy/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-08","source_url":"https://www.sec.gov/Archives/edgar/data/1804583/0001493152-26-021875-index.html","accession_number":"0001493152-26-021875","cik":"0001804583","ticker":"RAASY","issuer_name":"Cloopen Group Holding Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1804583/0001493152-26-021875-index.html","primary_entity_key":"0001804583","primary_entity_name":"Cloopen Group Holding Ltd"},"word_count":19564,"has_tables":true,"body_markdown":"**ITEM\n4. INFORMATION ON THE COMPANY**\n\n \n\n**A.\nHistory and Development of the Company**\n\n \n\nWe\nbegan to provide cloud-based communications solutions in 2014, and have primarily operated our business through Beijing Ronglian Yitong\nInformation Technology Co. Ltd., or Ronglian Yitong. In January 2014, we incorporated Cloopen Group Holding Limited, our current ultimate\nholding company, as an exempted company with limited liability in the Cayman Islands, to facilitate our offshore financings.\n\n \n\nIn\nFebruary 2014, Cloopen Limited, a subsidiary wholly-owned by Cloopen Group Holding Limited was incorporated in Hong Kong. In April 2014,\nAnxun Guantong (Beijing) Technology Co., Ltd., or Anxun Guantong, a subsidiary wholly-owned by Cloopen Limited, was established in China.\n\n \n\n58\n\n \n\n \n\nIn\nJuly 2014, due to the restrictions imposed by current PRC laws and regulations on foreign ownership and investment in companies that\nengage in value-added telecommunications services, Anxun Guantong entered into a series of contractual arrangements with Ronglian Yitong\nand its shareholders, by which we exert control over and are the primary beneficiary of the affiliated entities and consolidate their\nfinancial results under U.S. generally accepted accounting principles, or U.S. GAAP. The contractual arrangements with Ronglian Yitong\nwere subsequently amended and restated in 2018, 2019 and 2020. See “—Contractual Arrangements” for details.\n\n \n\nThe\nADSs had been listed for trading on the NYSE under the symbol “RAAS” since February 8, 2021. We raised approximately US$340.2\nmillion in net proceeds from issuance of new shares for our initial public offering after deducting underwriting discounts and commissions\nand estimated offering expenses payable by us.\n\n \n\nIn\nMarch 2021, we acquired all the equity interests of EliteCRM, a leading customer relationship management software provider.\n\n \n\nIn\nSeptember 2021, our board approved a share repurchase program to repurchase up to US$40.0 million of our Class A ordinary shares in the\nform of the ADSs during a 12-month period commencing on November 22, 2021. The share repurchase program expired on November 21, 2022,\nand as of such date, we have repurchased 9,041,386 of the ADSs (or 3,013,795 ADSs if retroactively adjusted to reflect the ADS ratio\nchange effected on March 15, 2023) for an aggregate purchase price of US$17.6 million pursuant to the share repurchase program.\n\n \n\nIn\nDecember 2021, we acquired all the equity interests of Zhuge, a user-centric intelligent data solution provider.\n\n \n\nEffective\non March 15, 2023, we changed the ratio of the ADSs to Class A ordinary shares from the then ADS ratio of one ADS representing two Class\nA ordinary shares to a new ADS ratio of one ADS representing six Class A ordinary shares.\n\n \n\nOn\nMay 17, 2023, the NYSE commenced delisting proceedings of the ADSs on the basis that the ADSs are not suitable for listing due to our\nfailure to file with the SEC our annual reports on Form 20-F for the years ended December 31, 2021 and December 31, 2022 and current\nreport on Form 6-K for the half year ended June 30, 2022 by May 17, 2023, which is the maximum time allowed under Section 802.01E of\nthe NYSE’s Listed Company Manual. The NYSE suspended the trading in the ADSs on the same date. Following the trading suspension,\nthe ADSs have been quoted on the OTC market in the United States under the symbol “RAASY.” We requested for a review of the\ndelisting determination by a committee of the board of directors of the NYSE, and on October 25, 2023, we received the final delisting\ndetermination from the committee. On the same date, we were delisted from NYSE when the NYSE staff filed a Form 25 Notification of Delisting.\n\n \n\nOn\nDecember 22, 2025, our board of directors received a preliminary non-binding proposal letter (the “Proposal”) from Mr. Changxun\nSun, our founder and chief executive officer, and Trustbridge Partners VII, L.P. (collectively, the “Buyer Group”). The Buyer\nGroup proposed to acquire all of our outstanding Class A and Class B ordinary shares, including Class A ordinary shares represented by\nADSs, that are not already beneficially owned by the Buyer Group or their affiliates, for a purchase price of US$0.4940 per ordinary\nshare, or US$2.9641 per ADS, in cash in a going private transaction. On December 29, 2025, our board of directors formed a special committee\nconsisting of three independent directors, Mr. Adam J. Zhao, Mr. Tim Yimin Liu, and Mr. Ziguang Gao, to evaluate and consider the Proposal.\nMr. Zhao chairs the special committee.\n\n \n\nOur\nprincipal executive offices are located at 16/F, Tower A, Fairmont Tower, 33 Guangshun North Main Street, Chaoyang District, Beijing,\nthe PRC. Our telephone number at this address is (86) 10-6477-5680. Our registered office in the Cayman Islands is located at Maples\nCorporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.\n\n \n\nOur\nwebsite is *yuntongxun.com*. The information contained on our website is not a part of, and will not be incorporated by reference\ninto, this annual report.\n\n \n\n**B.\nBusiness Overview**\n\n \n\nWe\nare a leading multi-capability cloud-based communications solution provider in China offering a full suite of cloud-based communications\nsolutions, covering communications platform as a service, or CPaaS, cloud-based contact centers, or cloud-based CC, and cloud-based unified\ncommunications and collaborations, or cloud-based UC&C. We serve a diverse and loyal customer base consisting of enterprises of all\nsizes across a variety of industries, including internet, telecommunications, financial services, industrial manufacturing and energy.\n\n \n\nChina’s\ncloud-based communications industry is still in the early stages of development relative to more mature markets globally, and is experiencing\nsignificant transformation driven by rapid advancements in cloud and AI technologies. Enterprises in China increasingly focus on digital\nsolutions and are adopting new technologies to improve the efficiency and quality of their intra- and extra-organizational communications.\nWe believe that we are well-positioned to capitalize on this great opportunity in the emerging China market and continue to contribute\nto the growth of this market. As an industry pioneer, we have accumulated extensive expertise, and developed a variety of proprietary\nproducts and services characterized by quality and reliability, to enable seamless connectivity across telecommunications networks.\n\n \n\n59\n\n \n\n \n\nWe\nbelieve that we are well adapted to serve China’s unique market dynamics, leveraging our deep-rooted experience in China’s\ncloud-based communications industry and insights in the specific communications needs of domestic enterprises. With our comprehensive\nbusiness portfolio and feature-rich solutions, we can accommodate the disparate demands of a broad range of customers across public and\nprivate clouds, from small- to medium-sized enterprises to large enterprises. We have developed a highly efficient product development\necosystem, which enables us to capture complex and evolving customer demands and develop new and enhanced features and products that\ncontinue to represent compelling value propositions across our customer base. Moreover, we have developed industry-specific solutions\nwith targeted features and functionalities for players in a number of industries, making it efficient for us to scale expediently among\nenterprises within the same industries.\n\n \n\nAs\nof December 31, 2023, 2024 and 2025, we had an active customer base of 8,703, 7,529 and 6,151 enterprises, respectively, among which\n121, 114 and 102 were large-enterprise customers, respectively. In 2023, 2024 and 2025, the dollar-based net customer retention rate\nin relation to solutions that we offer on a recurring basis was 85.8%, 74.6% and 76.7%, respectively, and the dollar-based net customer\nretention rate for active customers was 89.0%, 77.4% and 79.6%, respectively. We served 279, 337 and 339 customers for our project-based\nsolutions in 2023, 2024 and 2025, respectively. Our revenues increased by 0.4% from RMB571.0 million in 2023 to RMB573.6 million in 2024,\nand decreased by 6.6% to RMB535.7 million (US$76.6 million) in 2025. In 2023, 2024 and 2025, we incurred net loss of RMB412.4 million,\nRMB146.8 million and RMB238.8 million (US$34.1 million), respectively. See “Item 5. Operating and Financial Review and Prospects—A.\nOperating Results—Non-GAAP Financial Measures” for information on how we define and calculate the non-GAAP financial measures\nas well as a reconciliation of non-GAAP adjusted EBITDA to net loss.\n\n \n\n**Value\nPropositions to Our Customers**\n\n \n\nOur\ncloud-based communications solutions enable enterprises to transform their business operations with intelligent, efficient and effective\nintra- and extra-organizational communications. Our cloud-based communications solutions offer the following key benefits to our customers.\n\n \n\n**Convenient\non-demand access to telecommunications resources.**Telecommunications networks have traditionally operated independently from\nthe internet. Enterprises with large amounts of communications needs originating from their business operations often lack efficient\nand expedient access to the telecommunications resources, which are managed by the various mobile network operators, each serving a separate\ngeographical region in China. Our solutions are designed to integrate these networks by pooling the telecommunications resources in our\ncloud-based infrastructure, centrally managing and distributing them to enterprises upon demand, thus allowing enterprises to access\nthese resources at lower costs and with higher efficiency.\n\n \n\n**One-stop\ncommunications solutions.**Our solutions are designed to satisfy all of our customers’ various communications needs from\ntext messaging to high-quality audio and video conferencing, and from cloud-based contact centers designed for effective customer service\nand acquisition to large-scale, multi-format unified communications across scattered worksites. We believe our comprehensive portfolio\nof offerings save our customers the hassle of seeking multiple providers for different communications needs, making us the go-to one-stop\ndestination for the disparate demands of enterprises of all sizes, industries and stages of cloud adoption.\n\n \n\n**Intelligent\ncommunications.**Leveraging our robust AI capabilities, we enable intelligent communications to help save labor costs, improve\ncommunications efficiency and achieve higher customer service quality and level of satisfaction. In particular, our AI-powered solutions\ngreatly improve customer service effectiveness by automating certain tasks of contact center agents, monitoring service quality and offering\nreal-time assistance. Our AI technologies also help our customers establish internal knowledge bases and deliver intelligent internal\nhelpdesk services to streamline their business operations.\n\n \n\n60\n\n \n\n \n\n**Easy,\nrapid and scalable deployment.**Our solutions are software- and cloud-based, allowing for easy deployment and management across\nmultiple locations and on multiple devices without substantial upfront investment in hardware and infrastructure. This software- and\ncloud-based nature also makes scalable deployment and upgrades possible as our customers expand their operations and communications needs.\n\n \n\n**Seamless\nintegration and flexible configuration.**Our solutions feature various APIs and SDKs to enable voice, messaging and other communications\nfunctions, which can be readily embedded into our customers’ business systems and applications and physical infrastructure as building\nblocks. We also allow customizable options where customers may select communications functions based on their specific needs without\nhaving to purchase pre-packaged bundle of solutions.\n\n \n\n**Reliable\ncustomer experience.**We have independently developed many of the core technologies underlying our solutions, which we believe\nenables consistently high service levels. In particular, our solutions are capable of maintaining stable and safe connections with over\n99.95% uptime service level commitments even in cases of sudden spikes in the amount of simultaneous communications. In addition, our\nrobust research and development capabilities and accumulated industry experience allow us to introduce new and enhanced features and\nfunctionalities to meet evolving customer needs amid dynamic market conditions. We also provide ongoing customer support and operation\nmaintenance services to ensure superior customer experience.\n\n \n\n**Our\nSolutions**\n\n \n\nOur\ncomprehensive solution offerings primarily include CPaaS, cloud-based CC and cloud-based UC&C. The following diagram sets forth a\nsimplified presentation of our multi-capability solution offerings.\n\n****\n\n \n\n \n\n**CPaaS\nsolutions**\n\n \n\nOur\nCPaaS solutions are dedicated to allowing enterprises to access and utilize telecommunications resources with ease, efficiency and flexibility\nand in a way that suits their bespoke communications needs. Our customers typically have large intra- and extra-organizational communications\nneeds, which are not often addressed efficiently under their traditional arrangements with China’s mobile network operators. Provincial\nbranches of major mobile network operators in China typically do business as separate entities, which means enterprises with nationwide\nbusiness operations and communications needs often must work with a number of such provincial branches concurrently. We enter into written\nagreements with mobile network operators to utilize their telecommunications resources. These agreements typically have a fixed term\nof one year and are automatically renewable upon expiration of the original terms unless otherwise indicated. These agreements generally\nrequire monthly payments calculated based upon fixed unit prices and number of text messages and minutes of voice calls we utilize or\nprovide pre-bundled telecommunications resources with fee caps. A smaller number of such agreements also contain minimum usage commitments.\n\n \n\nLeveraging\nour close collaborations with the various mobile network operators across China, we aggregate telecommunications resources from them\nand offer our customers our CPaaS platform with a wide range of modules in the form of APIs and SDKs to embed voice, messaging and other\ncommunications functions into their business systems and applications. Our CPaaS platform saves customers the costs of establishing and\nmaintaining their own network infrastructure and supports highly customizable communications experience with our feature-rich functional\nmodules.\n\n \n\n*Voice\nmodules*\n\n \n\nWe\noffer various voice modules that can be readily integrated into our customers’ business systems and applications or directly employed\nthrough webpages, each enabling a specific voice function. For example, with a voice module integrating a “click-to-call”\nfunction into contact centers, our customers can make and receive bulk outbound and inbound calls without leaving their in-house business\nplatforms. Our voice modules also enable various frequently used voice functions such as call routing, call forwarding, callback, mute\nand three-way calling. We also offer phone menu and IVR to automate certain contact center services. Moreover, our customers can implement\neffective performance management and cost control leveraging our voice modules, with functions such as call history downloading, call\nrecording, call monitoring, agent online status query and fee calculation. In addition, our customers may utilize our voice module featuring\n“virtual intermediary phone number” function to preserve users’ privacy without compromising efficient communications.\nFor example, a food delivery platform may integrate this voice module into its mobile application, which enables delivery riders and\nconsumers to call each other without revealing their real phone numbers.\n\n \n\n61\n\n \n\n \n\n*Messaging\nmodules*\n\n \n\nOur\nmessaging modules can also be readily integrated into our customers’ business systems and applications, allowing them to send instantaneous\nauthentication codes, marketing messages, text notifications and other forms of messages as needed to a large number of their customers.\nOur messaging modules support multiple languages and are available in a variety of communications formats with features such as international\ntext messaging and video messaging. Characterized by quality and stability, our messaging modules are capable of initiating bulk outbound\ntext messaging to up to millions of end customers with low latency and high delivery rate. Prompted by the emergence of 5G technology,\nwe are also actively exploring opportunities in the field of 5G-based rich communications suite to support more communications formats\nwith our messaging modules.\n\n \n\nWe\nbelieve our messaging modules can significantly improve the effectiveness of our customers’ marketing and customer service activities.\n\n \n\nPursuant\nto our collaborative arrangements with mobile network operators, we sometimes assist and support them in establishing and operating communications\nservice platforms and share revenues with them. We are typically responsible for the design, implementation and maintenance of the platforms\nunder these arrangements, while the mobile network operators offer telecommunications resources and refer customers.\n\n \n\n*IoT\nrelated services*\n\n \n\nWe\nare dedicated to connecting devices, equipment and facilities with our IoT related services. Our customers can centrally manage SIM cards\nsupplied by China’s major mobile network operators, monitor usages and modify usage plans leveraging our services. Our IoT related\nservices also have a broad range of applications across industries. For example, our customers can integrate our services into smart\nwatches to enable connectivity, allowing parents to communicate with their children and live track their locations. Our IoT related services\ncan also enable collaboration among various connected devices with minimum human interference.\n\n \n\nAs\nof December 31, 2023, 2024 and 2025, our CPaaS solutions had approximately 3,800, 3,400 and 2,700 active customers, respectively. In\n2023, 2024 and 2025, we achieved a dollar-based net customer retention rate of 73.1%, 59.5% and 56.0% for our CPaaS solutions, respectively,\nand our dollar-based net customer retention rate for active customers in relation to CPaaS solutions was 74.8%, 61.1% and 57.3%,\nrespectively. We charge our customers generally based on the number of text messages and call minutes facilitated through our CPaaS solutions.\nWe experienced decreased dollar-based net customer retention rate in 2024, primarily because we replaced certain SMS channel clients\ndue to consideration of pricing. We experienced decreased dollar-based net customer retention rate in 2025, primarily because we strategically\nshifted our focus towards high-margin and high-quality industry customers, which resulted in a decrease in revenues generated from existing\ncustomers with lower profit margins.\n\n \n\n**Cloud-based\nCC solutions**\n\n \n\nOur\ncloud-based CC solutions empower enterprises with highly efficient and effective customer service and acquisition capabilities. Our cloud-based\nCC solutions include *RongCC*and *7moor Cloud*.\n\n \n\n*RongCC*\n\n \n\n*RongCC*aims to replace large enterprises’ legacy on-premises contact centers with cloud-based contact center solutions featuring enhanced\nagility, efficiency and compatibility. In addition to accommodating diverse customer service and acquisition interactions, *RongCC*\nserves as an integral part of an enterprise’s overall business management capability, empowered by AI and big data technologies,\nto streamline human labor as well as collect and analyze operational data to enable informed decision-making.\n\n \n\n62\n\n \n\n \n\n*RongCC*enables enterprises, freed from cumbersome tasks associated with configuring, integrating, maintaining and upgrading their contact\ncenters, to focus on what matters most to them - their customers and business operations. We offer *RongCC* in the form of pre-built\nreadily available functional modules, which can be configured based on our customers’ needs, to achieve easy delivery and rapid\ndeployment. *RongCC* improves enterprises’ customer service through the following ways.\n\n \n\n●We\noperate our own data centers and deploy our centrally-managed computing and storage resources\nand hosting and network equipment to ensure *RongCC*’s stability and security.\nWe have also made *RongCC* readily deployable by supporting the cloud computing platforms\nfrom China’s major internet infrastructure service providers and providing abundant\ntelecommunications resources to make on-demand access possible.\n\n   \n\n●To\naddress our customers’ considerations of costs and information security, we offer different\ncloud deployment options for *RongCC*. Our customers may choose private cloud deployment\nto achieve enhanced information security while leaving ample room for customization. In addition,\nhaving no need of sharing resources with other enterprises, private cloud deployment enables\ncontact centers with significant capacity and a large number of agents. We also support proprietary\ncloud deployment, through which our customers are able to leverage our cloud infrastructure\nto access exclusive but scalable computing resources in a cost-effective manner. To a lesser\nextent, we offer public cloud deployment for enterprises with relatively limited business\nscale and operation and maintenance capabilities.\n\n \n\nAs\nmarket demands and competitive landscape continue to evolve, enterprises need integrated solutions that are able to tackle both customer\nservices and marketing tasks. We have developed *RongCC* with a portfolio of functional modules including data intelligence, multi-channel\ncontact center, and customer relationship management, or the CRM, which form a closed-loop customer services and marketing solution and\nenable enterprises to optimize marketing strategies, drive sales and enhance operational efficiency.\n\n \n\n●Our\ndata intelligence module analyzes customer needs and behaviors to empower enterprises with\ndigital marketing. We gather data on user and sales behaviors across all channels and along\nthe purchasing decision-making process by event tracking, and label users into different\ngroups to create comprehensive user profiling. We also provide an intelligent marketing canvas\nfor enterprises, which allows for flexible and customized marketing strategies for different\nuser groups. Enterprises can then reach target customers across all channels leveraging our\nmulti-channel contact center module, and track and review various metrics in real time to\nevaluate their marketing effectiveness.\n\n   \n\n●Our\nmulti-channel contact center module allows enterprises to manage customer services across\nvarious platforms and channels, including phone calls, emails, social media platforms and\nlive chats, and to efficiently and conveniently communicate with customers. We support various\ncommunications formats, such as text, audio, video, emoji, graphic, document, or a combination\nof these formats.\n\n   \n\n●Our\nCRM module assists enterprises in enhancing their internal collaboration and efficiency and\nresolving legacy issues with cross-platform operation. Through our unified customer identification\nand ticket tracking system, enterprises can effectively streamline their customer service\nprocess by locating the service requests of a customer and accomplishing all steps needed\nto resolve the requests, such as to address and assign the inquiries or complaints, to supervise\nthe execution of attempted solutions, and to carry out follow-ups.\n\n \n\nUtilizing\nthe large model capability of generative AI, we empower the multi-channel contact center and CRM to improve sales performance and customer\nexperience. In the real-time communications with users, we enable various intelligent value-added functions for customer service or sales\nagents such as AI-generated talking point suggestion, automatic extraction of large model labels, knowledge-based recommendation, customer\nintention recognition, customer emotion recognition, and real-time quality inspection, improving operational efficiency while expediting\nthe trial-and-error process for new agents. Leveraging big data mining and analysis capabilities, we also assist enterprises in understanding\ntheir customers through each interaction. Specifically, we help create customer profiling, analyze customer needs and collect customer\nfeedback, to identify changes and grasp business opportunities with targeted and informed strategies for marketing, product optimization,\nand customer experience enhancement.\n\n \n\n63\n\n \n\n \n\nWe\noffer certain *RongCC* solutions deployed on private clouds on a project basis, for which customers pay us by installment in accordance\nwith agreed-upon project milestones. In 2023, 2024 and 2025, *RongCC* served 209, 227 and 178 enterprises, respectively, on a\nproject basis. We also offer certain *RongCC* solutions on a recurring basis for a combination of subscription and usage. We offer\ndifferent subscription fee packages according to capacity and number of functional modules embedded. We also charge customers based on\nthe number of call minutes facilitated. As of December 31, 2023, 2024 and 2025, *RongCC* had 134, 27 and 29 active customers,\nrespectively, on a recurring basis. We experienced decreased number of active customers of *RongCC* in 2024, primarily because of\na decline in the business demand of *RongCC’s* medium-sized customers. The number of recurring customers of *RongCC*remained\nrelatively stable in 2025.\n\n \n\n*7moor\nCloud*\n\n \n\n*7moor\nCloud*is a standardized cloud-based contact center solution that strategically focuses on serving small- to medium-sized enterprises,\nmany of which do not have a well-maintained contact center system. Centrally hosted on public clouds, our *7moor Cloud* requires\nminimal upfront investments and can be deployed expediently, equipping small-to medium-sized enterprises with ready-to-use contact center\ncapabilities without excessive costs.\n\n \n\nConsisting\nof mostly standard functional modules, *7moor Cloud* enables omni-channel access and multi-format communications through its intuitive\nuser interface which presents a unified display of various functions, including personal work record, ticket tracking, customer profile\nand knowledge base, allowing an enterprise’s contact center agents to navigate with ease through various customer service and telemarketing\nissues. *7moor Cloud* also offers various composable functional modules, such as business intelligence system and text-based customer\nservice AI robots which includes general-purpose *X-Bots* and *E-Bots* specially tailored for e-commerce settings.\n\n \n\n*7moor\nCloud*, targeting enterprises that often lack independent business process management systems, is also a comprehensive solution with\ncapabilities beyond contact center services. For example, enterprise can implement effective management of customer relations and sales\nand procurement leveraging *7moor Cloud*. Catering to the needs of small- to medium-sized enterprises which often do not employ\nprogramming specialists, we have invested in the Application Platform as a Service version of *7moor Cloud*, to empower non-specialists\nto customizably develop their own *7moor Cloud* with pre-built toolkits.\n\n \n\nWe\nprimarily offer *7moor Cloud* on a recurring basis for a combination of subscription and usage. As of December 31, 2023, 2024 and\n2025, *7moor Cloud* had approximately 4,700, 3,900 and 3,200 active customers, respectively, on a recurring basis.\n\n \n\nIn\n2023, 2024 and 2025, we achieved a dollar-based net customer retention rate of 90.3%, 84.9% and 83.7%, respectively, for cloud-based\nCC solutions that we offer on a recurring basis, i.e., those deployed primarily on public cloud and for which we charge a combination\nof seat subscription fees and related resource usage fees. In 2023, 2024 and 2025, our dollar-based net customer retention rate for active\ncustomers in relation to cloud-based CC solutions that we offer on a recurring basis was 96.3%, 87.6% and 84.7%, respectively. The\ndollar-based net customer retention rate for cloud-based CC solutions that we offer on a recurring basis decreased from 90.3% in 2023\nto 84.9% in 2024, primarily due to the decrease in business demands of our clients as a result of their reduction in relevant business.\nThe dollar-based net customer retention rate for cloud-based CC solutions decreased from 84.9% in 2024 to 83.7% in 2025, primarily\nbecause we deepened our strategic focus on serving customers in the pan-financial industry and reduced focus on subscription-based small-\nand medium-sized enterprise customers, resulting in a decrease in revenues from such customers.\n\n \n\n**Cloud-based\nUC&C solutions**\n\n \n\nOur\ncloud-based UC&C solutions consist of primarily *RongVideo* as applied in a variety of settings and use cases, designed to satisfy\nthe needs for reliable and interactive intra-organizational communications and collaboration through instant messaging and video conferencing.\nLeveraging our enterprise-grade video capability, *RongVideo* can support stable, smooth and high-quality video experience even\nin remote areas with weak network connections, enabling new use cases across various industries.\n\n \n\nIn\naddition to standardized solutions embedding basic features, *RongVideo* supports customization and private cloud deployment to\nbetter serve large enterprises’ heightened requirements on compatibility, stability and information security.\n\n \n\n64\n\n \n\n \n\nOur\n*RongVideo* is predominantly project-based, for which customers pay us by installment in accordance with agreed-upon project milestones.\nIn 2023, 2024 and 2025, *RongVideo*served 48, 37 and 43 enterprises, respectively. The delivery cycle for project-based *RongVideo*typically ranges from three to 12 months, due to the amount of efforts required in configuration, integration and additional customization.\nProjects with higher customization levels usually require more substantial upfront investment from us and have lower profit margins.\nHowever, once we complete a project for an enterprise in a particular industry, subsequent projects for other enterprises in the same\nindustry typically require less investment as we are able to achieve greater economies of scale by replicating certain basic industry-specific\nfeatures.\n\n \n\nWe\nalso offer software development and other technical support services to large enterprises in the telecommunications and financial services\nindustries, which allows us to initiate business collaboration with prospective customers and maintain stable business rapport with existing\ncustomers.\n\n \n\n**Our\nCustomers**\n\n \n\nWe\nserve a diverse and loyal customer base consisting of enterprises of all sizes and across a variety of industries, such as internet,\ntelecommunications, financial services, industrial manufacturing and energy. As of December 31, 2023, 2024 and 2025, we had an active\ncustomer base of 8,703, 7,529 and 6,151 enterprises, respectively, among which 121, 114 and 102 were large-enterprise customers, respectively.\nWe experienced decreased number of active customer and large-enterprise customers in 2024 and 2025, primarily due to natural attrition\namong small- to medium-sized customers as a result of their operational challenges or reduced business demand, and a decline in business\ndemand from large-enterprise customers. We believe our capabilities in attracting and retaining these large-enterprise customers rest\non our ability to develop and offer industry-specific features and functionalities that satisfy their disparate needs and complex internal\ndeployment and integration requirements. We also serve small- to medium-sized enterprises leveraging our comprehensive business portfolio\nand ready-to-use solution deployment.\n\n \n\nWe\nhave implemented a “land and expand” strategy to encourage existing customers to explore and expand into other solutions\nleveraging our multi-capability offering mix. For example, we initiated our business collaboration with a financial institution customer\nby satisfying its basic instant messaging needs and, as our relationship deepens, up-sold our video-enabled solutions to provide them\nwith capabilities in multi-format internal communications and a novel use case in real-time financial transaction monitoring. For solutions\nthat we offer on a recurring basis, such as CPaaS and cloud-based CC solutions deployed primarily on public cloud, we achieved a dollar-based\nnet customer retention rate of 85.8%, 74.6% and 76.7% in 2023, 2024 and 2025, respectively. In 2023, 2024 and 2025, our dollar-based\nnet customer retention rate for active customers was 89.0%, 77.4% and 79.6%, respectively. We experienced decreased dollar-based\ncustomer retention rate in 2024, primarily because of the decline in the PaaS business retention rate, resulting from the replacement\nof certain SMS channel clients for consideration of pricing. We experienced increased dollar-based customer retention rate in 2025,\nprimarily driven by the incremental revenues generated from successful cross-selling to our existing customers, which positively offset\nthe respective declines in the retention rates of our CPaaS and cloud-based CC businesses. For example, certain existing CPaaS customers\nreduced their CPaaS revenue contribution in 2025 but purchased additional cloud-based CC solutions, leading to a slight overall increase\nin this metric in 2025 compared to 2024. We believe these solutions present significant cross-selling and up-selling potential as customers\ntend to stay with us due to the critical role our solutions play in their business operations.\n\n \n\nWe\nhave developed a full-coverage customer support and success system for large enterprises designed to drive customer satisfaction and\nexpand cross-selling and up-selling opportunities. We place great emphasis on improving customer experience at each step. We provide\npre-sale consultation, onboarding implementation support and training at the initial stage. With ongoing 24/7/365 live chat and phone\nsupport, we help customers configure and use our solutions. We also offer operation maintenance services to ensure reliable performance.\nFor smaller customers, our intuitive user interfaces serve to reduce our customers’ need for human support, and we offer various\nself-service options on our websites, including a complimentary knowledge base with detailed documentation and sample code. We believe\nhigh customer satisfaction and close customer relationship can keep us posted of their honest feedback and evolving communications needs,\nwhich drives innovation and facilitates more targeted services to further increase customer loyalty.\n\n \n\nWe\nare also able to rapidly scale our business among customers within the same industry. For certain industry-specific solutions, as we\nserve more customers from the same industry, we are able to minimize marginal costs and achieve greater economies of scale leveraging\nreplicable technology infrastructure and experience. For example, since we first applied *RongVideo* to build a “virtual counter”\nfor a regional bank customer in China in 2019, we have offered similar solutions to several financial institutions. As we accumulate\nour knowledge in financial institutions’ business process and compliance requirements, over time we have standardized *RongVideo*\nin this use case and have shortened the delivery cycle from over six months to about two months and expanded our coverage from regional\nbanks to large nationwide banks. To date, we have accumulated extensive experience in serving enterprises from various industries, including\ninternet, telecommunications, financial services, industrial manufacturing and energy.\n\n \n\n65\n\n \n\n \n\n**Research\nand Development**\n\n \n\nWe\nhave developed many core technologies underlying our cloud-based communications solutions in-house. We have established our second research\nand development center in Wuhan, China in addition to the primary research and development center at our Beijing headquarters. As of\nDecember 31, 2025, we had a stable and dedicated research and development team of 234 members, accounting for 23.2 % of our total\nemployees. We have received numerous awards and recognitions in recent years for our research and development capabilities. In 2023, we were awarded with the “Co-Innovation Award”\nand “Best Support Award” by Guangfa Bank Credit Card Center. In 2024, People’s Daily subsequently officially released\nthe “2024 China AI Large Model Industry Development Report” and our Chitu Big Model was selected as the only financial industry\nbig model among the typical representatives of big models in China. In 2025, our big model application Copilot & Agent was selected\nas one of the “Top 10 Chinese Agents with the Most Global Development Potential” in the “2024 China AI Agent Annual\nList” released by a leading internationally consulting firm in collaboration with Toubao Research Institute. In 2025, we were positioned\nin the Leaders Category in the “IDC MarketScape: China AI-Enabled Contact Center 2025 Vendor Assessment” report released\nby IDC. In addition, our “Financial Large Model Copilot & Agent Solution” won the Global Silver Award in the Financial\nAlgorithm Track at the BPAA 5th Global Applied Algorithm Model Practice Paradigm Competition, guided by the Organizing Committee of the\nWorld Artificial Intelligence Conference and the People’s Government of Putuo District, Shanghai.\n\n \n\nWe\nare committed to continually innovating our technologies and solutions to stay ahead of our customers’ rapidly evolving communications\nneeds. We have developed a highly efficient product development ecosystem, which enables us to capture complex and evolving customer\ndemands and develop new and enhanced features and products that continue to represent compelling value propositions across our customer\nbase. Specifically, our research and development team work closely with our customer-facing sales team to collect and analyze latest\ncustomer feedback and design new features and functionalities that cater to the evolving customer needs. We also actively communicate\nwith customers from a variety of industry verticals to identify and address industry-specific communications needs with targeted services.\nOur research and development team are also dedicated to refining our solutions and technology infrastructure to ensure high-quality services\nat all times.\n\n \n\n**Sales\nand Marketing**\n\n \n\nOur\nvarious sales and marketing efforts have played a critical role in customer acquisition and retention.\n\n \n\n**Branding\nand customer acquisition**\n\n \n\nWe\nhave invested in establishing a comprehensive online presence and developing various online branding and customer acquisition channels,\nsuch as search engine marketing, customized newsfeed advertisements, and advertorials. We believe our online branding and customer acquisition\nefforts have contributed to our brand awareness and reputation, and have generated a steady stream of user traffic to our websites, through\nwhich our prospective customers, especially small- to medium-sized enterprises seeking relatively standardized products, can learn about\nour solution offerings and make informed purchases based on their specific needs all on a self-service basis.\n\n \n\nWe\nhave also organized or participated in various industry events for brand building and customer acquisition purposes. For example, in\nApril 2019, we organized the “Cloud Communications through China” event in Shanghai and invited over 100 existing customers\nand channel partners to initiate and reinforce business collaborations. In addition, we have actively participated in industry events\nhosted by third parties with a focus on financial services industry. In 2023, 2024 and 2025, we participated in over 60 online and\noffline industry events to explore business opportunities with a broad range of enterprises. These events have broadened our access to\npotential customers and have furnished us with valuable opportunities for in-person communications.\n\n \n\nWe\nbelieve our online and offline branding and customer acquisition efforts have contributed to our brand awareness and reputation and effectively\nfueled our business growth.\n\n \n\n66\n\n \n\n \n\n**Direct\nsales**\n\n \n\nWe\nhave built a sales and marketing team well-versed in China’s cloud-based communications industry. As of December 31, 2025, we had\na sales and marketing team of 233 members with an average of approximately 11 years of relevant experience. Our sales and marketing\nteam is generally responsible for contacting prospective customers, renewing existing subscriptions, and maintaining customer relationships.\nLeveraging their sales expertise, thorough knowledge of our business and dedication to customer support, our sales and marketing team\nfocuses primarily on large enterprises in key industry verticals with complex communications requirements and has a strong cross-selling\nand up-selling track record. We have offered competitive compensation schemes to motivate our sales and marketing personnel, under which\nwe grant them bonuses when their sales achieve the financial targets.\n\n \n\nAs\npart of our go-to-market strategy, we had established sales representative offices in 12 cities distributed across China as of December\n31, 2025 to expand our sales network. We believe such offices enable us to stay closer to our potential customers, and capture and accommodate\nspecific needs and customs in different localities more effectively. In addition, leveraging such sales representative offices, we are\nable to recruit experienced sales personnel with first-hand customer resources locally and build collaborative relationships with mobile\nnetwork operators’ local branches, both of which will contribute to our ability to establish a nationwide business network.\n\n \n\n**Indirect\nsales**\n\n \n\nWe\nleverage mobile network operators, distributors and system integrators to reach a wider market without incurring significant costs. We\ncollaborate with all three major mobile network operators in China and have entered into business agreements with a number of provincial\nbranches of these operators, whose business operations cover all geographical areas in China. Through our collaborations, we can capitalize\non their nationwide sales and marketing capabilities. In addition, we sell certain solutions that require minimal customization, such\nas *7moor Cloud*, through distributors, and work with various system integrators, which incorporate our solutions into theirs to\nbetter serve end customers.\n\n \n\n**Data\nPrivacy and Protection**\n\n \n\nSee\n“Item 16K. Cybersecurity” for details.\n\n \n\n**Competition**\n\n \n\nChina’s\ncloud-based communications industry is highly competitive and rapidly evolving due to the fast-growing market and technological developments.\nOur ability to compete successfully depends on many factors, including:\n\n \n\n●comprehensiveness\nof business portfolio;\n\n   \n\n●innovation\ncapabilities;\n\n   \n\n●brand\nawareness and reputation;\n\n   \n\n●strength\nof sales and marketing efforts; and\n\n   \n\n●customer\nreach.\n\n \n\nAs\na multi-capability provider that offers a full suite of cloud-based communications solutions and serves a diverse and loyal customer\nbase consisting of enterprises of all sizes across a variety of industries, we believe that we compete favorably on the basis of the\nforegoing factors.\n\n \n\nWe\ncompete directly and indirectly with various industry participants including SMS-focused vendors, CC-focused vendors, VC-focused vendors,\nAI-based vendors, ICT vendors, internet companies and other communications vendors. Some of our competitors have greater financial, technological\nand other resources, greater brand recognitions, larger sales and marketing budgets and larger intellectual property portfolios. As a\nresult, certain of our competitors may be able to respond more quickly and effectively than we can to new or evolving opportunities,\ntechnologies, standards or customer requirements. In addition, some competitors may offer products or services that address one or a\nlimited number of functions at lower prices, with greater depth than our solutions or in geographies where we do not operate. We expect\ncompetition to intensify in the future, with the introduction of new products and services and market entrants. Moreover, as we expand\nthe scope of our business, we may face additional competition.\n\n \n\n67\n\n \n\n \n\n**Intellectual\nProperty**\n\n \n\nTo\nprotect our proprietary rights in our software, patents, trademarks and other intellectual property, we depend upon a combination of\ntrade secret, misappropriation, copyright, trademark, computer fraud and other laws; registration of patents, copyrights and trademarks;\nnondisclosure, noncompetition and other contractual provisions with employees; and technical measures.\n\n \n\nWe\nare the registered holder of 125 trademarks, 76 patents, 591 software copyrights and 40 domain names in the PRC as of the date\nof this annual report. We also hold five pending software copyright applications in the PRC as of the same date.\n\n \n\n**Insurance**\n\n \n\nWe\nprovide social security insurance, including pension insurance, unemployment insurance, maternity insurance, work-related injury insurance\nand medical insurance, as well as housing fund for our employees. We also purchased additional commercial health insurance to increase\ninsurance coverage of our employees. However, we did not make adequate contributions to social security insurance and housing fund. See\n“Item 3. Key Information—D. Risk Factors—Risks Related to Regulatory Compliance—Failure to make adequate contributions\nto social insurance and housing fund as required by PRC regulations may subject us to penalties.”\n\n \n\nWe\ndo not maintain property insurance policies covering our equipment, systems and other property that are essential to our business operations\nto safeguard against risks and unexpected events. We do not maintain business interruption insurance or general third-party liability\ninsurance, nor do we maintain product liability insurance or key-man insurance. We consider our insurance coverage to be sufficient for\nour business operations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Regulatory Compliance—We\nhave limited insurance coverage, which could expose us to significant costs and business disruption.”\n\n \n\n**Regulations**\n\n \n\n**Regulations\nrelating to foreign investment**\n\n \n\n*Company\nLaw*\n\n \n\nThe\nCompany Law of the PRC, as amended in December 29, 2023, has become effective on July 1, 2024, which provides that the amount of capital\ncontributions subscribed for by all the shareholders shall be fully paid up by shareholders within five years as of the date of establishment\nand the shareholder may forfeit its equities for which the capital contribution has not been paid. Aforementioned new version also provides\nspecific regulations on organization structure of company and duty of diligence of directors and supervisors.\n\n \n\n*Foreign\nInvestment Law*\n\n \n\nThe\nForeign Investment Law, promulgated by the National People’s Congress on March 15, 2019, has come into effect on January 1, 2020\nand has replaced the major existing laws and regulations governing foreign investment in the PRC, including the Sino-foreign Equity Joint\nVentures Enterprises Law, the Sino-foreign Co-operative Enterprises Law, the Wholly Foreign-invested Enterprise Law, and together with\ntheir implementation rules and ancillary regulations. Pursuant to Foreign Investment Law, the existing foreign invested enterprises established\nprior to the effective of the Foreign Investment Law may keep their corporate organization forms within five years after the effective\nof the Foreign Investment Law before such existing foreign invested enterprise change their organization forms, organization structures,\nand their activities of foreign-invested enterprises in accordance with the Company Law, the Partnership Enterprise Law and other laws.\nAccording to the Foreign Investment Law, “foreign-invested enterprises” thereof refers to enterprises that are wholly or\npartly invested by foreign investors and registered within China under the PRC laws, “foreign investment” thereof refers\nto any foreign investor’s direct or indirect investment in China, including: (1) establishing foreign-invested enterprises in China\neither individually or jointly with other investors; (2) obtaining stock shares, stock equity, property shares, other similar interests\nin Chinese domestic enterprises; (3) investing in new projects in China either individually or jointly with other investors; and (4)\nmaking investment through other means provided by laws, administrative regulations, or State Council provisions.\n\n \n\n68\n\n \n\n \n\nInvestments\nconducted by foreign investors in the PRC are subject to the Catalogue of Industries for Encouraging Foreign Investment, or the Catalogue,\nand the Negative List, which were jointly issued by the NDRC and the MOFCOM. The version of the Catalogue currently in force was amended\n2025 and became effective on February 1, 2026, and the version of the Negative List currently in force was amended on April 8, 2024\nand became effective on November 1, 2024, both of which further reduce restrictions on the foreign investment. The Catalogue of Industries\nfor Encouraged Foreign Investment (2025Version), or the Encouraging Catalogue 2025, replaced the catalogue promulgated in 2022. Pursuant\nto the Encouraging Catalogue 2025, foreign-invested projects are categorized as encouraged, restricted and prohibited. Foreign-invested\nprojects that are not listed in the Negative List are permitted foreign-invested projects. According to the Negative List, industries\nsuch as Value-Added Telecommunications Services (excluding e-commerce, domestic multi-party communications services, store-and-forward\nservices, and contact center services) fall into restricted category, where the shareholding percentage of the foreign investors in the\njoint venture enterprises shall not exceed 50%.\n\n \n\nOn\nDecember 26, 2019, the State Council issued Implementation Regulations for the Foreign Investment Law, or the Implementation Regulations\nwhich came into effect on January 1, 2020. According to the Implementation Regulations, in the event of any discrepancy between the Foreign\nInvestment Law, the Implementation Regulations and relevant provisions on foreign investment promulgated prior to January 1, 2020, the\nForeign Investment Law and the Implementation Regulations shall prevail. The Implementation Regulations also indicated that foreign investors\nthat invest in sectors on the Negative List in which foreign investment is restricted shall comply with special management measures with\nrespect to shareholding, senior management personnel and other matters in the Negative List. On December 30, 2019, MOFCOM and the SAMR\njointly issued the Measures for Reporting of Foreign Investment Information, or the Foreign Investment Information Measures, which became\neffective on January 1, 2020 and replaced the Interim Administrative Measures for the Record-filing of the Establishment and Modification\nof Foreign-invested Enterprises. Since January 1, 2020, for foreign investors carrying out investment activities directly or indirectly\nin the PRC, foreign investors or foreign-invested enterprises shall submit investment information through the Enterprise Registration\nSystem and the National Enterprise Credit Information Publicity System operated by the SAMR. Foreign investors or foreign-invested enterprises\nshall disclose their investment information by submitting reports for their establishments, modifications and cancellations and their\nannual reports in accordance with the Foreign Investment Information Measures. If a foreign-invested enterprise investing in the PRC\nhas submitted its reports for its establishment, modifications and cancellation and its annual reports, the relevant information will\nbe shared by the competent market regulation department to the competent commercial department, and such foreign-invested enterprise\nis not required to submit the reports to the two departments separately.\n\n \n\n*Foreign\ninvestment in the value-added telecommunications industry*\n\n \n\nThe\nRegulations for the Administration of Foreign-Invested Telecommunications Enterprises (2022 revision), which was promulgated by the State\nCouncil on December 11, 2001 and amended on September 10, 2008 and February 6, 2016 and last amended on March 29, 2022, require foreign-invested\nvalue-added telecommunications enterprises in China to be established with the foreign investors owning no more than 50% of the equity\ninterests of such enterprise, except as otherwise stipulated by the state. In addition, the Regulations for the Administration of Foreign-Invested\nTelecommunications Enterprises (2022 revision) canceled the qualification requirement on the primary foreign investor in a foreign invested\nvalue-added telecommunications enterprise for demonstrating a good track record and sound experience in the value-added telecommunications\nindustry as stipulated in the previous version. However, the primary foreign investor still shall have obtained a basic telecommunications\nservices permit from the country or region where it is registered.\n\n \n\nOn\nJanuary 13, 2015, the MIIT issued the Circular on Loosening the Restrictions on Shareholding by Foreign Investors in Online Data Processing\nand Transaction Processing Business (for profit E-commerce), according to which, a foreign investor is allowed to hold 100% of the equity\ninterest in a PRC entity that provides online data processing and transaction processing services (for profit E-commerce) in China (Shanghai)\nPilot Free Trade Zone. On June 19, 2015, the MIIT issued the Circular on Loosening the Restrictions on Shareholding by Foreign Investors\nin Online Data Processing and Transaction Processing Business (for-profit E-commerce), which expanded the designated districts from China\n(Shanghai) Pilot Free Trade Zone to the whole country.\n\n \n\n69\n\n \n\n \n\nIn\nJune 2016, the MIIT issued Notice of the Ministry of Industry and Information Technology on Issues Relating to Hong Kong and Macau Service\nProviders Engaging in Telecommunications Business in Mainland China, or Notice 222, according to which, (1) Hong Kong and Macau service\nproviders are allowed to establish wholly-owned enterprises or joint venture enterprises in Mainland China with no restriction on shareholding\npercentage for provision of the value-add telecommunications businesses with respect to online data processing and transactions processing\n(limited to for profit E-commerce), domestic multi-party communications services (under the Classification Catalogue of Telecommunications\nServices), store-and-forward services, and contact center services, internet access services business (limited to providing internet\naccess services for online users) and information services business (limited to application stores), and (2) Hong Kong and Macau service\nproviders are allowed to establish joint venture enterprises in Mainland China with the shareholding percentage of Hong Kong and Macau\ninvestors in the joint venture enterprises not exceeding 50%, for provision of the value-add telecommunications businesses with respect\nto online data processing and transactions processing (excluding for profit E-commerce), domestic internet virtual private network business\n(under the Classification Catalogue of Telecommunications Services), internet data center business, internet access services business\n(except for providing internet access services for online users), and information services business (except for application stores).\nHong Kong and Macau service providers referred to in above Notice 222 shall be subject to relevant provisions in the Mainland and Hong\nKong Closer Economic Partnership Arrangement or the Mainland and Macau Closer Economic Partnership Arrangement and its relevant supplements.\n\n \n\nDue\nto the lack of interpretative guidance from the relevant PRC governmental authorities, there are uncertainties regarding whether PRC\ngovernmental authorities would consider our corporate structure and contractual arrangements to constitute foreign ownership of a value-added\ntelecommunications business. See “Item 3. Key Information— D. Risk Factors—Risks Related to Our Corporate Structure.”\nIf our current ownership structure is found to be in violation of current or future PRC laws, rules or regulations regarding the legality\nof foreign investment in value-added telecommunications services and other types of businesses in which foreign investment is restricted\nor prohibited, we could be subject to severe penalties.\n\n \n\n**Regulations\nrelating to value-added telecommunications services**\n\n \n\n*Value-added\ntelecommunications services*\n\n \n\nAn\nextensive regulatory scheme governing telecommunications services, including value-added telecommunications services and infrastructure\ntelecommunications services, is promulgated by the State Council, MIIT, and other relevant government authorities. Value-added telecommunications\nservice operators may be required to obtain additional licenses and permits in addition to those that they currently have given new laws\nand regulations may be adopted from time to time. In addition, substantial uncertainties exist regarding the interpretation and implementation\nof current and any future PRC laws and regulations applicable to the telecommunications activities.\n\n \n\nOn\nSeptember 25, 2000, the State Council promulgated the Telecommunications Regulation of the People’s Republic of China, or the Telecommunications\nRegulations, as last amended on February 6, 2016, to regulate telecommunications activities in China. According to the Telecommunications\nRegulations, there are two categories of telecommunications activities, namely “infrastructure telecommunications services”\nand “value-added telecommunications services.” Pursuant to the Telecommunications Regulations, operators of value-added telecommunications\nservices, or VATS, shall be approved by MIIT, or its provincial level counterparts, and obtain a license for value-added telecommunications\nbusiness, or VAT License. The Measures for the Administration of Telecommunications Business Licensing, or the Licenses Measures, issued\non March 1, 2009 and most recently amended on July 3, 2017 for the purpose of strengthening the administration of telecommunications\nbusiness licensing, which set forth more specific provisions regarding the types of licenses required to operate VATS and the application\nfor and the approval, use and administration of a telecommunications business permit. According to the Licenses Measures and Telecommunications\nRegulations, any entity conducting VATS without obtaining the VAT License or conducting business beyond the authorized scope on the VAT\nLicense may be subject to correction, confiscation of the illegal income, a fine ranging from three to five times the amount of the illegal\nincome (where there is no illegal income, or the illegal income is less than RMB50,000, a fine ranging from RMB100,000 to RMB1 million),\nand suspension of business operation.\n\n \n\n70\n\n \n\n \n\nUnder\nthe Licenses Measures, where any entity conducting VATS change the name, legal representative or registered capital within the validity\nperiod of its VAT License, it shall file an application for updating the VAT License to the competent authority within thirty days immediately\nafter the registration or filing with the State Administration for Market Regulation. Any entity conducting VATS who fail to comply with\nthe required procedures may be ordered to make rectifications, warned or imposed a fine of RMB5,000 to RMB30,000 by the relevant authorities.\nMIIT issued the Interim Administrative Measures on Telecommunications Services Quality Supervision on January 11, 2001, as amended on\nSeptember 23, 2014, which apply to the supervision and administration of the licensed telecommunications operators within the territory\nof the PRC. According to the Interim Administrative Measures on Telecommunications Services Quality Supervision, MIIT supervises and\nadministers the quality of the telecommunications service provided by telecommunications service providers pursuant to applicable laws\nand regulations. Where a telecommunications operator violates the telecom service standards and injures the lawful rights and interests\nof the users, such telecommunications operator may be subject to a rectification order, a warning or fines ranging from RMB500 to RMB10,000.\n\n \n\nThe\nClassification Catalogue of Telecommunications Services (2015 Version), as last amended on June 6, 2019, defines (1) “domestic\nmulti-party communications services” as real-time interactive or on-demand voice and image communication services realized domestically\nbetween two points or among multiple points by virtue of a multi-party communication platform, public communication network or the internet;\n(2) “contact center services” as business consultation, information consultation and data query services provided to users\nthrough the public communication network, by utilizing database technology and call center system which is connected to the public communication\nnetwork or the internet, and by establishing an information base after information collection, processing and storage; (3) “information\nservices” as the information services provided for users through public communications networks or internet by means of information\ngathering, development, processing and the construction of the information platform, which include, among others, internet information\nservices and non-internet information service; (4) “internet data center services” as the services including the placement,\nproxy maintains, system configuration and management services provided for users’ servers or other internet/network-related equipment,\nthe lease of equipment such as database systems or servers and lease of their storage spaces, rental agency service of telecommunications\nline and export bandwidth and other application services, which are in a form of outsource lease by utilizing corresponding engine room\nequipment; and (5) “store-and-forward services” as message sending services provided for users based on the store-and-forward\nmechanism, which include the services of voice mail, e-mail, store-and-forward of fax, etc.\n\n \n\n*Internet\ninformation services*\n\n \n\nThe\nAdministrative Measures on Internet Information Services, or the ICP Measures, promulgated by the PRC State Council on September 25,\n2000 and last amended on December 6, 2024, set forth more specific rules on the provision of internet information services, or the ICP\nService. According to the ICP Measures, internet information services are classified into two categories: profit-making ICP Services\nand non-profit-making ICP Services, among which, the profit-making ICP Services generally refers to the provision of specific information\ncontent, online advertising, web page construction and other online application services through the internet for profit-making purpose.\nAccording to the ICP Measures, a profit-making ICP Services provider shall apply for and obtain a permit for the operation of value-added\ntelecom services of internet information services, while a non-profit-making ICP Services provider shall apply for and obtain relevant\nrecord-filing. Any ICP Service provider who does not obtain such permit or does not go through the record-filing formalities shall not\nengage in ICP Services.\n\n \n\n*Telecommunications\nnetwork information service*\n\n \n\nMeasures\nfor Management of Telecommunications Network Code Number Resources, together with the Catalog of the Telecom Code Number Resources under\nClassified Administration, was issued by MIIT on January 29, 2003 and amended on September 23, 2014, or the Telecommunications Network\nCode Numbers Measures, according to which, code resources shall be owned by the State, and any telecommunications network information\nservice providers and call center service providers who need to use telecommunications network code numbers shall be approved by MIIT\nor its provincial level counterparts to use telecommunications network code numbers to provide relevant services, and the time limit\nand scope of such approval shall be identical with that of the VAT License or other related approval documents obtained by such entity.\nThe approved telecommunications network code numbers users shall enter into a required agreement with the competent infrastructure telecommunications\nservice operators, and file with the competent counterparts of MIIT. Telecommunications network code number users shall commence using\ntelecommunications network code numbers allocated to them within the specified time limit and reach the minimum scale if any or the expected\nservice capability if there is no such minimum scale requirement. In addition, no telecommunications network code number user is permitted\nto assign or lease telecommunications network code number, nor to use beyond the scope or in more than one local network. Any entity\nusing telecommunications network code numbers without approval or beyond the authorized scope or time limit or assigning or leasing telecommunications\nnetwork code number without approval may be subject to correction, confiscation of the illegal income, fine ranging from three to five\ntimes the amount of the illegal income (where there is no illegal income, or the illegal income is less than RMB50,000, a fine ranging\nfrom RMB50,000 to RMB1 million). On January 1, 2005, the Interim Administrative Measures on Telecommunications Network Code Number Resource\nOccupation Fee and the Standard of Telecommunications Network Code Number Resource Occupation Fee, jointly enacted by the NDRC, the MOF\nand the MIIT, entered into force. According to the Interim Administrative Measures on Telecommunications Network Code Number Resource\nOccupation Fee, telecommunications network code numbers are state property and the telecommunications service operators occupying or\nusing telecom code numbers shall pay occupation fee accordingly to the applicable governmental authorities.\n\n \n\n71\n\n \n\n \n\nOn\nMay 19, 2015, the MIIT published the Provisions on the Administration of Short Message Services, or the Short Message Provisions. Pursuant\nto the Short Message Provisions, short message service operators, like us, shall obtain the telecommunications business licenses in accordance\nwith the law.\n\n \n\nWhile\nmost of the affiliated entities have obtained the requisite licenses from MIIT and/or its local authorities, certain of the affiliated\nentities are in the process of obtaining, renewing or updating the license, including, among others, the VAT License. We cannot assure\nyou that these affiliated entities can successfully obtain or maintain required license and permits in a timely manner or at all. See\n“Item 3. Key Information—D. Risk Factors—Risks Related to Regulatory Compliance—Our business is subject to extensive\nregulation, and if we fail to obtain and maintain required licenses and permits, we could face government enforcement actions, fines\nand possibly restrictions on our ability to operate or offer certain of our solutions.”\n\n \n\n**Regulations\nrelating to cybersecurity and privacy protection**\n\n \n\n*Cybersecurity*\n\n \n\nOn\nDecember 28, 2000, the SCNPC enacted the Decision on the Protection of Internet Security, as amended on August 27, 2009, which provides\nthat the following activities conducted through the internet are subject to criminal liabilities: (1) gaining improper entry into any\nof the computer information networks relating to state affairs, national defensive affairs, or cutting-edge science and technology; (2)\nviolation of relevant provisions of the State in the form of unauthorized interruption of any computer network or communication service,\nas a result of which the computer network or communication system cannot function normally; (3) spreading rumor, slander or other harmful\ninformation via the internet for the purpose of inciting subversion of the state political power; (4) stealing or divulging state secrets,\nintelligence or military secrets via internet; (5) spreading false or inappropriate commercial information; or (6) infringing on the\nintellectual property.\n\n \n\nOn\nDecember 13, 2005, the Ministry of Public Security issued the Provisions on the Technical Measures for Internet Security Protection,\nwhich took effect on March 1, 2006. These regulations require internet service providers to take proper measures including anti-virus,\ndata back-up, keeping records of certain information such as the login-in and exit time of users, and other related measures, and to\nkeep records of certain information about their users for at least 60 days. On June 22, 2007, the Ministry of Public Security, State\nSecrecy Bureau, State Cryptography Administration and the Information Office of the State Council jointly promulgated the Administrative\nMeasures for the Multi-level Protection of Information Security, under which the security protection grade of an information system may\nbe classified into five grades. Companies operating and using information systems shall protect the information systems and any system\nequal to or above level II as determined in accordance with these measures, a record-filing with the competent authority is required.\n\n \n\nThe\nCybersecurity Law, as adopted by the National People’s Congress on November 7, 2016, has come into force on June 1, 2017, and\nwas then amended on October 28. 2026. Regarded as the fundamental law in the area of cybersecurity in China, the Cybersecurity Law\nregulates network operators and others from the following perspectives: the principle of Cyberspace sovereignty, security\nobligations of network operators and providers of network products and services, protection of personal information, protection of\ncritical information infrastructure, data use and cross-border transfer, network interoperability and standardization. Network\noperators shall, according to the requirements of the rules for graded protection of cybersecurity, fulfill security protection\nobligations, so as to ensure that the network is free from interference, damage or unauthorized access, and prevent network data\nfrom being divulged, stolen or falsified. In addition, any network operator to collect personal information shall follow the\nprinciples of legitimacy, rationality and necessity and shall not collect or use any personal information without due authorization\nof the person whose personal information is collected. Each individual is entitled to require a network operator to delete his or\nher personal information if he or she finds that collection and use of such information by such operator violate the laws,\nadministrative regulations or the agreement by and between such network operator and such individual; and is entitled to require any\nnetwork operator to make corrections if he or she finds errors in such information collected and stored by such network operator.\nSuch network operator shall take measures to delete the information or correct the error.\n\n \n\n72\n\n \n\n \n\nOn\nDecember 28, 2021, the CAC and other 12 regulatory authorities jointly revised and promulgated the Cybersecurity Review Measures, which\nbecame effective on February 15, 2022 and replaced the Measures for Cybersecurity Review promulgated in 2020. The Cybersecurity Review\nMeasures stipulates that (1) critical information infrastructure operators purchasing network products and services and network platform\noperators carrying out data processing activities, which affect or may affect national security, are subject to the cybersecurity review\nby the Cybersecurity Review Office, and (2) network platform operators holding personal information of more than one million users seeking\nfor listing in a foreign country must apply for the cybersecurity review. In addition, the relevant PRC governmental authorities may\nconduct a cybersecurity review against the operators if the authorities believe that network products, services or data processing activities\nof such operators affect or may affect national security.\n\n \n\nThe\nSCNPC promulgated the PRC Data Security Law on June 10, 2021, which came into effect on September 1, 2021. According to the PRC Data\nSecurity Law, data collection shall be conducted in a legitimate and proper manner, while theft or illegal collection of data shall be\nprohibited. In addition, enterprises conducting data processing activities shall establish and improve their data security management\nsystems, organize data security trainings and adopt corresponding technical measures and other necessary measures to guard data security.\nThe State shall establish a data security system to administer data protection at different levels and by different categories, and impose\nspecific compliance obligations on processors of important data, including specifying the person and institution of data security protection\nresponsibilities, conducting regular risk assessment, fulfilling the regulatory requirements for transmitting important data overseas.\nAny organization or individual carrying out data processing activities that violates the PRC Data Security Law shall bear the corresponding\ncivil, administrative or criminal liability depending on specific circumstances. Where the national core data management system is violated,\nwhich endangers national sovereignty, security, and development interests, the relevant competent authority shall impose a fine ranging\nfrom RMB2 million to RMB10 million, and order suspension of the related business, suspension of business for rectification, revocation\nof the related business permit or business license according to the circumstance.\n\n \n\nOn\nSeptember 24, 2024, the State Council promulgated the Cyber Data Security Regulations, which is applicable to network data processing\nactivities and the security supervision and administration thereof conducted within the territory of the PRC. The Cyber Data Security\nRegulations aim to regulate network data processing activities, protect the legitimate rights and interests of individuals and organizations\nand safeguard national security and public interests. The Cyber Data Security Regulations put forward general requirements and provisions\nfor network data security, further specify rules concerning personal information protection and fine-tune mechanisms for the management\nof important data.\n\n \n\n*AIGC\nservices*\n\n \n\nOn\nNovember 25, 2022, the CAC, MIIT and Ministry of Public Security jointly issued the Administrative Provisions on Deep Synthesis of Internet\nInformation Services, or the Provisions on Deep Synthesis Services, which took effect on January 10, 2023. According to the Provisions\non Deep Synthesis Services, deep synthesis technology refers to any technology that utilizes deep learning, virtual reality or any other\ngenerative or synthetic algorithm to produce text, images, audio, video, virtual scenes or other network information. The Provisions\non Deep Synthesis Services emphasize that the providers of deep synthesis services, as the primary entities responsible for the information\nsecurity, should not use deep synthesis services to engage in activities prohibited by laws and regulations.\n\n \n\n73\n\n \n\n \n\nOn\nJuly 10, 2023, the CAC issued the AIGC Administrative Measures, which became effective on August 15, 2023, which imposes compliance requirements\nfor providers of generative AI services. The AIGC Administrative Measures provides, among other things, that individuals or organizations\nthat provide generative AI services of text, image or sound shall assume the responsibilities as the producers of such AI-generated content\nand shall apply for security assessment and complete the filing formalities of algorithms in accordance with the applicable laws and\nregulations before providing such services to the public.\n\n \n\n*Privacy\nprotection*\n\n \n\nOn\nDecember 29, 2011, the MIIT promulgated the Several Provisions on Regulating the Market Order of Internet Information Services, which\nbecame effective on March 15, 2012. On December 28, 2012, the SCNPC promulgated the Decision on Strengthening Network Information Protection\nto enhance the legal protection of information security and privacy on the internet. The Provisions on Protection of Personal Information\nof Telecommunications and Internet Users promulgated by the MIIT on July 16, 2013 contains detailed requirements on the use and collection\nof personal information as well as the security measures to be taken by internet service providers. Specifically, (1) the users’\npersonal information shall not be collected without prior consent; (2) the personal information shall not be collected other than those\nnecessary for internet service providers to provide services; (3) the personal information shall be kept strictly confidential; and (4)\na series of detailed measures shall be taken to prevent any divulge, damage, tamper or loss of personal information of users.\n\n \n\nPursuant\nto the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally\nPunishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in April 2013, and the Interpretation of the\nSupreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases\nInfringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following\nactivities may constitute the crime of infringing upon a citizen’s personal information: (1) providing a citizen’s personal\ninformation to specified persons or releasing a citizen’s personal information online or through other methods in violation of\nrelevant national provisions; (2) providing legitimately collected information relating to a citizen to others without such citizen’s\nconsent (unless the information is processed, not traceable to a specific person and not recoverable); (3) collecting a citizen’s\npersonal information in violation of applicable rules and regulations when performing a duty or providing services; or (4) collecting\na citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations.\nIn addition, on May 28, 2020, the National People’s Congress of the PRC approved the PRC Civil Code, which took effect on January\n1, 2021. Pursuant to the PRC Civil Code, the collection, storage, use, process, transmission, provision and disclosure of personal information\nshall follow the principles of legitimacy, properness and necessity.\n\n \n\nOn\nAugust 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which came into effect on November 1, 2021. The law aims\nat protecting the rights and interests of personal information, regulating the processing of personal information and promoting the reasonable\nuse of personal information. With respect to personal information processing, the Personal Information Protection Law defines certain\nimportant concepts. First, “personal information” refers to all kinds of information related to identified or identifiable\nnatural persons recorded by electronic or other means, excluding anonymized information. Second, “processing of personal information”\nincludes the collection, storage, use, processing, transmission, provision, disclosure, deletion, etc. of personal information. Personal\ninformation processing shall be for a clear and reasonable purpose, directly related to the processing purpose and in a manner that has\nthe minimum impact on the rights and interests of individuals. Collection of personal information shall be limited to the minimum scope\nnecessary for achieving the processing purpose and shall not be excessive. Where the personal information processor entrusts others with\nprocessing of personal information, the personal information processor shall agree with the agent on substantial matters like purpose,\nmethod of entrusted processing, type of information and protection measures, as well as supervise the processing activities of the agent.\nIn addition, the law provides rules for cross-border provision of personal information. In particular, it is provided that the personal\ninformation processors that process personal information up to the number prescribed by the national cyberspace administration shall\nstore personal information collected and generated within the PRC. If it is necessary to provide such personal information overseas,\nthey shall pass the security assessment organized by the national cyberspace administration, except as otherwise stipulated by laws,\nadministrative regulations and the national cyberspace administration. Any processor in violation of this law may be subject to administrative\npenalties including rectifications, warnings, fines, confiscation of illegal gains, suspension of the apps illegally processing personal\ninformation or suspension of the relevant business, revocation of business operation permits or business licenses, civil liabilities\nor even criminal liabilities.\n\n \n\n74\n\n \n\n* *\n\n**\n\n*Unauthorized\ncalls and text messages*\n\n \n\nWe\ncould also be required to comply with rules and regulations regarding the control and management of unauthorized calls, including the\nNotice on the Special Campaign Program for Comprehensive Action against Unauthorized Calls, issued on July 18, 2018 and the Work Plans\nfor Promoting the Special Campaign Program for Comprehensive Action against Unauthorized Calls issued by MIIT issued and came into effect\non October 27, 2018. According to the aforementioned regulations, enterprises including basic telecommunications service providers and\ncall center service providers shall coordinate with the MIIT and its local authorities to control and rectify unauthorized calls, and\ncall center service provider like us shall strictly control the channels for unauthorized calls, including but not limit to (1) establish\nforbidden call lists so that the telemarketing calls could not reach those end-users who have explicitly refused to be reached by telemarketing\ncalls of a particular industry or business, (2) strictly control the timing and frequency of active call-out and reserve the record of\nsuch call within a certain period of time (generally not less than 30 days), and (3) improve technical abilities regarding prevention\nand monitoring of unauthorized calls and risk precaution.\n\n \n\nIn\naddition, the Short Message Provisions also impose similar requirement on short message service providers and short message content providers,\nand without the consumers’ consent or request, they shall not send commercial text messages or shall cease to send such text messages\nto consumers when the latter explicitly present their refusal after their early consent. Where any consumer explicitly rejects to receive\ncommercial text messages or do not reply, the short message service providers or short message content providers may not send them the\ntext messages of the same or similar contents once again. Besides, short message service providers and short message content providers\nare also required to explicitly indicate the names of the corresponding content providers in the commercial text messages.\n\n \n\nWhile\nwe have established certain systems and take certain acts to control the unauthorized calls and text messages, we cannot assure you that\nour current systems and acts will be sufficient or effective under applicable laws and regulations. See “Item 3. Key Information—D.\nRisk Factors—Risks Related to Regulatory Compliance—Our brand image, business and results of operations may be adversely\naffected by third-party misconduct and misuse of our solutions, many of which are beyond our control.”\n\n \n\nThe\nregulatory frameworks regarding privacy issues in many jurisdictions are constantly evolving and can be subject to significant changes\nfrom time to time. Any failure to comply with applicable regulations could result in regulatory enforcement actions against us and materially\nand adversely affect our business, results of operations and financial condition. See “Item 3. Key Information—D. Risk Factors—Risks\nRelated to Our Business and Industry—If we fail to comply with laws and contractual obligations related to data privacy and protection,\nour business, results of operations and financial condition could be materially and adversely affected.” Pursuant to the PRC Civil\nCode, if one intentionally infringes upon the intellectual property rights of others and the circumstance is severe, the infringed party\nis entitled to request for the corresponding punitive compensation.\n\n \n\n**Regulations\nrelating to intellectual property**\n\n \n\n*Patent*\n\n \n\nPatents\nin the PRC are principally protected under the Patent Law of the PRC promulgated by the SCNPC in 1984 and then respectively amended in\n1992, 2000 and 2008 and on October 17, 2020, with the latest amendment to take effect from June 1, 2021, and its implementation rules,\nwhich was last amended on December 11, 2023 by the State Council, and became effective on January 20, 2024. According to these regulations,\npatents are divided into three categories, i.e., invention patent, utility model patent and design patent. Novelty, inventiveness and\npracticality are three essential ingredients of patens in the PRC. The protection period is 20 years for an invention patent and ten\nyears for a utility model patent and a design patent, commencing from their respective application dates.\n\n \n\n75\n\n \n\n \n\n*Copyright*\n\n \n\nThe\nPRC Copyright Law, promulgated in 1990 and amended in 2001 and 2010, or the Copyright Law, and its related implementing regulations,\npromulgated in 2002 and then respectively amended in 2013 and on November 11, 2020, with the latest amendment to take effect from June\n1, 2021, are the principal laws and regulations governing copyright related matters. The Copyright Law provides that Chinese citizens,\nlegal persons, or other organizations shall, whether published or not, enjoy copyright of their works, which includes, among others,\nworks of literature, art, natural science, social science, engineering technology and computer software. Under the Copyright Law, the\nterm of protection for copyrighted software is 50 years. The Regulation on the Protection of the Right to Communicate Works to the Public\nover Information Networks, which was most recently amended on January 30, 2013, provides specific rules on fair use, statutory license,\nand a safe harbor for use of copyrights and copyright management technology and specifies the liabilities of various entities for violations,\nincluding copyright holders, libraries and internet service providers.\n\n \n\n*Trademark*\n\n \n\nThe\nPRC Trademark Law was adopted in 1982 and then amended in 1993, 2001, 2013 and 2019 respectively. The implementation rules of the PRC\nTrademark Law was adopted in 2002 and amended in 2014. Registered trademarks are protected under the Trademark Law of the PRC and related\nrules and regulations. The Trademark Office of National Intellectual Property Administration handles trademark registrations and grants\na protection term of ten years to registered trademarks. Where registration is sought for a trademark that is identical or similar to\nanother trademark which has already been registered or given preliminary examination and approval for use in the same or similar category\nof commodities or services, the application for registration of this trademark may be rejected. Trademark registrations are effective\nfor a renewable ten-year period, unless otherwise revoked.\n\n \n\n*Domain\nname*\n\n \n\nThe\nMIIT, promulgated the Administrative Measures on Internet Domain Name, or the Domain Name Measure on August 24, 2017 to protect domain\nnames. According to the Domain Name Measures, domain name applicants are required to duly register their domain names with domain name\nregistration service institutions. The applicants will become the holder of such domain names upon the completion of the registration\nprocedure. The permits for registered domain names are effective for five years, which are subject to renewals, cancellations or revocations.\n\n \n\n*Trade\nsecrets*\n\n \n\nAccording\nto the PRC Anti-Unfair Competition Law, promulgated by the SCNPC in September 1993, as amended in November 4, 2017, April 23, 2019 and\nJune 27, 2025 respectively, the term “trade secrets” refers to technical and business information that is unknown to the\npublic, has utility, may create business interests or profits for its legal owners or holders, and is maintained as a secret by its legal\nowners or holders. Under the PRC Anti-Unfair Competition Law, business persons are prohibited from infringing others’ trade secrets\nby: (1) obtaining the trade secrets from the legal owners or holders by any unfair methods such as theft, bribery, fraud, coercion, electronic\nintrusion, or any other illicit means; (2) disclosing, using or permitting others to use the trade secrets obtained illegally under item\n(1) above; or (3) disclosing, using or permitting others to use the trade secrets, in violation of any contractual agreements or any\nrequirements of the legal owners or holders to keep such trade secrets in confidence. Pursuant to the PRC Civil Code, if one intentionally\ninfringes upon the intellectual property rights of others and the circumstance is severe, the infringed party is entitled to request\nfor the corresponding punitive compensation.\n\n \n\n**Regulations\nrelating to employment**\n\n \n\nAccording\nto the Labor Law promulgated on July 5, 1994 and amended on August 27, 2009 and December 29, 2018, the PRC Labor Contract Law promulgated\non June 29, 2007 and amended on December 28, 2012, and the Implementing Regulations of the Employment Contracts Law of the PRC promulgated\nby the State Council on September 18, 2008, employers must execute written labor contracts with full-time employees and employers have\nobligation to sign an unfixed-term labor contract with any employee who has worked for the employer for ten consecutive years. In addition,\nall employers must comply with local minimum wage standards. The employers must establish a system for labor safety and sanitation, strictly\nabide by State rules and standards, provide education regarding labor safety and sanitation to its employees, provide employees with\nlabor safety and sanitation conditions and necessary protection materials in compliance with State rules, and carry out regular health\nexaminations for employees engaged in work involving occupational hazards.\n\n \n\n76\n\n \n\n \n\nAccording\nto the Law on Social Insurance of the PRC promulgated by SCNPC on October 28, 2010 and amended on December 29, 2018, and the Regulations\non the Administration of Housing Funds promulgated by the State Council on April 3, 1999 and amended on March 24, 2002 and March 24,\n2019, employers in China must provide employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance,\nwork-related injury insurance, medical insurance and housing fund. An enterprise must provide social insurance by going through social\ninsurance registration with local social insurance authorities or agencies and shall pay or withhold relevant social insurance premiums\nfor or on behalf of employees. On July 20, 2018, the General Office of the State Council issued the Plan for Reforming the State and\nLocal Tax Collection and Administration Systems, which stipulated that the State Administration of Taxation of the PRC, or SAT, become\nsolely responsible for collecting social insurance premiums. On September 1, 2025, the Interpretation (II) of the Supreme People’s Court on Issues Concerning the Application\nof Law in the Trial of Labor Dispute Cases came into effect. According to this interpretation, among others, where the employer and the\nemployee agree, or the employee promises the employer, that there is no need to make social insurance contributions, the people’s\ncourt shall determine that such agreement or promise is invalid. Where the employer fails to make social insurance contributions in accordance\nwith the law, and the employee requests to terminate the labor contract and claim economic compensation in accordance with item (3) of\nArticle 38 of the Labor Contract Law, the people’s court shall uphold such claim.\n\n \n\n**Regulations\nrelating to dividend distribution**\n\n \n\nThe\nprincipal laws and regulations regulating the dividend distribution of dividends by foreign invested enterprises in the PRC include the\nCompany Law of the PRC, as amended in August 2004, October 2005, December 2013, October 2018 and December 2023, the Law of Wholly Foreign-owned\nEnterprises promulgated in April 1986 and amended in October 2000 and September 2016 and its implementation regulations promulgated in\nDecember 1990 and subsequently amended in April 2001 and February 2014, the Sino-Foreign Equity Joint Venture Law of the PRC promulgated\nin July 1979 and subsequently amended in April 1990, March 2001 and September 2016 and its implementation regulations promulgated in\nSeptember 1983 and subsequently amended in January 1986, December 1987, July 2001, January 2011, February 2014 and March 2019, and the\nSino-Foreign Cooperative Joint Venture Law of the PRC promulgated in April 1988 and amended in October 2000, September 2016 and November\n2017 and its implementation regulations promulgated in September 1995 and amended in March 2014, March 2017 and November 2017 respectively.\nThe Wholly Foreign-owned Enterprise Law, the Sino-Foreign Equity Joint Venture Law of the PRC and the Sino-Foreign Cooperative Joint\nVenture Law of the PRC were replaced by the\n\n \n\nForeign\nInvestment Law on January 1, 2020. Under the current regulatory regime in the PRC, foreign-invested enterprises in the PRC may pay dividends\nonly out of their retained earnings, if any, determined in accordance with PRC accounting standards and regulations. A PRC company is\nrequired to set aside as statutory reserve funds at least 10% of its after-tax profit, until the cumulative amount of such reserve funds\nreaches 50% of its registered capital unless laws regarding foreign investment provide otherwise. A PRC company shall not distribute\nany profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together\nwith distributable profits from the current fiscal year.\n\n \n\nAccording\nto the Notice on Improving the Check of Authenticity and Compliance to Further Promote Foreign Exchange Control promulgated by the SAFE,\non January 26, 2017, (1) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution,\nthe original version of tax filing records and audited financial statements; and (2) domestic entities shall hold income to account for\nprevious years’ losses before remitting the profits. Moreover, domestic entities shall make detailed explanations of sources of\ncapital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures\nin connection with an outbound investment.\n\n \n\n**Regulations\nrelating to foreign exchange**\n\n \n\n*Regulations\non foreign currency exchange*\n\n \n\nThe\nprincipal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, as last amended\non August 1, 2008, or the FEA Regulations. Pursuant to the FEA Regulations, international payments in foreign exchange and the transfer\nof foreign exchange under the current account items shall not be subject to any state control or restriction when complying with certain\nprocedural requirements. In contrast, the conversion of Renminbi into foreign currencies and remittance of the converted foreign currency\noutside the PRC for the purpose of capital account items, such as direct equity investments, loans and repatriation of investment, requires\nprior approval from SAFE or its local branches.\n\n \n\n77\n\n \n\n \n\nAccording\nto the Circular of SAFE on Further Improving and Adjusting the Foreign Exchange Policies on Direct Investment and its appendix, the Operating\nRules for Foreign Exchange Issues with Regard to Direct Investment under Capital Account, promulgated on November 19, 2012 and amended\non May 4, 2015, foreign exchange control measures related to foreign direct investment are improved, such as (1) the open of and payment\ninto the foreign exchange account related to direct investment are no longer subject to approval by SAFE; (2) reinvestment with legal\nincome of foreign investors in China is no longer subject to approval by SAFE; (3) purchase and external payment of foreign exchange\nrelated to foreign direct investment are no longer subject to approval by SAFE. Later, on February 13, 2015, SAFE issued the Circular\non Further Simplifying and Improving Foreign Exchange Administration Policies in Respect of Direct Investment, or Circular 13, effective\nfrom June 1, 2015, providing that the bank, instead of SAFE, can directly handle the foreign exchange registration and approval for foreign\ndirect investment and SAFE and its branches.\n\n \n\nSAFE\nreleased the Notice of the State Administration of Foreign Exchange on Reforming the Mode of Management of Settlement of Foreign Exchange\nCapital of Foreign Invested Enterprises, or Circular 19, on March 30, 2015, which came into force on June 1, 2015. Under Circular 19,\na foreign-invested enterprise, within the registered scope of business, may settle their foreign exchange capital following a principal\nof authenticity on a discretionary basis according to the actual needs of their business operation, and the Renminbi capital so converted\ncan be used for equity investments within the PRC, which will be regarded as the reinvestment of foreign-invested enterprise, provided\nthat such foreign invested enterprises are not registered as an enterprises mainly engaged in investment business, including foreign\ninvestment companies, foreign funded venture capital enterprises and foreign funded equity investment enterprises. The Renminbi converted\nfrom the foreign exchange capital will be kept in a designated account and is not allowed to be used directly or indirectly for purposes\nbeyond its business scope or used to provide Renminbi entrusted loans (unless permitted within its registered business scope), repayment\nof inter-company loans (including third-party advances), and repayment of bank Renminbi loans that have been re-loaned to third parties,\nand other uses expressly forbidden under Circular 19.\n\n \n\nThe\nCircular of the SAFE on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or the\nSAFE Circular No. 16, was promulgated and became effective on June 9, 2016 and was amended on December 4, 2023. According to the SAFE\nCircular No. 16, enterprises registered in PRC may also convert their foreign debts from foreign currency into Renminbi on self-discretionary\nbasis. The SAFE Circular No. 16 provides an integrated standard for conversion of foreign exchange under capital account items (including\nbut not limited to foreign currency capital and foreign debts) on self-discretionary basis, which applies to all enterprises registered\nin the PRC. The SAFE Circular No. 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a\ncompany may not be directly or indirectly used for purposes beyond its business scope and may not be used for investments in securities\nor other investment excluding banks’ principal-secured financing products within the PRC unless otherwise specifically provided.\nBesides, the converted Renminbi shall not be used to make loans for non-affiliated enterprises unless it is permitted within the business\nscope or to build or to purchase any real estate that is not for the enterprise’s own use unless it is a real estate enterprise.\n\n \n\nOn\nOctober 23, 2019, SAFE issued SAFE Circular 28, which was amended on December 4, 2023. The SAFE Circular 28 cancels the restrictions\non domestic equity investments by capital fund of non-investment foreign invested enterprises and allows non-investment foreign-invested\nenterprises to use their capital funds to lawfully make equity investments in China, provided that such investments do not violate the\nNegative List and the target investment projects are genuine and in compliance with laws. The interpretation and implementation in practice\nof Circular 28 are still subject to substantial uncertainties given it is a newly issued regulation.\n\n \n\n*Regulations\non foreign exchange registration of overseas investment by PRC domestic residents*\n\n \n\nOn\nJuly 4, 2014, SAFE issued Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment\nand Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to regulate foreign exchange matters in\nrelation to the use of Special Purpose Vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing or conduct\nround trip investment in China.\n\n \n\nPursuant\nto SAFE Circular 37, an SPV refers to an overseas enterprise directly formed or indirectly controlled for investment or financing purposes\nby a domestic resident (domestic institution or domestic individual resident) with the assets or interests it legally holds overseas\nor in a domestic enterprise, while “round trip investment” refers to the direct investments made in China by domestic residents\ndirectly or indirectly through SPVs, namely, the behavior of establishing foreign invested enterprises or projects, or foreign-funded\nenterprises, in China by formation, acquisition, merger, or any other means, and acquiring interests, such as ownership, control, or\noperating right, in them. SAFE Circular 37 provides that, before making contribution into an SPV, PRC residents are required to complete\nforeign exchange registration with SAFE or its local branch according to SAFE Circular 37 and applicable currently effective SAFE regulations\nincluding the Administration of Foreign Exchange in Foreign Direct Investments by Foreign Investors. According to the Circular 13, local\nbanks, instead of SAFE, will examine and handle foreign exchange registration for overseas direct investment, including the initial foreign\nexchange registration and amendment registration.\n\n \n\n78\n\n \n\n \n\nFailure\nto comply with the registration procedures set forth in SAFE Circular 37 and the subsequent notice, or making misrepresentation on or\nfailure to disclose controllers of the foreign invested enterprise that is established through round-trip investment, may result in restrictions\nbeing imposed on the foreign exchange activities of the relevant foreign invested enterprise, including payment of dividends and other\ndistributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and\nthe capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange\nadministration regulations.\n\n \n\nWe\nhave used our best efforts to notify PRC residents (domestic institution or domestic individual resident) who directly or indirectly\nhold shares in our Cayman Islands holding company and who are known to us as being PRC residents to complete the foreign exchange registrations.\nHowever, we may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners, and we cannot\ncompel them to comply with SAFE registration requirements. See “Item 3. Key Information—D. Risk Factors—Risks Related\nto Doing Business in China—PRC regulations relating to the establishment of offshore special purpose companies by PRC residents\nmay subject our PRC resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital\ninto our PRC subsidiaries, limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us,\nor may otherwise adversely affect us.”\n\n \n\n*Regulations\non stock incentive plans*\n\n \n\nPursuant\nto the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan\nof Overseas Publicly Listed Company, issued by SAFE on February 15, 2012, employees, directors, supervisors and other senior management\nparticipating in any stock incentive plan of an overseas publicly listed company who are PRC citizens or who are non PRC citizens residing\nin China for a continuous period of not less than one year, subject to a few exceptions, are required to register with SAFE through a\ndomestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain other procedures. Failure\nto complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional\ncapital into our wholly foreign owned subsidiaries in China and limit these subsidiaries’ ability to distribute dividends to us.\nThe PRC agents shall, on behalf of the PRC residents who have the right to exercise the employee share options, apply to SAFE or its\nlocal branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the\nemployee share options. The foreign exchange proceeds received by the PRC residents from the sale of shares under the stock incentive\nplans granted and dividends distributed by the overseas listed companies must be remitted into the bank accounts in the PRC established\nby the PRC agents before distribution to such PRC residents. In addition, the PRC agents shall quarterly submit the form for record-filing\nof information of the Domestic Individuals Participating in the Stock Incentive Plans of Overseas Listed Companies with SAFE or its local\nbranches. We and our PRC citizen employees who have been granted share options, or PRC optionees, are subject to the Stock Option Rules.\nIf we or our PRC optionees fail to comply with the Individual Foreign Exchange Rule or the Stock Option Rules, we and our PRC optionees\nmay be subject to fines and other legal sanctions. In addition, the PRC agents are required to amend the SAFE registration with respect\nto the stock incentive plan if there is any material change to the stock incentive plan. Moreover, the SAFE Circular 37 provides that\nPRC residents who participate in a share incentive plan of an overseas unlisted special purpose company may register with local branches\nof SAFE before exercising rights.\n\n \n\nIn\naddition, the Ministry of Finance and the SAT have jointly issued circulars concerning individual income tax on employee share options,\nunder which our employees working in the PRC who exercise share options will be subject to PRC individual income tax. Our PRC subsidiaries\nand affiliated entities have obligations to file documents related to employee share options with relevant tax authorities and to withhold\nindividual income taxes of those employees who exercise their share options. If our employees fail to pay or if we fail to withhold their\nincome taxes as required by relevant laws and regulations, we may face sanctions imposed by the PRC tax authorities or other PRC government\nauthorities.\n\n \n\n79\n\n \n\n \n\n**Regulations\nrelating to M&A Rule and overseas listing in the PRC**\n\n \n\nMOFCOM,\nChina Securities Regulatory Commission, or CSRC, SAFE and three other PRC governmental and regulatory agencies promulgated the Rules\non Acquisition of Domestic Enterprises by Foreign Investors on August 8, 2006, as later amended on June 22, 2009, or the M&A Rules,\ngoverning the mergers and acquisitions of domestic enterprises by foreign investors. The M&A Rules, among other things, require that\nif a domestic company, domestic enterprise, or a domestic individual, through an overseas company established or controlled by it/him/her,\nacquires a domestic company which is affiliated with it/him/her, an approval from the MOFCOM is required. The M&A Rules further requires\nthat an SPV that is controlled directly or indirectly by the PRC companies or individuals and that has been formed for overseas listing\npurposes through acquisitions of PRC domestic interest held by such PRC companies or individuals, shall obtain the approval of CSRC prior\nto overseas listing and trading of such SPV’s securities on an overseas stock exchange. Moreover, if foreign investors merge a\ndomestic enterprise and obtain the actual control over the enterprise, and if such merger involves any critical industry, affects or\nmay affect the security of national economy, or causes transference of actual control over the domestic enterprise who possesses a resound\ntrademark or PRC time-honored brand, the parties to the merger shall file an application to MOFCOM.\n\n \n\nThe\nCSRC promulgated the Overseas Listing Trial Measures and five related guidelines on February 17, 2023, which came into effect on March\n31, 2023. The Overseas Listing Trial Measures provide that Chinese companies must file with the CSRC within three business days for its\nfollow-on offering of securities after it is listed in an overseas market either in direct or indirect means. Such companies must also\nfollow the relevant reporting requirements within three working days upon the occurrence and public disclosure of any specified circumstances\nprovided thereunder, including (1) change of control, (2) investigations or sanctions imposed by overseas securities regulatory agencies\nor other relevant competent authorities, (3) change of listing status or transfer of listing segment, and (4) voluntary or mandatory\ndelisting. In addition, where the main business of an issuer undergoes material change after overseas offering and listing, and is therefore\nbeyond the scope of business stated in the filing documents, such issuer shall submit to the CSRC an ad hoc report and a relevant legal\nopinion issued by a domestic law firm within three working days after occurrence of the changes. In case of any violations of the foregoing\nrequirements, competent Chinese authorities may impose administrative regulatory measures, such as orders for correction, warnings, fines,\nand may pursue legal liability in accordance with law.\n\n \n\nThe\nCSRC and other three relevant government authorities promulgated the Provision on Confidentiality, which came into effect on March 31,\n2023. According to the Provision on Confidentiality, Chinese companies that directly or indirectly conduct overseas offerings and listings,\nshall strictly abide by relevant laws and regulations on confidentiality when providing or publicly disclosing, either directly or through\ntheir overseas listed entities, documents and materials to securities service providers such as securities companies, securities service\ninstitutions, overseas regulatory authorities and other entities and individuals in the process of their overseas offering and listing.\nIn the event such documents or materials contain state secrets or working secrets of government agencies, the Chinese companies shall\nfirst obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level\nwith the approving authority. In the event that such documents or materials, if leaked, will be detrimental to national security or public\ninterest, the Chinese companies shall strictly fulfill relevant procedures stipulated by applicable national regulations. Chinese companies\nshall also provide a written statement of the specific state secrets and sensitive information that are contained in the documents and\nmaterials provided to securities companies and securities service providers, and the securities companies and securities service providers\nshall properly retain such written statements for inspection. The working papers formed within the territory of the PRC by the securities\ncompanies and securities service institutions that provide related services for the overseas offering and listing of Chinese companies\nshall be kept within the territory of the PRC. Cross-border transferring of such working papers shall go through the examination and\napproval formalities in accordance with the relevant regulations.\n\n \n\n80\n\n \n\n \n\n**Regulations\nrelating to taxation**\n\n \n\n*Dividend\nwithholding tax*\n\n \n\nThe\nNational People’s Congress enacted the Enterprise Income Tax Law, which became effective on January 1, 2008 and last amended on\nDecember 29, 2018. According to Enterprise Income Tax Law and the Regulation on the Implementation of the Enterprise Income Tax Law,\nor the Implementing Rules, which became effective on January 1, 2008 then further amended on April 23, 2019 and last amended on December\n26, 2024, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors\nare subject to a 10% withholding tax, unless any such foreign enterprise investor’s jurisdiction of incorporation has a tax treaty\nwith China that provides for a preferential withholding arrangement. According to the Arrangement between Mainland China and the Hong\nKong Special Administrative Region for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income,\nor Double Tax Avoidance Arrangement, the withholding tax rate in respect of the payment of dividends by a PRC enterprise to a Hong Kong\nenterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise\nand certain other conditions are met, including: (1) the Hong Kong enterprise must directly own the required percentage of equity interests\nand voting rights in the PRC resident enterprise; and (2) the Hong Kong enterprise must have directly owned such required percentage\nin the PRC resident enterprise throughout the 12 months prior to receiving the dividends. However, based on the Circular on Certain Issues\nwith Respect to the Enforcement of Dividend Provisions in Tax Treaties issued on February 20, 2009 by the SAT, if the relevant PRC tax\nauthorities determine, in their discretion, that a company benefits from such reduced income tax rate due to a structure or arrangement\nthat is primarily tax-driven, such PRC tax authorities may adjust the preferential tax treatment; and based on the Announcement on Certain\nIssues with Respect to the “Beneficial Owner” in Tax Treaties issued by the SAT on February 3, 2018 and effective from April\n1, 2018, if an applicant’s business activities do not constitute substantive business activities, it could result in the negative\ndetermination of the applicant’s status as a “beneficial owner,” and consequently, the applicant could be precluded\nfrom enjoying the above-mentioned reduced income tax rate of 5% under the Double Tax Avoidance Arrangement.\n\n \n\n*Enterprise\nincome tax*\n\n \n\nThe\nEnterprise Income Tax Law and the Implementing Rules impose a uniform 25% enterprise income tax rate to both foreign invested enterprises\nand domestic enterprises, except where tax incentives are granted to special industries and projects. Among other tax incentives, the\npreferential tax treatment continues as long as an enterprise can retain its “High and New Technology Enterprise” status.\n\n \n\nUnder\nthe PRC Enterprise Income Tax Law, an enterprise established outside China with “*de facto* management bodies” within\nChina is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform\n25% enterprise income tax rate on its worldwide income. A circular issued by the SAT in April 2009 and amended in 2017 regarding the\nstandards used to classify certain Chinese invested enterprises controlled by Chinese enterprises or Chinese enterprise groups and established\noutside of China as “resident enterprises,” which also clarified that dividends and other income paid by such PRC “resident\nenterprises” will be considered PRC source income and subject to PRC withholding tax, currently at a rate of 10%, when paid to\nnon PRC enterprise shareholders. This circular also subjects such PRC “resident enterprises” to various reporting requirements\nwith the PRC tax authorities. Under the implementing rules, a “*de facto* management body” is defined as a body that\nhas material and overall management and control over the manufacturing and business operations, personnel and human resources, finances\nand properties of an enterprise.\n\n \n\nOn\nOctober 17, 2017, the SAT issued the SAT Bulletin 37, which replaced the Notice on Strengthening Administration of Enterprise Income\nTax for Share Transfers by Non-PRC Resident Enterprises, issued by the SAT, on December 10, 2009, and partially replaced and supplemented\nby the rules under the SAT Bulletin 7, issued by the SAT, on February 3, 2015. Under SAT Bulletin 7, an “indirect transfer”\nof assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated\nas a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for\nthe purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to\nPRC enterprise income tax. In respect of an indirect offshore transfer of assets of a PRC establishment, the relevant gain is to be regarded\nas effectively connected with the PRC establishment and therefore included in its enterprise income tax filing, and would consequently\nbe subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the immoveable properties in China\nor to equity investments in a PRC resident enterprise, which is not effectively connected to a PRC establishment of a non-resident enterprise,\na PRC enterprise income tax at 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similar\narrangements, and the party who is obligated to make the transfer payments bears the withholding obligation. Pursuant to SAT Bulletin\n37, the withholding party shall declare and pay the withheld tax to the competent tax authority in the place where such withholding party\nis located within 7 days from the date of occurrence of the withholding obligation. Both SAT Bulletin 37 and SAT Bulletin 7 do not apply\nto transactions of sale of shares by investors through a public stock exchange where such shares were acquired from a transaction through\na public stock exchange.\n\n \n\n81\n\n \n\n \n\n*Value-added\ntax*\n\n \n\nThe\nProvisional Regulations of the PRC on Value-added Tax or the Interim Regulations were promulgated by the State Council on December\n13, 1993 and came into effect on January 1, 1994 which were subsequently amended in 2008, 2016 and 2017, or the VAT\nRegulation.\n\n \n\nThe\nDetailed Rules for the Implementation of the Provisional Regulations of the PRC on Value-added Tax (Revised in 2011) was promulgated\nby the MOF on December 25, 1993 and subsequently amended on December 15, 2008 and October 28, 2011, and together with the VAT Regulation,\nor the VAT Law. The PRC State Council approved, and the SAT and the MOF officially launched a pilot value-added tax reform program starting\nfrom January 1, 2012, or the Pilot Program, applicable to businesses in selected industries. Businesses in the Pilot Program would pay\nvalue-added tax instead of business tax. The Pilot Program was initiated in Shanghai, then further applied to ten additional regions\nsuch as Beijing and Guangdong province. On November 19, 2017, the State Council promulgated the Decisions on Abolishing the Provisional\nRegulations of the PRC on Business Tax and Amending the Provisional Regulations of the PRC on Value-added Tax, or the Order 691.\n\n \n\nAccording\nto the VAT Law and the Order 691, all enterprises and individuals engaged in the sale of goods, the provision of processing, repair and\nreplacement services, sales of services, intangible assets, real property and the importation of goods within the territory of the PRC\nare the taxpayers of VAT. The VAT rates generally applicable are simplified as 17%, 11%, 6% and 0%, and the VAT rate applicable to the\nsmall-scale taxpayers is 3%.\n\n \n\nOn\nApril 4, 2018, Adjustment to Value-added Tax Rates issued by the Ministry of Finance and the SAT, which came into effect on May 1, 2018,\nor the Bulletin 32. According to Bulletin 32, the VAT tax rates of 17% and 11% are changed to 16% and 10%, respectively. On March 20,\n2019, the Ministry of Finance, State Taxation Administration and General Administration of Customs jointly promulgated the Announcement\non Policies for Deeping the VAT Reform or Notice 39, which came into effect on April 1, 2019. Notice 39 further changes the VAT tax rates\nof 16% and 10% to 13% and 9%, respectively.\n\n \n\nOn\nDecember 25, 2024, the Standing Committee of the National People’s Congress promulgated the Value-Added Tax Law of the People’s\nRepublic of China, or the VAT Law, which became effective on January 1, 2026 and replaced the Interim Regulations. The VAT Law, based\non consolidating the achievements of reforms such as tax rate adjustments and the replacement of business tax with VAT, systematically\noptimizes and clarifies core elements including the scope of taxation, calculation rules, collection and management mechanisms, and taxpayer\nobligations.\n\n \n\n**C.\nOrganizational Structure**\n\n \n\nWe\nare a holding company that does not have any substantive operations. We conduct our operations primarily through our subsidiaries and\nthe affiliated entities in China. For more information, see “—Contractual Arrangements.”\n\n \n\n82\n\n \n\n \n\nThe\nfollowing diagram illustrates our simplified corporate structure, including our principal subsidiaries, the VIE and other principal affiliated\nentities in China, as of the date of this annual report.\n\n \n\n \n\n(1)See\n“Item 6. Directors, Senior Management and Employees—E. Share Ownership”\nfor details of our shareholding structure.\n\n   \n\n(2)Includes\nfour wholly-owned subsidiaries incorporated in Japan, Philippines, Malaysia and Singapore.\nWe are in the process of dissolving our subsidiary in Philippines as of the date of this\nannual report.\n\n   \n\n(3)As\nof the date of this annual report, Ronglian Yitong is owned as to 72.1% by Mr. Changxun Sun,\nour founder and chief executive officer, 26.9% by Mr. Jianhong Zhou, and 1.0% by Dazi Heye\nInvestment Management Co., Ltd. (formerly known as Lhasa Heye Investment Management Co.,\nLtd.).\n\n \n\n**Contractual\nArrangements**\n\n \n\nCurrent\nPRC laws and regulations impose restrictions on foreign ownership and investment in companies that engage in value-added telecommunications\nservices. We are an exempted company incorporated in the Cayman Islands. Anxun Guantong, or WFOE, is our wholly-owned PRC subsidiary\nand a foreign-invested enterprise under PRC laws. We conduct our business in China through Ronglian Yitong, or the VIE, and its subsidiaries,\nor collectively the affiliated entities, in China, based on a series of contractual arrangements by and among WFOE, the VIE and its shareholders.\n\n \n\nOur\ncontractual arrangements allow us to (1) exercise effective control over the affiliated entities, (2) receive substantially all of the\neconomic benefits of the affiliated entities, and (3) have an exclusive option to purchase all or part of the equity interests in the\naffiliated entities when and to the extent permitted by PRC law.\n\n \n\n83\n\n \n\n \n\nAs\na result of our direct ownership in WFOE and the contractual arrangements with the VIE, we have control over and are the primary beneficiary\nof the affiliated entities, and, therefore, have consolidated the financial results of the VIE and its subsidiaries in our consolidated\nfinancial statements in accordance with U.S. GAAP.\n\n \n\nThe\nfollowing is a summary of the currently effective contractual arrangements by and among WFOE, the VIE and its shareholders.\n\n \n\n**Agreements\nthat provide us with effective control over the VIE**\n\n \n\n*Powers\nof Attorney.*Pursuant to each of the powers of attorney dated March 28, 2019, August 28, 2019 or November 3, 2020 executed and issued\nby the respective shareholders of the VIE, each of them irrevocably appointed and authorized WFOE or its designee(s) to act on their\nrespective behalf as exclusive agent and attorney, to the extent permitted by PRC law, with respect to all matters concerning all equity\ninterests held by each of these shareholders in the VIE, including but not limited to the power to (1) attend shareholders’ meetings,\n(2) exercise all shareholders’ rights and shareholders’ voting rights that it is entitled under relevant PRC laws and regulations\nand the articles of association of the VIE, including but not limited to the right to sell, transfer, pledge or dispose of all the equity\ninterests held in part or in whole, (3) sign minutes and resolutions and filing documents with the companies registry, and (4) designate\nand appoint on their respective behalf the legal representative, directors, supervisors, chief executive officer and other senior management\nmembers of the VIE. Each power of attorney agreement is irrevocable and continuously effective from the execution date.\n\n \n\n*Share\nPledge Agreements.*Under each of the share pledge agreements dated March 28, 2019 or November 3, 2020 entered into by and among WFOE,\nthe VIE and each of its shareholders, each of the VIE’s shareholders will pledge all of its equity interests in the VIE to WFOE\nas security for performance of the respective obligations of the VIE and each of its shareholders hereunder and under the exclusive option\nagreements, the powers of attorney and the exclusive business cooperation agreement, and for payment of all the losses and losses of\nanticipated profits suffered by WFOE as a result the VIE or its shareholders’ defaults. If any of the VIE or its shareholders breach\ntheir contractual obligations, WFOE, as the pledgee, may, upon issuing written notice, exercise certain remedy measures, including but\nnot limited to being paid in priority with all pledged equity interests based on monetary evaluation or from the proceeds from auction\nor sale. Without WFOE’s prior written consent, the shareholders of the VIE shall not transfer the pledged equity interests or place\nor permit the existence of any security interests or other encumbrances over the pledged equity interest. WFOE may assign all or any\nof its rights and obligations under any of the share pledge agreements to its designee(s) at any time. The pledge will become effective\non the date the pledged equity interests are registered with the relevant local branch of State Administration for Market Regulation,\nand will remain in effect until the fulfillment of all the obligations hereunder and under the exclusive option agreements, the powers\nof attorney and the exclusive business cooperation agreement and the full payment of all the losses and losses of anticipated profits\nsuffered by the WFOE as a result the VIE or its shareholders’ default. As of the date of this annual report, we have completed\nthe registration of all the pledged equity interests in the VIE with the relevant local branch of State Administration for Market Regulation.\n\n \n\n*Spousal\nConsent.*Pursuant to the spousal consent dated August 28, 2019 executed and provided by the spouse of the largest shareholder of\nthe VIE, the signing spouse (1) unconditionally and irrevocably agreed to the execution of the share pledge agreements, the exclusive\noption agreement and the powers of attorney and to the disposal of the individual shareholder’ equity interests in the VIE in accordance\nwith these agreements, and (2) confirmed that the individual shareholder of the VIE can perform and further amend or terminate these\nagreements absent her authorization or consent and that his equity interests do not constitute her communal property or inheritable property,\nand (3) undertook to not to make any assertions in connection with the individual shareholder’ equity interests in the VIE. The\nspouse further undertook to execute all necessary documents and take all necessary actions to ensure the appropriate performance of the\nagreements described herein and agreed to be subject to the obligations under the contractual arrangements in the event any equity interests\nin the VIE will be held by her.\n\n \n\n84\n\n \n\n** **\n\n**Agreements\nthat allow us to receive economic benefits from the VIE**\n\n \n\n*Exclusive\nBusiness Cooperation Agreement.*Pursuant to the exclusive business cooperation agreement dated November 3, 2020 entered into by and\nbetween WFOE and the VIE, WFOE has the exclusive right, during the term of the exclusive business cooperation agreement, to provide or\ndesignate its affiliates to provide complete business support and technical and consulting services to the VIE, which may include all\nor part of the services within the business scope of the VIE as may be determined from time to time by WFOE. In exchange, the VIE shall\npay WFOE on a monthly basis service fees equal to 100% of its net income, which may be adjusted by WFOE in its sole discretion. WFOE\nshall have exclusive and proprietary rights and interests in all rights, ownership, interests and intellectual properties arising out\nof or created during the performance of this agreement. This agreement shall remain effective for ten years from the execution date and\nmay be extended by WFOE at its sole discretion if confirmed in writing.\n\n \n\n**Agreements\nthat grant us the option to purchase equity interests in and assets of the VIE**\n\n \n\n*Exclusive\nOption Agreements.*Under each of the exclusive option agreements dated March 28, 2019, August 28, 2019 or November 3, 2020 entered\ninto by and between WFOE, the VIE and its shareholders, each of the shareholders of the VIE irrevocably granted WFOE or its designee(s)\nan exclusive right to purchase all of their equity interests in the VIE at any time in part or in whole at the sole and absolute discretion\nof WFOE to the extent permitted by PRC law and at a purchase price of RMB10. In addition, the VIE irrevocably granted WFOE or its designee(s)\nan exclusive right to purchase all of its assets at any time in part or in whole at the sole and absolute discretion of WFOE to the extent\npermitted by PRC law after satisfaction of required procedures and at a purchase price of RMB10. Without the prior written consent of\nWFOE, the shareholders and/or the VIE shall not, among others (1) sell, transfer, mortgage, or dispose of in any other manner any legal\nor beneficial interests in the equity interests of such shareholders in the VIE, or allow any encumbrances thereon, except for the interest\nplaced in accordance with the share pledge agreements and power of attorney, (2) amend the VIE’s articles of association, (3) sell,\ntransfer, mortgage, or dispose of in any other manner any material assets of the VIE or any legal or beneficial interests in the material\nbusiness or revenues of the VIE of more than RMB500,000, or allow any encumbrances thereon of any security interests, (4) allow the VIE\nto incur, inherit, guarantee or permit any debts, except for those payables incurred in the ordinary or usual course of business but\nnot incurred by way of borrowing, (5) cause the VIE to enter into any major contracts or terminate any material contracts with a value\nof more than RMB500,000 to which the VIE is a party, except for those in the ordinary course of business, (6) allow the VIE to provide\nloan or credit to any person, (7) merger, consolidate with, acquire or invest in any person, (8) declare or distribute dividends, or\n(9) dissolute or liquate or terminate the VIE. The shareholders of the VIE and the VIE also agree to, among other, appoint the directors\nand supervisors designed by WFOE as its directors or supervisors. If the shareholders of the VIE shall receive any profits, interest,\ndividends or proceeds of liquidation from the VIE or if such shareholders shall receive any monies in connection with a transfer of their\nequity interests in the VIE, they shall promptly donate to WFOE or its designee(s) to the extent permitted under the applicable PRC law.\nThis agreement shall become effective on the execution date and remain in effect until all equity interests in the VIE have been transferred\nor assigned to WFOE or its designee(s).\n\n \n\nIn\nthe opinion of CM Law Firm, our PRC counsel:\n\n \n\n(1)the\nownership structures of the VIE and WFOE, currently are not in any violation of the applicable\nPRC laws or regulations currently in effect; and\n\n   \n\n(2)the\ncontractual arrangements between WFOE, the VIE and its shareholders governed by PRC laws\nand regulations are currently valid, binding and enforceable, and will not result in any\nviolation of applicable PRC laws and regulations currently in effect.\n\n \n\nHowever,\nwe have been further advised by our PRC counsel that there are substantial uncertainties regarding the interpretation and application\nof current PRC laws and regulations. Thus, the PRC government may ultimately take a view contrary to or otherwise different from the\nopinion of our PRC counsel. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will\nbe adopted or if adopted, what they would provide. If we or the VIE is found to be in violation of any existing or future PRC laws or\nregulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have\nbroad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks\nRelated to Our Corporate Structure—The PRC government may find that the contractual arrangements that establish our corporate structure\nfor operating our business do not comply with applicable PRC laws and regulations.”\n\n \n\n85\n\n \n\n \n\n**D.\nProperty, Plant and Equipment**\n\n \n\nOur\nprincipal executive offices are in Beijing, China, where we lease approximately 2,739 square meters of office space that are currently\nin use. We also maintain other leased offices in cities across China totaling approximately 4,369 square meters that are currently\nin use. We opened Malaysia office in December 2020, which has approximately 133 square meters of office space. Our Japan office has\napproximately 274 square meters of office space. In addition, we own approximately 394 square meters of office premises in Shanghai.\nWe believe our existing premises are adequate for our current business operations and that additional space can be obtained on commercially\nreasonable terms to accommodate our future expansion plans."}