{"url_path":"/sec/ymt/10-k/2026/item-5","section_key":"item-5","section_title":"Item 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1991605/0001213900-26-057895-index.html","accession_number":"0001213900-26-057895","cik":"0001991605","ticker":"YMT","issuer_name":"Yimutian Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1991605/0001213900-26-057895-index.html","primary_entity_key":"0001991605","primary_entity_name":"Yimutian Inc."},"word_count":7688,"has_tables":true,"body_markdown":"ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS\n\n*The following discussion\nand analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements\nand the related notes included elsewhere in this annual report. This report contains forward-looking statements that involve risks and\nuncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking\nstatements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors”\nand elsewhere in this annual report. See “Forward-Looking Information.”*\n\nA.OPERATING RESULTS\n\nWe are the largest agricultural\nB2B platform in mainland China, in terms of monthly active merchants in 2024, according to the F&S Report. In facilitating transactions\nof agricultural products, we have the following main lines of business: (i) digital agricultural commerce services for efficient circulation\nof agricultural and food products, which are mainly offered via the Yimutian App, a versatile, merchant-friendly B2B e-commerce platform,\ncomplemented with offline, sales-assistance services via Douniu App, a platform matching offline transactions of agricultural products\nbetween sellers and wholesale buyers, (ii) agricultural sourcing and trading services that focus on reliable transaction services with\nsellers at cultivation and production sites and buyers with unmet or underserved demand, (iii) smart farming business, where we selectively\ncultivate produce based on our industry insights and (iv) other digital agricultural solutions, which primarily entail consulting, brand\npromotion and digital agricultural training programs. Our platform had over 39 million merchants as of December 31, 2025. In\n2025, our platform facilitated approximately 103 million searches, 620 million\ncalls and instant messages, and over 224 million potential transactions. As of December 31,\n2025, the merchants presented approximately 22 million SKUs on our platform. Building upon our\nexperience in transaction matching since our inception, we connected over 640,000 sellers and over 4.6 million buyers in 2025 in\nthe agricultural product supply chain with precise, dynamic and up-to-date information related to agricultural product transactions.\nWe further elevate merchant experiences with a full spectrum of services in advertising and client contact privilege via a suite of online\ntools.\n\nIn 2023, 2024 and 2025, our\ntotal revenues was RMB187.5 million, RMB161.3 million and RMB140.7 million (US$20.1 million), respectively. We had net loss\nof RMB105.6 million in 2023, RMB34.9 million in 2024 and RMB42.9 million (US$6.0 million) in 2025.\n\nKey Factors Affecting Our\nResults of Operations\n\nOur results of operations\nhave been, and are expected to continue to be, affected by a number of general factors affecting the agricultural B2B industry in general,\nincluding without limitation:\n\n●China’s overall economic growth and development, along with its digital economy transformation;\n\n●the development of China’s agriculture industry and policy of China’s agriculture industry;\n\n103\n\n●the volume of agricultural production in China and inclement weather or natural disaster;\n\n●the digitalization of China’s agriculture industry;\n\n●the growth of China’s agricultural B2B industry;\n\n●the application of AI technology in China’s agricultural B2B industry; and\n\n●competitive landscape of China’s agricultural B2B industry and our market position therein.\n\nAny unfavorable changes on\nthese general industry conditions could affect demand for our services and products and materially affect our results of operations. While\nour business is affected by general factors affecting the agriculture industry, specifically the agricultural B2B industry, we believe\nour results of operations are affected by a number of company specific factors, including the key factors as discussed below.\n\nOur ability to expand\nour large and active merchant base\n\nOur large and active merchant base has been key to our success, as\nmembership fees charged to our paying merchants and transaction service fees charged for transaction facilitation services are among the\nmain sources of our revenue. Our deep understanding in mainland China’s agricultural B2B market and insights accumulated through\nour decade of operations have helped us gained trust from both sellers and buyers involved in agricultural transactions. We believe annual\npaying merchants as a percentage of active merchants is a key operating metric to measure our loyal and active merchant base and reflect\nour monetization ability. This percentage decreased from 15.4% in 2023 to 12.6% in 2024. The decrease in this percentage in 2024 was primarily\ndue to our strategic decision to remove certain paid features in order to further improve the platform’s functionality and user\nexperience. We believe this adjustment has made our services more accessible and attractive to a broader base of merchants, supporting\nour long-term growth objectives. This percentage decreased from 12.6% in 2024 to 11.3% in 2025. The number of paying merchants for\na certain period refers to the number of merchants that have paid for our services in such period. The number of active merchants for\na certain period refers to the number of merchants that have been active on our platform in such period. Whether we can continue to grow\nour paying merchants as a percentage of monthly active merchants mainly depends on our ability to provide superior merchant experience.\nTo this end, we expect to continue to focus on providing customized merchant experience through extending the depth and breadth of our\nknowledge graph and technologies in general, which fuel our recommendation and matching capabilities, and further expanding our service\nand product offerings that meet the evolving needs of merchants on our platforms.\n\nOur ability to improve\nand expand service offerings\n\nWe have been in the forefront\nof innovation of agricultural commerce business, expanding our offerings from multiple aspects. Our digital agricultural commerce services\nhave evolved from merely matching buyers and sellers online to more diverse services covering sales-assistance services connecting\nsellers with wholesale stallholders offline and various value-added services for promotion. We typically attract and accumulate paying\nmerchants through value-added services, such as advertising service, offered on our platform. As some merchants achieve higher sales\nof products benefiting from such value-added services on our platform, they turn to subscribe for membership of our flagship product\nwhich provides a suite of online tools to further help merchants boost their sales, such as hosting premium storefronts on our platform.\nThe paying merchants of our flagship product, who mainly receive our services on an annual basis, on average spent RMB6,062 (US$867) in\n2025. Such paying merchants on average spent approximately RMB5,243 in 2024 and RMB5,352 in 2023. We believe that there is a significant\nopportunity for cross-selling more of our digital agricultural commerce services to our existing paying merchants. We see great potential\nto further monetize our merchant base, and we plan to continue fine-tuning and expand our service offerings with new value-added services\nfor marketing and improving merchant engagement.\n\nOur ability to maintain\nand increase cooperation with business partners\n\nWe expect to launch new business\ninitiatives to penetrate deeper in the agricultural product supply chain. The success of such business initiatives not only relies on\nmarket insights and technology capabilities, but also depends on our continued collaboration with local agricultural producers and processors\nfrom cultivation and production sites and buyers with regional or bulk procurement capacities in both online and offline environment.\nWe intend to deepen our business relationships with existing market participants in the agricultural product supply chain and build relationships\nwith additional market participants with cultivation at scale or bulk procurement capacities. We believe that business partners will choose\nto cooperate with us because of our deep understanding of the agriculture industry, strong reputation and broad network of merchants on\nour Apps.\n\n104\n\nOur ability to promote\nour brands and market our services and products more effectively\n\nWe believe that our one-stop platform,\nwith a wide variety of services and products offered thereon and positive merchant experience, makes us a reputable brand, and is our\nbest and most effective marketing tools. In 2023, 2024 and 2025, we acquired over 42% of new merchants on our platform through word-of-mouth marketing,\nthanks to our reputable and trusted brand. Despite the acquisition cost of such merchants is close to nil, such merchants contribute great\nvalue to our business. They often interact with our platform over a long-term and spend more time on our platform than merchants\nacquired via other means. Besides word-of-mouth marketing, we also invest in branding, marketing and promotional activities. We plan\nto continue building our brand by enhancing merchant experience on our platform and enhancing efficiency in our selling and marketing\nactivities.\n\nOur ability to continue\nmaking investments in technology\n\nOur dedication to technological\nadvancements runs deep in our DNA, evident through our substantial investments in technology since our inception. We aim to provide more\naccurate and intelligent matching, as well as sales and marketing services, to merchants, enabling them to offer and procure high-quality products\nthrough secure, responsive, and scalable infrastructure and applications, thus further improving their transaction experience and efficiency.\nWe expect to continue to invest in research and development in areas such as big data analysis, cloud computing, and other technologies,\nas well as in talent acquisition and retention.\n\nOur ability to enhance\nour operating efficiency\n\nOur results of operations\nare affected by our ability to control our operating costs and expenses. We expect to achieve greater efficiency in managing our costs\nand expenses. We believe our nationwide coverage, coupled with the network effect of our platform, will allow us to benefit more from\nsubstantial economies of scale. The staff cost and cloud service fees associated with the operation of our platform are expected to increase\nat a slower pace as our revenue growth, because most of our employees are working remotely from the production sites and wholesale markets,\nand we do not need to increase the size of our overall workforce proportionally with our business growth as we optimize human resource\nefficiency at the headquarters. As our business further grows, we believe we will be able to take advantage of economies of scale to further\nimprove operating efficiency and achieve profitability over time.\n\nKey Components of Results\nof Operations\n\nRevenues\n\nIn 2023, 2024 and 2025, we\ngenerated revenue from providing digital agricultural commerce services and other digital agricultural solutions. The following table\nbreaks down our revenues by amounts and as percentages of total revenues for the periods indicated.\n\nFor the Year Ended December 31,\n\n2023\n2024\n2025\n\nRMB\n%\nRMB\n%\nRMB\nUS$\n%\n\n(in thousands, except percentage)\n\nDigital agricultural commerce\nservices\n170,921\n91.1\n152,606\n94.6\n135,332\n19,352\n96.2\n\nMembership services\n99,924\n53.3\n95,589\n59.3\n84,821\n12,129\n60.3\n\nValue-added services\n65,850\n35.1\n52,712\n32.7\n47,755\n6,829\n34.0\n\nTransaction services\n5,147\n2.7\n4,305\n2.7\n2,756\n394\n2.0\n\nOther digital agricultural\nsolutions\n16,602\n8.9\n8,715\n5.4\n5,323\n761\n3.8\n\nTotal revenues\n187,523\n100.0\n161,321\n100.0\n**140,655**** **** **\n** ****20,113**** **** **\n** ****100.0**\n\n105\n\nCost of revenues\n\nCost of revenues consists\nof (i) staff cost and outsourcing labor service fees, (ii) technology service fees charged by cloud service providers, and (iii) depreciation.\n\nThe following table sets forth\na breakdown of our cost of revenues by nature, both in absolute amount and as a percentage of total revenues for the periods indicated.\n\nFor the Year Ended December 31,\n\n2023\n2024\n2025\n\nRMB\n%\nRMB\n%\nRMB\nUS$\n%\n\n(in thousands, except percentage)\n\nStaff cost and outsourcing labor service fees\n28,705\n15.3\n18,538\n11.5\n11,111\n1,589\n7.9\n\nTechnology service fees\n6,587\n3.5\n4,482\n2.8\n94\n13\n0.1\n\nOthers\n13,956\n7.4\n7,553\n4.7\n10,399\n1,487\n7.4\n\nTotal cost of revenues\n49,248\n26.3\n30,573\n19.0\n**21,604**** **** **\n** ****3,089**** **** **\n** ****15.4**** **\n\nGross profit and\ngross margin\n\nWe recorded gross profit of\nRMB138.3 million, RMB130.7 million and RMB119.1 million (US$17.0 million) in 2023, 2024 and 2025, respectively. Our\noverall gross margin was 73.7% in 2023, 81.0% in 2024 and 84.6% in 2025, respectively.\n\nOperating expenses\n\nOur operating expenses mainly\nconsist of (i) selling and marketing expenses, (ii) general and administrative expenses, and (iii) research and development expenses.\nThe following table sets forth the components of our operating expenses, both in absolute amount and as a percentage of total revenues\nfor the periods indicated.\n\nFor the Year Ended December 31,\n\n2023\n2024\n2025\n\nRMB\n%\nRMB\n%\nRMB\nUS$\n%\n\n(in thousands, except percentage)\n\nOperating expenses:\n\nSelling and marketing expenses\n(94,647)\n(50.5)\n(87,618)\n(54.3)\n(77,459)\n(11,076)\n(55.1)\n\nGeneral and administrative expenses\n(96,712)\n(51.6)\n(39,564)\n(24.5)\n(58,764)\n(8,403)\n(41.8)\n\nResearch and development expenses\n(47,453)\n(25.3)\n(37,811)\n(23.4)\n(29,596)\n(4,232)\n(21.0)\n\nOther income, net\n823\n0.4\n218\n0.1\n4,988\n713\n3.5\n\nTotal operating expenses\n(237,989)\n(126.9)\n(164,775)\n(102.1)\n**(160,831****)**** **\n** ****(22,998****)**** **\n** ****(114.3****)**\n\n* *\n\n*Selling and marketing expenses. *Our\nselling and marketing expenses consist primarily of (i) staff cost related to selling and marketing personnel, (ii) advertising\nand promotion expenses, and (iii) depreciation, rental and other expenses related to selling and marketing functions. We expect our\nsales and marketing expenses on an absolute dollar basis and as a percentage of revenues to vary from period to period over the short\nterm, depending on the number of selling and marketing employees we are going to hire and spendings on marketing activities.\n\n*General and administrative\nexpenses. *Our general and administrative expenses consist primarily of (i) share-based compensation\nexpenses related to ordinary shares issuance, (ii) staff cost relating to general and administrative personnel, (iii) professional\nservice fees, and (iv) other general corporate expenses. We expect our general and administrative expenses to increase in the near\nterm as we incur additional costs as a result of operating as a public company.\n\n*Research and development\nexpenses. *Our research and development expenses consist of (i) staff cost relating to research and development\nprofessionals and (ii) rental, depreciation and other expenses related to research and development functions. We expect that our\nresearch and development expenses on an absolute dollar basis and as a percentage of revenues to vary from period to period over the short\nterm, depending on the number of research and development employees we are going to hire.\n\n106\n\nTaxation\n\nCayman Islands\n\nWe are incorporated in the\nCayman Islands. Under the current tax laws of the Cayman Islands, we are not subject to tax on our income or capital gains. In addition,\npayments of dividends and capital in respect of our shares are not subject to taxation, and no withholding will be required in the Cayman\nIslands on the payment of any dividend or capital to any holder of our shares, nor will gains derived from the disposal of our shares\nbe subject to the Cayman Islands income or corporate tax.\n\nHong Kong\n\nOur wholly owned subsidiaries\nin Hong Kong are subject to Hong Kong profits tax on their taxable income generated from operations in Hong Kong. Under\nthe two-tiered profits tax rates regime in Hong Kong, the first HK$2 million of profits of the qualifying group entity\nwill be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. Payments of dividends by our subsidiaries to our company\nare not subject to any withholding tax in Hong Kong.\n\nMainland China\n\nOur subsidiaries in mainland\nChina, the VIEs and the VIE’s subsidiaries that were established in mainland China are subject to PRC Enterprise Income Tax Law,\nor the PRC EIT Law, on the taxable income, which have adopted a unified income tax rate of 25%, except for high and new technology enterprises,\nwhich are subject to a preferential income tax rate of 15%, and small enterprises with low profits, which are subject to a preferential\nincome tax rate of 20%.\n\nBeijing Yimutian, Yimutian\nXinnong and Beijing Douniu were recognized as high and new technology enterprises. As such, they are entitled to a preferential income\ntax rate at 15% from 2024 to 2025.\n\nWe are subject to VAT on the\nproducts sold and services provided. We are also subject to surcharges on VAT payments in accordance with the laws of mainland China.\n\nAs a Cayman Islands holding\ncompany, we may receive dividends from our subsidiaries in mainland China through Yimutian HK. The PRC EIT Law and its implementing\nrules provide that dividends paid by a mainland China entity to a nonresident enterprise for income tax purposes is subject to mainland\nChina withholding tax at a rate of 10%, and may be subject to reduction by an applicable tax treaty with China. Pursuant to the Arrangement\nbetween the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention\nof Fiscal Evasion with respect to Taxes on Income, the withholding tax rate in respect to the payment of dividends by a mainland China\nenterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise (i) directly\nholds at least 25% of the mainland China enterprise, (ii) is a tax resident in Hong Kong and (iii) could be recognized\nas a beneficial owner of the dividend from mainland China tax perspective. Pursuant to the Notice on Certain Issues with Respect to the\nEnforcement of Dividend Provisions in Tax Treaties, or Guoshuihan [2009] 81, a Hong Kong resident enterprise must meet the following\nconditions, among others, in order to apply the reduced withholding tax rate: (i) it must be a company; (ii) it must directly\nown the required percentage of equity interests and voting rights in the PRC resident enterprise; and (iii) it must have directly\nowned such required percentage in the mainland China resident enterprise throughout the 12 months prior to receiving the dividends.\nIn October 2019, the SAT issued Announcement of the State Taxation Administration on Issuing the Measures for Non-resident Taxpayers’\nEnjoyment of Treaty Benefits, or SAT Circular 35, which became effective on January 1, 2020. SAT Circular 35 provides that nonresident\nenterprises are not required to obtain pre-approval from the tax authorities in order to enjoy the reduced withholding tax. Instead,\nnonresident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to\nenjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents\nwhen performing tax filings, which will be subject to post-tax filing examinations by the tax authorities. Accordingly, Yimutian\nHK may be able to benefit from the 5% withholding tax rate for the dividends it receives from its mainland China subsidiaries, if it satisfies\nthe conditions prescribed under Guoshuihan [2009] 81 and other tax rules and regulations. However, according to Guoshuihan [2009] 81 and\nSAT Circular 35, if the tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying\na favorable tax treatment, the tax authorities may adjust the favorable withholding tax in the future.\n\nIf our holding company in\nthe Cayman Islands or any of our subsidiaries outside of mainland China were deemed to be a “resident enterprise” under the\nPRC EIT Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.\n\n107\n\nResults of Operations\n\nThe following table sets forth\na summary of our consolidated results of operations, both in absolute amount and as a percentage of total revenues for the periods indicated.\nThis information should be read together with our consolidated financial statements and related notes included elsewhere in this annual\nreport. We believe that the period-to-period comparison of operating results should not be relied upon as being indicative of future\nperformance.\n\nFor the Year Ended December 31,\n\n2023\n2024\n2025\n\nRMB\n%\nRMB\n%\nRMB\nUS$\n%\n\n(in thousands, except percentage)\n\nRevenues\n187,523\n100.0\n161,321\n100.0\n140,655\n20,113\n100.0\n\nCost of revenues\n(49,248)\n(26.3)\n(30,573)\n(19.0)\n(21,604)\n(3,089)\n(15.4)\n\n**Gross profit**** **\n** ****138,275**** **** **\n** ****73.7**** **** **\n** ****130,748**** **** **\n** ****81.0**** **** **\n** ****119,051**** **** **\n** ****17,024**** **** **\n** ****84.6**** **\n\nSelling and marketing expenses\n(94,647)\n(50.5)\n(87,618)\n(54.3)\n(77,459)\n(11,076)\n(55.1)\n\nGeneral and administrative expenses\n(96,712)\n(51.6)\n(39,564)\n(24.5)\n(58,764)\n(8,403)\n(41.8)\n\nResearch and development expenses\n(47,453)\n(25.3)\n(37,811)\n(23.4)\n(29,596)\n(4,232)\n(21.0)\n\nOther income, net\n823\n0.4\n218\n0.1\n4,988\n713\n3.5\n\n**Operating loss**** **\n** ****(99,714****)**** **\n** ****(53.2****)**** **\n** ****(34,027****)**** **\n** ****(21.1****)**** **\n** ****(41,780****)**** **\n** ****(5,974****)**** **\n** ****(29.7****)**\n\nImpairment loss on a long-term investment\n\nInterest income\n23\n0.01\n12\n0.01\n9\n1\n0.01\n\nInterest expense\n(211)\n(0.1)\n(964)\n(0.6)\n(1,088)\n(156)\n(0.8)\n\nChange in fair value of financial liabilities\n(3,728)\n(2.0)\n—\n—\n—\n—\n—\n\nLoss from derecognition of financial liabilities\n(1,953)\n(1.0)\n—\n—\n—\n—\n—\n\n**Loss before\nincome taxes and share of loss of equity method investment **** **\n** ****(105,583****)**** **\n** ****(56.3****)**** **\n** ****(34,979****)**** **\n** ****(21.7****)**** **\n** ****(42,859****)**** **\n** ****(6,129****)**** **\n** ****(30.5****)**\n\nIncome tax expense\n—\n—\n—\n—\n—\n—\n—\n\nShare of loss of an equity method investment\n(38)\n(0.02)\n38\n0.02\n—\n—\n—\n\nNet loss\n(105,621)\n(56.3)\n(34,941)\n(21.7)\n**(42,859****)**** **\n** ****(6,129****)**** **\n** ****(30.5****)**\n\nYear Ended December\n31, 2024 Compared to Year Ended December 31, 2025\n\nRevenues\n\nOur revenues decreased by\n12.8% from RMB161.3 million in 2024 to RMB140.7 million (US$20.1 million) in 2025.\n\nRevenue from digital agricultural\ncommerce services decreased by 11.3% from RMB152.6 million in 2024 to RMB135.3 million (US$19.4 million) in 2025, primarily due to\na decline in revenue from membership services and a decline in revenue from value-added services. Membership revenue declined in 2025\nas we strategically prioritized our agricultural sourcing and trading business, reallocating resources and budgets to accelerate our retail\nnetwork expansion in key production regions. This shift resulted in reduced investments in the digital agricultural commerce business,\nleading to a temporary decrease in related revenue. In addition, revenue from value-added services decreased, mainly attributable to our\nuser experience enhancement initiatives, which included eliminating certain small-item fees.\n\nRevenue from other digital\nagricultural solutions decreased by 38.9% from RMB8.7 million in 2024 to RMB5.3 million (US$761 thousand) in 2025, primarily due\nto government-related projects have decreased.\n\n108\n\nCost\nof Revenues\n\nOur cost of revenues decreased\nby 29.3% from RMB30.6 million in 2024 to RMB21.6 million (US$3.1 million) in 2025.\n\nGross\nProfit and Gross Margin\n\nAs a result of the foregoing,\nour gross profit decreased from RMB130.7 million in 2024 to RMB119.1 million (US$17.0 million) in 2025. Our gross margin increased\nfrom 81.0% in 2024 to 84.6% in 2025, which was primarily due to the decrease in our staff cost related to cost of revenues and decrease\nin our total revenues for the reasons discussed above.\n\nSelling\nand Marketing Expenses\n\nOur selling and\nmarketing expenses decreased by 11.6% from RMB87.6 million in 2024 to RMB77.5 million (US$11.1 million) in 2025, primarily due\nto decrease in advertising and promotion expenses and a decrease in staff cost related to selling and marketing personnel.\n\nGeneral\nand Administrative Expenses\n\nOur general and administrative expenses increased by 48.5% from RMB39.6 million\nin 2024 to RMB58.8 million (US$8.4 million) in 2025, primarily due to the Company’s listing on August 19, 2025, which led to an\nincrease in listing-related consulting fees.\n\nResearch\nand Development Expenses\n\nOur research and\ndevelopment expenses decreased by 21.7% from RMB37.8 million in 2024 to RMB29.6 million (US$4.2 million) in 2025, primarily due\nto a decrease in staff cost relating to research and development professionals in connection with the reduced research and\ndevelopment workforce.\n\nShare\nof Gain of Equity Method Investments\n\nShare of gain of equity method\ninvestments was RMB38 thousand in 2024 due to the company discontinued its investment and recovery of the invested capital. Share of gain\nof equity method investments was nil in 2025.\n\nNet\nLoss\n\nAs a result of the foregoing,\nour net loss increased by 22.7% from RMB34.9 million in 2024 to RMB42.9 million (US$6.1 million) in 2025.\n\nYear Ended December 31,\n2023 Compared to Year Ended December 31, 2024\n\nRevenues\n\nOur revenues decreased by\n14.0% from RMB187.5 million in 2023 to RMB161.3 million in 2024.\n\nRevenue from digital agricultural\ncommerce services decreased by 10.7% from RMB170.9 million in 2023 to RMB152.6 million in 2024, primarily due to\nthe fact that to comply with regulations, the short video feature was disabled, resulting in a decline in monthly active users and\nbusiness conversion rates.\n\nRevenue from other digital\nagricultural solutions decreased by 47.5% from RMB16.6 million in 2023 to RMB8.7 million in 2024, primarily due to government-related projects\nhave decreased.\n\nCost\nof Revenues\n\nOur cost of revenues decreased by 37.9% from RMB49.2 million in\n2023 to RMB30.6 million in 2024.\n\n109\n\nGross\nProfit and Gross Margin\n\nAs a result of the foregoing, our gross profit decreased from RMB138.3 million\nin 2023 to RMB130.7 million in 2024. Our gross margin increased from 73.7% in 2023 to 81.0% in 2024, which was primarily due to the\ndecrease in our staff cost related to cost of revenues and decrease in our total revenues for the reasons discussed above.\n\nSelling\nand Marketing Expenses\n\nOur selling and marketing\nexpenses decreased by 7.4% from RMB94.6 million in 2023 to RMB87.6 million in 2024, primarily due to a decrease in advertising\nand promotion expenses and a decrease in staff cost related to selling and marketing personnel.\n\nGeneral\nand Administrative Expenses\n\nOur general and administrative\nexpenses decreased by 59.1% from RMB96.7 million in 2023 to RMB39.6 million in 2024, primarily due to the increase of share-based compensation\nexpenses related to awards granted to certain directors and management personnel of our company in 2023 and decrease in staff cost.\n\nResearch\nand Development Expenses\n\nOur research and development\nexpenses decreased by 20.3% from RMB47.5 million in 2023 to RMB37.8 million in 2024, primarily due to our reduction in the research\nand development workforce associated with operations that were in the trial-and-error stage and decrease in staff cost.\n\nChange\nin Fair Value of Financial Liabilities\n\nChange in fair value of financial\nliabilities amounted to RMB3.7 million and nil in 2023 and 2024, respectively. It was included overseas direct investment (ODI) convertible\nloans and exchangeable notes, at their fair value at upon conversion.\n\n*Loss from Derecognition of Financial\nLiabilities*\n\nUpon the conversion of ODI\nconvertible loans and exchangeable notes, we recognized loss of RMB2.0 million and nil from derecognition of financial liabilities\nin 2023 and 2024, respectively, which represented the cumulative amount of the gain or loss previously recorded in other comprehensive\nloss resulted from changes in instrument-specific credit risk of the ODI convertible loans and the exchangeable notes.\n\n*Share of (Loss) Gain of Equity\nMethod Investments*\n\nShare of loss of equity method\ninvestments was RMB38 thousand in 2023 due to our investment loss in certain other investees which investments occurred in March and September 2023.\nShare of gain of equity method investments was RMB38 thousand in 2024 due to the company discontinued its investment and recovery of the\ninvested capital.\n\nNet\nLoss\n\nAs a result of the foregoing,\nour net loss decreased by 66.9% from RMB105.6 million in 2023 to RMB34.9 million in 2024.\n\n110\n\nB.LIQUIDITY AND CAPITAL RESOURCES\n\nCash flows and working\ncapital\n\nThe following table sets forth\na summary of our cash flows for the periods indicated:\n\n**For the Year Ended December 31,**\n\n**2023**\n\n**2024**\n\n**2025**\n\n**RMB**\n\n**RMB**\n\n**RMB**\n\n**US$**\n\n**(in thousands)**\n\n**Net cash used in operating activities**\n\n**(17,956**\n**)**\n\n**(61,439**\n**)**\n\n**(49,179**\n**)**\n\n**(7,032**\n**) **\n\n**Net cash (used in)/ provided by investing activities**\n\n**(3,230**\n**)**\n\n**149**\n\n**(850**\n**)**\n\n**(122**\n**)**\n\n**Net cash provided by financing activities**\n\n**18,545**\n\n**60,368**\n\n**152,288**\n\n**22,206**\n\nEffect\nof foreign currency exchange rate changes on cash and cash equivalents\n\n(215\n)\n\n(135\n)\n\n1,455\n\n208\n\n**Net\n(decrease)/ increase in cash and cash equivalents**\n\n**(2,856**\n**)**\n\n**(1,057**\n**)**\n\n**106,714**\n\n**15,260**\n\nCash and cash equivalents at the beginning of the year\n\n6,685\n\n3,829\n\n2,772\n\n396\n\n**Cash and cash equivalents at the end of the year**\n\n**3,829**\n\n**2,772**\n\n**109,486**\n\n**15,656**\n\nTo date, we have financed\nour operating and investing activities primarily through cash provided by historical equity and debt financing activities, including issuance\nof financial liabilities convertible into preferred shares. As of December 31, 2023, 2024 and 2025, we had RMB3.8 million, RMB2.8 million\nand RMB109.5 million (US$15.7 million) in cash and cash equivalents, respectively. Our cash consists primarily of cash on hand and\ncash at bank.\n\nWe experienced recurring operating\nlosses. For the years ended December 31, 2023, 2024 and 2025, we had net cash used in operating activities of RMB18.0 million,\nRMB61.4 million and RMB49.2 million (US$7.0 million) respectively. As of December 31, 2023, 2024 and 2025, we had net current\nliabilities of RMB227.8 million, RMB432.2 million and RMB155.7 million (US$22.3 million), respectively. We will require\nadditional liquidity to continue our operations over the next 12 months. We may need additional cash resources in the future if we\nexperience changes in business conditions or other developments. We may also need additional cash resources in the future if we identify\nand wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions. We are evaluating strategies to\nobtain the required additional funding for future operations. These strategies may include, but are not limited to, obtaining equity financing,\nissuing debt or entering into other financing arrangements, obtaining agreements with the existing investors to extend the due dates for\noutstanding debt. In 2024 and 2025, we borrowed interest free loans in the total amount of RMB28.3 million and RMB28.9 million\n(US$4.1 million) from our founder, respectively. In addition, we plan to diversify revenue streams, such as operating our newly launched\nagricultural sourcing and trading business, and implement cost saving measures to grow revenues and decrease expenses. However, we may\nbe unable to access further equity or debt financing when needed. As such, there can be no assurance that we will be able to obtain additional\nliquidity when needed or under acceptable terms, if at all. See “Item 3. Key Information—D. Risk Factors—Risks Related\nto Our Business and Industry—Our operating cash outflow, net current liabilities, and preferred shareholder redemption rights raise\nsubstantial doubt about our ability to continue as a going concern.” and “Item 3. Key Information—D. Risk Factors—Risks\nRelated to Our Business and Industry—We may require additional capital to pursue our business objectives and respond to business\nopportunities, challenges, or unforeseen circumstances. If we are unable to generate sufficient cash flows or if capital is not available\nto us, our business, operating results, financial condition and prospects could be adversely affected.”\n\nAs of December 31, 2025,\n34.7% and 65.3% of our cash and cash equivalents were held in and outside of mainland China, respectively, with 0.4% of our\ncash and cash equivalents being held by the VIEs. Although we consolidate the results of the VIEs, we only have access to\nthe assets or earnings of the VIE through our contractual arrangements with the VIEs and their shareholders. See “Item 4. Information\non the Company—C. Organizational Structure—Contractual Arrangements and the VIEs.” For restrictions and limitations\non liquidity and capital resources as a result of our corporate structure, see “—Holding Company Structure.”\n\n111\n\nOur accounts receivable primarily\nrepresent receivable for other digital agricultural solutions. As of December 31, 2023, 2024 and 2025, our accounts receivable, net\nof allowance for credit losses, was RMB139.0 thousand, RMB733.0 thousand and RMB945.0 thousand (US$135 thousand), respectively. The\nincrease in accounts receivable, net of allowance for credit losses was primarily due to the customary settlement periods for certain\ndownstream customers at year-end in connection with our sales of certain agricultural products at year-end in response to favorable\nmarket conditions. As of the same dates, our amounts due from related parties was RMB11.3 million, RMB3.4 million and RMB3.4 million\n(US$480 thousand), respectively. Our accounts receivable turnover days decreased from 48 days in 2023 to 18 days in 2024, mainly\ndue to our more stringent collection effort from 2023 to 2024, and increased to 58 days in 2025, mainly attributable to the significant\nyear-over-year increase in sales during the fourth quarter, which led to a large balance of accounts receivable that were still within\ntheir credit period at year end. The aging of accounts receivable balances was considered when estimating the allowance of credit loss.\nAccounts receivable turnover days for a given period are equal to the sum of the average balances of accounts receivable at the beginning\nand the end of the period divided by revenue from other digital agricultural solutions during the period and multiplied by the number\nof days during the same period.\n\nOur accounts payable primarily\nconsists of accounts payable for cloud service. As of December 31, 2023, 2024 and 2025, our accounts payable was RMB3.3 million,\nRMB4.4 million and RMB5.2 million (US$745 thousand), respectively. Our accounts payable turnover days increased from 23 days\nin 2023 to 46 days in 2024, and increased to 81 days in 2025, primarily due to our establishment of long-term relationships\nwith trusted suppliers. Accounts payable turnover days for a given period are equal to average accounts payable balances at the beginning\nand the end of the period divided by total cost of revenues during the period and multiplied by the number of days during the period.\n\nIn utilizing the proceeds\nfrom our initial public offering and other financing activities, we may make additional capital contributions to our mainland China subsidiaries,\nestablish new mainland China subsidiaries and make capital contributions to these new mainland China subsidiaries, make loans to our mainland\nChina subsidiaries, or acquire offshore entities with operations in mainland China in offshore transactions. However, most of these uses\nare subject to mainland China regulations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business\nin Mainland China—Mainland China regulations of loans to and direct investment in domestic entities by offshore holding companies\nand governmental regulations of currency conversion may restrict or delay us from using the proceeds of our initial public offering or\nother offshore financing activities to make loans or additional capital contributions to our subsidiaries in mainland China, which could\nadversely affect our liquidity and our ability to fund and expand our business.”\n\nAll of our revenues have been,\nand we expect will likely to continue to be, denominated in Renminbi. Under existing mainland China foreign exchange regulations, payments\nof current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions,\ncan be made in foreign currencies without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore,\nour mainland China subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain\nroutine procedural requirements. However, approval from or registration with competent government authorities is required where the Renminbi\nis to be converted into foreign currency and remitted out of mainland China to pay capital expenses such as the repayment of loans denominated\nin foreign currencies. The mainland China government may impose laws and regulations from time to time regarding access to foreign currencies\nfor current account transactions in the future. If, in order to comply with the laws and regulations over foreign exchange, we are unable\nto obtain sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies\nto our shareholders, including holders of our ADSs.\n\nOperating activities\n\nNet cash used in operating\nactivities was RMB18.0 million for the year ended December 31, 2023 and was primarily attributable to (i) net loss of RMB105.6 million,\n(ii) various non-cash items of RMB56.1 million, such as depreciation of property and equipment, allowance for credit losses\nand share-based compensation expense etc, (iii) RMB3.9 million increase in account receivables, (iv) RMB11.7 million increase\nin prepayments and other current assets, (v) RMB0.5 million decrease in accounts payable, (vi) RMB9.2 million decrease in contract\nliabilities, and (vii) RMB8.6 million decrease in accrued expenses and other current liabilities.\n\nNet cash used in operating\nactivities was RMB61.4 million for the year ended December 31, 2024 and was primarily attributable to (i) net loss of RMB34.9 million,\n(ii) various non-cash items of RMB1.9 million, such as depreciation of property and equipment, allowance for credit losses etc,\n(iii) RMB0.9 million decrease in account receivables, (iv) RMB5.5 million decrease in prepayments and other current assets,\n(v) RMB1.1 million decrease in accounts payable, (vi) RMB12.0 million increase in contract liabilities, and (vii) RMB11.0 million\nincrease in accrued expenses and other current liabilities.\n\n112\n\nNet cash used in operating activities was RMB49.2 million (US$7.0 million)\nfor the year ended December 31, 2025 and was primarily due to (i) adjustment of non-cash items of RMB2.8 million (US$400 thousand) which\nmainly consists of depreciation, allowance for credit losses, interest expenses related to convertible note and redemption\nof non-controlling interest, and (ii) a net change in operating assets and liabilities by RMB4.6 million (US$657 thousand), which was\nprimarily attributable to prepayments and other current assets, contract liabilities, accrued expenses and other current liabilities and\naccounts payable.\n\nInvesting activities\n\nOur net cash used in investing activities was RMB3.2 million in\n2023. This was attributable to cash paid for purchase of property and equipment of RMB2.1 million in relation to office supplies\nand devices, and cash paid for equity-method investments of RMB1.2 million.\n\nOur net cash provided by investing\nactivities was RMB149 thousand in 2024. This was attributable to cash paid for purchase of property and equipment of RMB351 thousand in\nrelation to office supplies and devices, and proceeds from disposal of investments of RMB500 thousand.\n\nOur net cash used in investing\nactivities was RMB850 thousand (US$122 thousand) in 2025. This was attributable to cash paid for purchase of property and equipment.\n\nFinancing activities\n\nOur net cash provided by financing activities was RMB18.5 million\nin 2023. This was mainly attributable to (i) proceeds from shareholder loans of RMB14.2 million, and (ii) repayment for short-term borrowings\nof RMB2.0 million, (iii) loans repaid by a related party of RMB5.0 million.\n\nOur net cash provided by financing\nactivities was RMB60.4 million in 2024. This was mainly attributable to (i) proceeds from shareholder loans of RMB28.3 million,\n(ii) proceeds from short-term borrowings of RMB10.0 million, (iii) loans repaid by a related party of RMB7.9 million, (iv)\ncapital contribution from non-controlling interest of RMB30.0 million, (v) repayment for shareholder loans of RMB8.4 million,\nand (vi) amounts due to related parties of RMB8.5 million.\n\nOur net cash provided by\nfinancing activities was RMB155.3 million (US$22.2 million) in 2025. This was mainly attributable to proceeds from bank borrowings, proceeds\nfrom shareholder loans, issuance of common stocks-cash and convertible notes payable, partially offset by repayment for bank borrowings,\nrepayment amounts due to related parties and repayment for shareholder loans.\n\nMaterial Cash Requirements\n\nOur material cash requirements\nas of December 31, 2025 and any subsequent interim period primarily include our capital expenditures and contractual obligations.\nWe intend to fund our material cash requirements with our cash balance and proceeds from our initial public offering and other financing\nactivities. We will continue to make cash commitments, including capital expenditures, to meet the expected growth of our business.\n\nCapital Expenditures\n\nOur capital expenditures were\nincurred primarily in connection with office facilities and equipment, furnishing of our buildings and purchase of property. Our capital\nexpenditures were RMB2.1 million in 2023, RMB351 thousand in 2024 and RMB850 thousand (US$122 thousand) in 2025. We will continue\nto make capital expenditures to meet the expected growth of our operations and expect cash generated from our financing activities will\ncontinue to meet our capital expenditure needs in the foreseeable future.\n\n113\n\nContractual Obligations\n\nThe following table sets\nforth our contractual obligations as of December 31, 2025:\n\nPayment Due by December 31,\n\nTotal\n2026\n2027\n2028\nAfter\n\n(RMB in thousands)\n\nOperating lease obligations\n2,747\n2,377\n370\n-\n-\n\nExcept for those disclosed\nabove, we did not have any significant capital or other commitments, long-term obligations, or guarantees as of December 31,\n2025.\n\nOff-Balance Sheet Commitments\nand Arrangements\n\nWe have not entered into any financial guarantees or other commitments\nto guarantee the payment obligations of any third parties. In addition, we have not entered into any derivative contracts that are indexed\nto our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore,\nwe do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity\nor market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity,\nmarket risk or credit support to us or engages in leasing, hedging or product development services with us.\n\nHolding Company Structure\n\nYimutian is a holding company\nwith no material operations of its own. We conduct our operations through our mainland China subsidiaries and the VIEs. As a result,\nYimutian’s ability to pay dividends depends upon dividends paid by our mainland China subsidiaries. If our existing mainland China\nsubsidiaries or any newly formed mainland China subsidiaries incur debt on their own behalf in the future, the instruments governing\ntheir debt may restrict their ability to pay dividends to us. In addition, our mainland China subsidiaries are permitted to pay dividends\nto us only out of their retained earnings, if any, as determined in accordance with accounting standards and regulations in mainland\nChina. Under the laws of mainland China, each of our mainland China subsidiaries and the VIEs is required to set aside at least 10% of\nits after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered\ncapital. In addition, our mainland China subsidiaries may allocate a portion of its after-tax profits based on mainland China accounting\nstandards to enterprise expansion funds and staff bonus and welfare funds at its discretion, and the VIEs may allocate a portion of their\nafter-tax profits based on mainland China accounting standards to a discretionary surplus fund at its discretion. The statutory\nreserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company\nout of mainland China is subject to examination by the banks designated by SAFE. Our mainland China subsidiaries have not paid dividends\nand will not be able to pay dividends until they generate accumulated profits and meets the requirements for statutory reserve funds.\n\nC.RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES,\nETC.\n\nSee “Item 4. Information\non the Company—B. Business Overview—Technology” and “Item 4. Information On the Company—B. Business Overview—Intellectual\nProperty.”\n\nD.TREND INFORMATION\n\nOther than as disclosed elsewhere\nin this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2026\nthat are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that\nwould cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.\n\nE.CRITICAL ACCOUNTING ESTIMATES\n\nAn accounting policy is considered\ncritical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such\nestimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates\nthat are reasonably likely to occur periodically, could materially impact the consolidated financial statements.\n\n114\n\nWe prepare our consolidated\nfinancial statements in conformity with the U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect our\nreported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the end of each fiscal period and the\nreported amounts of revenue and expenses during each fiscal period. We continually evaluate these judgments and estimates based on our\nown historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based\non available information and assumptions that we believe to be reasonable, which together form our basis for making judgments about matters\nthat are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process,\nour actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others\nin their application.\n\nThe selection of critical\naccounting policies, the judgments and other uncertainties affecting application of those policies and the sensitivity of reported results\nto changes in conditions and assumptions are factors that should be considered when reviewing our financial statements. We believe the\nfollowing accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements.\n\nFair value of our\nordinary shares\n\nIn determining our equity\nvalue, we applied the discounted cash flow analysis based on our projected cash flows using our best estimate as of the valuation date.\nThe determination of the fair value of our ordinary shares requires complex and subjective judgments to be made regarding our projected\nfinancial and operating results, our unique business risks, the liquidity of our shares and our operating history and prospects at the\ntime of valuation.\n\nThe income approach involves\napplying appropriate weighted average costs of capital, or WACCs, to estimated cash flows that are based on earnings forecasts. Our revenues\nand earnings growth rates, as well as major milestones that we have achieved, contributed to the increase in the fair value of our ordinary\nshares. The assumptions used in deriving the fair values are consistent with our business plan. These assumptions include: no material\nchanges in the existing political, legal and economic conditions in China; our ability to retain competent management, key personnel\nand staff to support our ongoing operations; and no material deviation in market conditions from economic forecasts. These assumptions\nare inherently uncertain.\n\nThe hybrid method, comprising\nof the probability-weighted expected return method and the option pricing method, was used to allocate equity value of our company\nto preferred and ordinary shares, considering the guidance prescribed by the AICPA Audit and Accounting Practice Aid. This method involves\nmaking estimates of the anticipated timing of a potential liquidity event, such as a sale of our company or an initial public offering\nand estimates of the volatility of our equity securities. The anticipated timing is based on the plans of our board of directors and\nmanagement.\n\nThe major assumptions used\nin calculating the fair value of ordinary shares include:\n\n●*WACCs*: The\nWACCs were determined based on a consideration of the factors including risk-free rate,\ncomparative industry risk, equity risk premium, company size and non-systematic risk\nfactors.\n\n●*Comparable\ncompanies*: In deriving the weighted average cost of capital used as the discount\nrates under the income approach, certain publicly traded companies were selected for reference\nas our guideline companies. The guideline companies were selected based on the following\ncriteria: (i) they operate in the online agriculture industry and (ii) their shares\nare publicly traded in China.\n\n●*Discount\nfor lack of marketability, or DLOM*: DLOM was quantified by the Finnerty’s\nAverage-Strike put options mode. Under this option-pricing method, which assumed\nthat the put option is struck at the average price of the stock before the privately held\nshares can be sold, the cost of the put option was considered as a basis to determine the\nDLOM.\n\nAssumptions are updated at\neach valuation date if required.\n\n115"}