| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
| Dec. 31, 2022 |
| Accounting Policies [Abstract] | |
| Basis of Presentation | (a)
Basis of Presentation The
accompanying consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”). The
accompanying consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal
course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on,
among other things, the Group’s ability to operate profitably, to generate cash flows from operations, and its ability to attract
investors and to borrow funds on reasonable economic terms. |
| Principles of Consolidation | (b)
Principles of Consolidation The
consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE for which the WFOE is the
primary beneficiary, and the VIE’s subsidiaries. Subsidiaries
are those entities in which the Company, directly or indirectly, controls more than one half of the voting power or has the power to
govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a
majority of votes at the meeting of directors. A VIE is an entity in which the Company, or its subsidiary, through contractual arrangements,
exercises effective control over the activities that most impact the economic performance, bears the risks of, and enjoys the rewards
normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. All
intercompany transactions and balances among the Company, its subsidiaries, the VIE, and the VIE’s subsidiaries have been eliminated
upon consolidation. The
following table lists major subsidiaries and the consolidated VIEs of the Company as of December 31, 2022: SCHEDULE OF MAJOR SUBSIDIARIES AND CONSOLIDATED VARIABLE INTEREST ENTITIES
Palace of Incorporation Percentage of
Beijing Ronglian Yitong Information Technology Co., Ltd. PRC VIE
Beijing Ronglian Qimo Technology Co., Ltd. PRC 100 %
Beijing Ronglian Guanghui Technology Co., Ltd. PRC 100 %
Beijing Baiyi High-tech Information Technology Co., Ltd. PRC 100 %
Beijing Ronglian Huitong Technology Information Co., Ltd. PRC 100 %
Shenzhen Zhongtian Wangjing Technology Co., Ltd. PRC 100 %
Cloopen Japan Co., Ltd. Japan 100 %
Anxun Guantong (Beijing) Technology Co., Ltd. PRC 100 %
Cloopen limited HK 100 % |
| Use of Estimates | (c)
Use of Estimates The
preparation of the consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet
date, and the reported revenues and expenses during the reported period in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.
Significant accounting estimates reflected in the Group’s financial statements include, but not limited to, revenue recognition,
fair value of assets and liabilities acquired in business combination, the allowance for doubtful accounts receivable and contract assets,
depreciable lives and recoverability of property and equipment and intangible assets, assessment of impairment of long-lived assets,
intangible assets and goodwill, the realization of deferred income tax assets, the fair value of share based compensation awards, redeemable
convertible preferred shares, short-term investments, equity method investments, other equity investments, warrant liabilities, incremental
borrowing rates for operating lease liabilities, the fair value of the ordinary shares to determine the existence of beneficial
conversion feature of the redeemable convertible preferred shares, and management bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the circumstances. In
March 2020, the World Health Organization declared the outbreak of a disease caused by a novel strain of the coronavirus (“COVID-19”)
to be a pandemic. After the initial outbreak of the COVID-19, some instances of COVID-19 infections have emerged from time to time. The
COVID-19 pandemic has created and may continue to create significant uncertainty in the macroeconomic environment which, in addition
to other unforeseen effects of this pandemic, may adversely impact the Group’s results of operations. The extent to which COVID-19
would impacts the results of operations is contingent on the future developments of the outbreak, including constant updates concerning
the global severity of and actions needed to contain the outbreak, which are highly uncertain and unpredictable. Due to the uncertainty
and the economic implications on global economics conditions from the COVID-19 pandemic, certain estimates and assumptions may change
in the near term. |
| Convenience Translation | (d)
Convenience Translation Translations
of the consolidated financial statements from RMB into US$ as of and for the year ended December 31, 2022 are solely for the convenience
of the readers and were calculated at the rate of US$1.00 = RMB 6.8972 |
| Commitments and Contingencies | (e)
Commitments and Contingencies In
the normal course of business, the Group is subject to loss contingencies, such as legal proceedings and claims arising out of its business,
that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters.
An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be
reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot
be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and
material, is disclosed. |
| Business combinations | (f)
Business combinations Business
combinations are recorded using the acquisition method of accounting in accordance with ASC topic 805 (“ASC 805”): Business
Combinations. The acquisition method of accounting requires an acquirer to determine the identifiable acquired assets, the liabilities
assumed and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date. The
consideration transferred for an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given,
liabilities assumed, and equity instruments issued as well as the contingent considerations as of the acquisition date. The costs directly
attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed
are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests.
The excess of (i) the total cost of the acquisition, fair value of the non-controlling interests and acquisition date fair value of any
previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded
as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference
is recognized directly in earnings. |
| Cash | (g)
Cash Cash
consists of cash on hand and cash at bank. Cash at bank are deposited in financial institutions at below locations: SCHEDULE OF CASH ON HAND AND CASH AT BANK
2021 2022
December 31,
2021 2022
RMB RMB
Cash on hand 28 23
Cash balances include deposits in: Financial institutions in the mainland of
the PRC
—Denominated in Renminbi (“RMB”) 224,984 209,053
—Denominated in US$ 121,721 142,257
—Denominated in Hong Kong S.A.R. Dollar (“HKD”) 16 -
Total cash balances held at mainland PRC financial
institutions 346,721 351,310
Financial institutions in Hong Kong Special Administrative Region (“HKSAR”)
—Denominated in HKD 5,942 -
—Denominated in US$ 192,427 105,357
—Denominated in RMB 64,726 -
Total cash balances held at HKSAR financial institutions 263,095 105,357
Financial institutions in Japan
—Denominated in Japanese Yen 8,890 53,464
Total cash balances held at Japan financial institutions 8,890 53,464
Financial institutions in Malaysia
—Denominated in Malaysian Ringgit 105 328
—Denominated in US$ 3,912 3,099
Total cash balances held at Malaysia financial institutions 4,017 3,427
Financial institutions in Singapore
—Denominated in SGD 322 7,513
— Denominated in United Stated Dollars (“USD”) - 301
Total cash balances held at Singapore financial institutions 322 7,814
Financial institutions in the United States
—Denominated in USD 31,893 5,047
Total cash balances held at the United States financial
institutions 31,893 5,047
Financial institutions in the Philippines
—Denominated in PHP 1,213 -
Total cash balances held at the Philippines financial institutions 1,213 -
Financial institutions in Korean
— Denominated in Korean Won (“KRW”) - 298
Total cash balances held at Korean financial institutions - 298
Total cash balances held at financial institutions 656,151 526,717
Total cash balances 656,179 526,740 The
bank deposits, including term deposits, with financial institutions in the mainland of the PRC and Japan are insured by the government
authorities up to RMB 500 10,000 24,678 20,337 |
| Restricted cash | (h)
Restricted cash Cash
balances that have restrictions as to withdrawal or usage are considered restricted cash. Restricted cash that will be released to cash
within the next 12 months is classified as current asset, while the balance restricted for use longer than one year is classified as
non-current asset on the consolidated balance sheets. |
| Term deposits | (i)
Term deposits Term
deposits represent deposits at banks with original maturities more than three months but less than one year. The Group’s term deposits
were denominated in US$ and were deposited at financial institutions in the mainland of the PRC with the interest rate of 0.44 4.20 Term
deposits maintained at financial institutions consist of the following: SCHEDULE OF TERM DEPOSITS MAINTAINED AT BANKS
2021 2022
RMB RMB
US$ denominated bank deposits with financial institutions in the PRC 1,609,864 915,845 To
limit exposure to credit risk relating to bank deposits, the Company primarily places term deposits only with large financial institutions
in the PRC with acceptable credit rating. |
| Short-term Investments | (j)
Short-term Investments The
Group’s short-term investments represent the Group’s investments in financial products managed by financial institutions
in the PRC and Cayman which are redeemable at the option of the Group on any working day. Short-term investments are classified as available
for sale debt securities and reported at fair value, with unrealized holding gains or losses, net of any related income tax effect, excluded
from earnings and recorded as accumulated other comprehensive loss until realized. Realized gains or losses from the sale of short-term
investments are determined on a specific identification basis and are recorded as investment income when earned. |
| Accounts Receivable, net | (k)
Accounts Receivable, net Accounts
receivable are recognized in the period when the Group has provided services to its customers and when its right to consideration is
unconditional. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the consolidated
statements of cash flows. Management considers the following factors when determining the collectability of specific accounts: historical
experience, credit worthiness of the clients, aging of the receivables and other specific circumstances related to the accounts. An allowance
for doubtful accounts is made and recorded into general and administrative expenses based on aging of accounts receivable and on any
specifically identified accounts receivable that may become uncollectible. Accounts receivable which are deemed to be uncollectible are
charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
There is a time lag between when the Group estimates a portion of or the entire account balances to be uncollectible and when a write
off of the account balances is taken. The Group does not have any off-balance sheet credit exposure related to its customers. |
| Long-term investments | (l)
Long-term investments Equity
method investments The
Group applies the equity method to account for an equity interest in an investee over which the Group has significant influence but does
not own a majority equity interest or otherwise control. Under
the equity method of accounting, the Group’s share of the investee’s results of operations is reported as share of losses
of equity method investments in the consolidated statements of comprehensive loss. The
Group recognizes an impairment loss when there is a decline in value below the carrying value of the equity method investment that is
considered to be other than temporary. The process of assessing and determining whether impairment on an investment is other than temporary
requires a significant amount of judgment. To determine whether an impairment is other than temporary, management considers whether it
has the ability and intent to hold the investment until recovery and whether evidence indicating the carrying value of the investment
is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the
severity and duration of the decline in value, any change in value subsequent to the period end, and forecasted performance of the investee. Other
equity investments The
Group elects the measurement alternative in ASC 321 and measures investments in “equity investment” at cost, adjusted for
changes resulting from impairments and observable price changes in orderly transactions for identical or similar securities of the same
issuer. The Group considers information in periodic financial statements and other documentation provided by the investees to determine
whether observable price changes have occurred. The
Group makes a qualitative assessment considering impairment indicators to evaluate whether the equity investments without a readily determinable
fair value is impaired at each reporting period, and written down to its fair value if a qualitative assessment indicates that the investment
is impaired and the fair value of the investment is less than its carrying value. If an equity investment without a readily determinable
fair value is impaired, the Group includes an impairment loss in net income equal to the difference between the fair value of the investment
and its carrying amount. |
| Property and Equipment, net | (m)
Property and Equipment, net Property
and equipment are stated at cost less accumulated depreciation and any recorded impairment. The
estimated useful lives are as follows: SCHEDULE OF ESTIMATED USEFUL LIVES OF PROPERTY AND EQUIPMENT
Computer
and office equipment 3 5
Furniture
and fixtures 3 5
Motor
vehicles 4 5
Buildings 20
Leasehold
improvements The
shorter of lease terms and estimated useful lives Depreciation
on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets. When
items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and the proceeds
received thereon. Ordinary maintenance and repairs are charged to expense as incurred. |
| Intangible Assets, net | (n)
Intangible Assets, net Intangible
assets purchased from third parties are initially recorded at cost and amortized on a straight-line basis over the estimated economic
useful lives. The Group performs valuation of the intangible assets arising from business combination to determine the fair value to
be assigned to each asset acquired. The acquired intangible assets are recognized and measured at fair value and are expensed or amortized
using the straight-line approach over the estimated economic useful lives of the assets. The
estimated useful lives of intangible assets are as follows: SCHEDULE OF ESTIMATED USEFUL LIVES OF INTANGIBLE ASSETS
Software
copyrights 8
Telecommunication
business operation licenses 3 5
Technology 6 10
Non-compete
arrangements 4 7
Customer
relationship 3 10
Trademark 10
Order
backlogs 1 4
Software 3 8 |
| Goodwill | (o)
Goodwill Goodwill
represents the excess of the purchase consideration over the acquisition date amounts of the identifiable tangible and intangible assets
acquired and liabilities assumed from the acquired entity as a result of the Company’s acquisitions of interests in its subsidiaries.
Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate
that it might be impaired. In accordance with ASC 350, the Company may first assess qualitative factors to determine whether it is necessary
to perform the quantitative goodwill impairment test. In the qualitative assessment, the Company considers factors such as macroeconomic
conditions, industry and market considerations, overall financial performance of the reporting unit, and other specific information related
to the operations, business plans and strategies of the reporting unit, including consideration of the impact of the COVID-19 pandemic.
Based on the qualitative assessment, if it is more likely than not that the fair value of a reporting unit is less than the carrying
amount, the quantitative impairment test is performed. The Company may also bypass the qualitative assessment and proceed directly to
perform the quantitative impairment test. The
Company performs the quantitative impairment test by comparing the fair value of each reporting unit to its carrying amount, including
goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not considered to be impaired. If the carrying
amount of a reporting unit exceeds its fair value, the amount by which the carrying amount exceeds the reporting unit’s fair value
is recognized as impairment. Application of a goodwill impairment test requires significant management judgment, including the identification
of reporting units, allocation of assets, liabilities and goodwill to reporting units, and determination of the fair value of each reporting
unit. |
| Impairment of Long-lived Assets | (p)
Impairment of Long-lived Assets Long-lived
assets such as property and equipment and intangible assets with finite lives are evaluated for impairment whenever events or changes
in circumstances indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the
Group had originally estimated. When these events occur, the Group evaluates the impairment for the long-lived assets by comparing the
carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and
their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets,
the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. |
| Value Added Taxes | (q)
Value Added Taxes The
Company’s PRC subsidiaries are subject to value added tax (“VAT”). Revenue from providing cloud communication services
and communication devices sales are generally subject to VAT at the rate of 6 13 6 16 |
| Warrant Liabilities | (r)
Warrant Liabilities The
freestanding warrants to purchase redeemable convertible preferred shares at a future date were determined to be freestanding instruments
that were accounted for as liabilities. At initial recognition, the Group recorded the warrant liabilities on the consolidated balance
sheets at their estimated fair value and changes in estimated fair values were included in the change in fair value of warrant liabilities
on the consolidated statement of comprehensive loss or allocated to the proceeds from the issuance of the debt instrument to the warrants
based on the warrant liabilities fair value. The warrant liabilities are subject to remeasurement at each reporting period and the Group
adjusted the carrying value of the warrant liabilities to fair value at the end of each reporting period utilizing the binominal option
pricing model, with changes in estimated fair value included in the change in fair value of warrant liabilities on the consolidated statement
of comprehensive loss. |
| Fair Value Measurements | (s)
Fair Value Measurements Fair
value represents the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions
that market participants would use in pricing an asset or a liability. Accounting
guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.
Accounting guidance establishes a three-level fair value hierarchy and requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value
hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs are: Level
1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level
2—Include other inputs that are directly or indirectly observable in the marketplace. Level
3—Unobservable inputs which are supported by little or no market activity. Accounting
guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income
approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving
identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present
value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach
is based on the amount that would currently be required to replace an asset. Financial
assets and liabilities of the Group primarily consist of cash, restricted cash, term deposits, short-term investments, accounts receivable
- third parties, net, accounts receivable - related parties, net, other receivables included in prepayments and other current assets,
long-term investment, amounts due from related parties, short-term borrowings, long-term borrowings, accounts payable, contract liabilities,
other payables included in accrued expenses and other current liabilities. The Group measures short-term investments at fair value on
a recurring basis. Short-term investments include financial products issued by financial institutions, which are valued based on prices
per units quoted by issuers and are categorized in Level 2 of the fair value hierarchy. The
Group’s non-financial assets, such as intangible assets and property and equipment, would be measured at fair value only if they
were determined to be impaired. |
| Revenue recognition | (t)
Revenue recognition The
Group accounts for its revenue contracts in accordance with ASC Topic 606, Revenue from Contracts with Customers (ASC 606). According
to ASC 606, revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects
the consideration the Group expects to be entitled to in exchange for those goods or services. The Group determines revenue recognition
through the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract,
(3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize
revenue when (or as) the entity satisfies a performance obligation. The
Group generate substantially all of the Group’s revenues from the following services and products:
(1) Communication
Platform-as-a-Service (“CPaaS”) which allows customers to send text messages
and place voice calls using the Company’s cloud-based platform;
(2) Cloud-based
Contact Centers (“Cloud-based CC”) with which customers can operate their virtual
contact centers and access related value-added services using the Company’s cloud-based
platform; and
(3) Cloud-based
Unified Communications and Collaborations (“Cloud-based UC&C”) where the
Company creates customized communications software on customers’ private clouds to
meet their specific needs and deliver the software licenses to customers. The
Company recognizes revenue upon the transfer of control of promised products or services provided to the Company’s customers, in
the amount of consideration the Company expect to receive for those products or services (excluding sales taxes collected on behalf of
government authorities). The Company’s revenue contracts generally do not include a right of return in relation to the delivered
products or services. The
timing of revenue recognition may differ from the timing of invoicing to the Company’s customers. The Company record a contract
asset when revenue is recognized prior to invoicing, and a contract liability when payment is received from a customer in advance of
revenue recognition. The Company generally issue invoices based on contract terms, which may be when the services are completed, upon
customer acceptance of the Company’s deliverables or at preset milestones. Payments are due with standard payment terms which are
generally not more than 90 days from invoice issuance. We
recognize the incremental costs of obtaining contracts as selling, general and administrative expenses when incurred if the amortization
period of the asset that otherwise would have been recognized is one year or less. Assets recognized for costs to obtain a contract were
not material as of December 31, 2022. Costs to fulfill a contract are recorded as assets if they relate directly to a contract or
a specific anticipated contract, the costs generate or enhance resources that will be used in satisfying performance obligations in the
future and the costs are expected to be recovered. Costs to fulfill a contract recognized as assets primarily consist of labor and materials
costs and generally relate to engineering and set-up costs incurred prior to the satisfaction of performance obligations. Assets recognized
for costs to fulfill a contract are included in the “Prepaid expenses and other current assets” line of the consolidated
balance sheets and were not material as of December 31, 2022. Such assets are recognized as expenses as we transfer the related goods
or services to the customer. All other costs to fulfill a contract are expensed as incurred. As
of December 31, 2022, there were no material amounts of remaining performance obligations that are required to be disclosed. As permitted
by ASC 606, we have elected not to disclose information about remaining performance obligations where i) the performance obligation is
part of a contract that has an original expected duration of one year or less or ii) when we recognize revenue from the satisfaction
of the performance obligation in accordance with the right-to-invoice practical expedient. CPaaS
revenues The
Company accounts for revenue from customers’ usage of text message and voice call services on the Company’s CPaaS platform
as two The
Company also provides services as an agent in provision of CPaaS platforms to customers. The Company identified one 212 166 89 50 41 14 The
service contracts are generally with a length between 3 12 Cloud-based
CC revenues Customers
subscribe to the Company’s basic Cloud-based CC services at a fixed monthly fee and pay for other value-added services on a usage
basis. The Company recognizes the monthly service fees ratably over the contract period during which the Company is obligated to grant
customers continuous access to those basic Cloud-based CC services. Revenue for other value-added services on top of the basic subscription
is determined by applying the contractual unit price to the monthly usage volume and recognized when the related services are provided
to customers. The basic subscription is sold to customers at the same price with or without the value-added services, so the transaction
price is allocated on the basis of observable stand-alone selling prices. The
service contracts are generally with a length between 3 12 months The
Company also offers customized Cloud-based CC solutions to customers with tailored functionalities and interfacing capabilities suitable
to their complicated IT environment. The Company has identified that the nature of our overall promise to customers as the provision
of an appropriately customized and interfaced software solution comprising the customized CC license and other highly interdependent
and interrelated services, and has accounted for the promise as one combined performance obligation. The Company applies an iterative
process to design, test and implement the software in customers’ IT environment and recognizes revenue for this performance obligation
over a period of time during which the control of the customized Cloud-based CC solution is progressively transferred to the customers.
The Company uses an input method to estimate progress, based on the proportion of the labour hours incurred relative to the estimated
total labour hours. The Company also offers standard or non-complex cloud-based CC solutions to customers, and has identified one Cloud-based
UC&C revenues The
Company offers customized Cloud-based UC&C solutions to customers with tailored functionalities and interfacing capabilities suitable
to their complicated IT environment. The Company has identified that the nature of our overall promise to customers as the provision
of an appropriately customized and interfaced software solution comprising the customized UC&C license and other highly interdependent
and interrelated services, and has accounted for the promise as one combined performance obligation. The Company applies an iterative
process to design, test and implement the software in customers’ IT environment and recognizes revenue for this performance obligation
over a period of time during which the control of the customized UC&C solution is progressively transferred to the customers. The
Company uses an input method to estimate progress, based on the proportion of the labour hours incurred relative to the estimated total
labour hours. The Company also offers standard or non-complex cloud-based UC&C solutions to customers, and has identified one |
| Cost of Revenues | (u)
Cost of Revenues Cost
of revenues mainly consists of payroll and related costs for employees, communication service expense associated with the use of facilities
and equipment by these employees, such as rental and depreciation expenses, communication service expense charges to telecom operators
or its distributors and cloud service fees to cloud service providers. |
| Research and Development Expenses | (v)
Research and Development Expenses Research
and development expenses mainly consist of payroll and related costs for employees involved in researching in the field of cloud communication,
and outsourced design expenses as well as expenses associated with the use by these functions of facilities and equipment, such as rental
and depreciation expenses. Research and development expenses are expensed as incurred in accordance with ASC 730 amounted to RMB 174,192 297,360 326,513 |
| Selling and Marketing Expenses | (w)
Selling and Marketing Expenses Selling
and marketing expenses mainly consist of advertising expenses, promotion expenses, payroll and related expenses for personnel engaged
in selling and marketing activities and expenses associated with the use by these functions of facilities and equipment, such as rental
and depreciation expenses. Advertising expenses are expensed when incurred and are included in selling expenses in the consolidated statements
of comprehensive loss. For the years ended December 31, 2020, 2021 and 2022, the advertising expenses were RMB 46,942 57,618 52,716 |
| General and Administrative Expenses | (x)
General and Administrative Expenses General
and administrative expenses mainly consist of payroll and related costs for employees involved in general corporate functions, expenses
associated with the use of facilities and equipment by these employees, such as rental and depreciation expenses, professional fees and
other general corporate expenses. |
| Share-based Compensation | (y)
Share-based Compensation The
Group applied ASC 718, Compensation-Stock Compensation Share-based
compensation in relation to the restricted ordinary shares is measured based on the fair value of the Company’s ordinary shares
at the grant date of the award, which is estimated using the income approach and equity allocation method. Estimation of the fair value
of the Company’s ordinary shares involves significant assumptions that might not be observable in the market, and a number of complex
and subjective variables, discount rate, risk-free interest rate and subjective judgments regarding the Company’s projected financial
and operating results, its unique business risks, the liquidity of its ordinary shares and its operating history and prospects at the
time the grants are made. Share-based compensation in relation to the share options is estimated using the binominal option pricing model.
The determination of the fair value of share options is affected by the fair value of the Company’s ordinary shares as well as
the assumptions regarding a number of complex and subjective variables, including the expected share price volatility, risk-free interest
rate, exercise multiple and expected dividend yield. The fair value of these awards was determined by management with the assistance
from a valuation report prepared by an independent valuation firm using management’s estimates and assumptions. A
change in any of the terms or conditions of share-based awards is accounted for as a modification of the awards. The Company calculates
incremental compensation cost of a modification as the excess of the fair value of the modified awards over the fair value of the original
awards immediately before its terms are modified at the modification date. For vested awards, the Company recognizes incremental compensation
cost in the period the modification occurs. For awards not being fully vested, the Company recognizes the sum of the incremental compensation
cost and the remaining unrecognized compensation cost for the original awards over the remaining requisite service period after modification. |
| Employee Benefits | (z)
Employee Benefits The
Company’s subsidiaries and the VIE and VIE’s subsidiaries in the PRC participate in a government mandated, multi-employers,
defined contribution plan, pursuant to which certain retirement, medical, housing and other welfare benefits are provided to employees.
PRC labor laws require the entities incorporated in the PRC to pay to the local labor bureau a monthly contribution calculated at a stated
contribution rate on the monthly basic compensation of qualified employees. The Company also makes payments to other defined contribution
plans and defined benefit plans for the benefit of employees employed by the subsidiary of Japan. The Group has no further commitments
beyond its monthly contribution. Employee social benefits included as expenses in the accompanying consolidated statements of comprehensive
loss amounted to RMB 45,181 94,148 104,722 |
| Income Taxes | (aa)
Income Taxes The
Company follows the asset and liability method in according for income taxes in according to ASC topic 740”Taxation” (“ASC
740”), Income Taxes, Under this method, current income taxes are provided on the basis of income before income taxes for financial
reporting purposes, and adjusted for income and expense items which are not assessable or deductible for income tax purposes, deferred
income taxes are provided using the liability method. Under this method, deferred income tax assets and liabilities are recognized for
the tax effects of temporary differences and are determined by applying enacted statutory tax rates that will be in effect in the period
in which the temporary differences are expected to reverse to the temporary differences between the financial statements’ carrying
amounts and the tax bases of assets and liabilities. A valuation allowance is provided to reduce the amount of deferred income tax assets
if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred income tax assets
will not be realized. The effect on deferred income taxes arising from a change in tax rates is recognized in the consolidated statements
of comprehensive loss in the period of change. The
Company adopts ASC740 to account for uncertainty in income taxes. ASC740 clarifies a “more likely than not” recognition threshold
in the evaluation of uncertain tax positions. The Group recognizes the benefit of a tax position in its consolidated financial statements
if the tax position is “more likely than not” to prevail based on the facts and technical merits of the position. Tax positions
that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefit that has a greater
than fifty percent likelihood of being realized upon settlement. Unrecognized tax benefits may be affected by changes in interpretation
of laws, rulings of tax authorities, tax audits, and expiry of statutory limitations. In addition, changes in facts, circumstances and
new information may require the Group to adjust the recognition and measurement estimates with regard to individual tax positions. Accordingly,
unrecognized tax benefits are periodically reviewed and re-assessed. Adjustments, if required, are recorded in the Group’s consolidated
financial statements in the period in which the change that necessities the adjustments occur. The ultimate outcome for a particular
tax position may not be determined with certainty prior to the conclusion of a tax audit and, in certain circumstances, a tax appeal
or litigation process. The Group records interest and penalties related to unrecognized tax benefits (if any) in interest expenses and
general and administrative expenses, respectively. As of December 31, 2021 and 2022, the Group did not have any significant unrecognized
uncertain tax positions. |
| Operating Leases | (bb)
Operating Leases The
Company adopted ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) from January 1, 2022 by using the modified retrospective
method and did not restate the comparable periods. The Company has elected the package of practical expedients, which allows the Company
not to reassess (1) whether any expired or existing contracts as of the adoption date are contain a lease, (2) lease classification for
any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption
date. The Company also elected the short-term lease exemption for all contracts with lease terms of 12 months or less. The
Company determines if an arrangement is a lease or contains a lease at lease inception. Leases are classified at the inception date as
either as a finance lease or an operating lease. The Company classifies a lease as a finance lease when the lease meets any one of the
following criteria at lease commencement: a.
The lease transfers ownership of the underlying asset to the lessee by the end of the lease term. b.
The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise. c.
The lease term is for a major part of the remaining economic life of the underlying asset. d.
The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the
lease payments equals or exceeds substantially all of the fair value of the underlying asset. e.
The underlying asset is of such a specialized nature that it is expected to have no alternative use to the Company at the end of the
lease term. For
operating leases, the Company recognizes an ROU asset and a lease liability based on the present value of the lease payments over the
lease term on the consolidated balance sheets at commencement date. At lease commencement, operating lease ROU assets represent the right
to use underlying assets for their respective lease terms and are recognized at amounts equal to the lease liabilities adjusted for any
lease payments made prior to the lease commencement date, less any lease incentives received and any initial direct costs incurred by
the Company. After
lease commencement, operating lease liabilities are measured at the present value of the remaining lease payments using the discount
rate determined at lease commencement. Operating
lease ROU assets are measured at the amount of the lease liabilities and further adjusted for prepaid or accrued lease payments, the
remaining balance of any lease incentives received, unamortized initial direct costs and impairment of the ROU assets, if any. Operating
lease expense is recorded as a single cost on a straight-line basis over the lease term. The
Company’s leases do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information
available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated to
approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased
asset is located. The
effect of the changes made to the Company’s consolidated balance sheet as of January 1, 2022 for the adoption of ASU 2016-02 is
as follows: SCHEDULE
OF CONSOLIDATED BALANCE SHEET FOR ADOPTION
RMB RMB RMB
Balance as of Adjustments due Balance as of
December 31, to the adoption of January 1,
2021 ASU 2016-02 2022
RMB RMB RMB
ASSETS
Prepayments and other current assets 136,665 (2,663 ) 134,002
Operating lease right-of-use assets - 34,948 34,948
LIABILITIES
Operating lease liabilities-current - (20,405 ) (20,405 )
Operating lease liabilities-non current - (11,882 ) (11,882 ) The
impact of adopting ASU 2016-02 on the Company’s consolidated balance sheet as of December 31, 2022 are as follows:
RMB RMB RMB
Adjustments due
to the adoption of
As reported Legacy GAAP ASU 2016-02
RMB RMB RMB
ASSETS
Prepayments and other current assets 108,129 (109,489 ) (1,360 )
Operating lease right-of-use assets 16,342 - 16,342
LIABILITIES
Operating lease liabilities-current (10,162 ) - (10,162 )
Operating lease liabilities-non current (6,448 ) - (6,448 ) The
adoption of the standard did not have significant impact to the Company’s consolidated statements of comprehensive loss or cash
flows for the year ended December 31, 2022. |
| Foreign Currency Translation and Foreign Currency Risks | (cc)
Foreign Currency Translation and Foreign Currency Risks The
Company’s reporting currency is RMB. The functional currency of the Company and its subsidiary incorporated at Hong Kong S.A.R.
is the US$. The functional currency of the Company’s subsidiary incorporated at Japan is JPY. The functional currency of the Company’s
PRC subsidiary, the VIE and the VIE’s subsidiaries is RMB. Transactions
denominated in currencies other than the functional currency are remeasured into the functional currency at the exchange rates prevailing
at the dates of the transactions. Monetary assets and liabilities denominated in a foreign currency are remeasured into the functional
currency using the applicable exchange rate at the balance sheet date. The resulted exchange differences are recorded as foreign currency
exchange gains (losses), net in the consolidated statements of comprehensive loss. The
financial statements of the Company, its subsidiary incorporated at Hong Kong S.A.R. and its subsidiary incorporated at Japan are translated
from the functional currency into RMB. Assets and liabilities are translated into RMB using the applicable exchange rates at the balance
sheet date. Equity accounts other than earnings (deficits) generated in the current period are translated into RMB using the appropriate
historical rates. Revenues, expenses, gains and losses are translated into RMB using the average exchange rates for the relevant period.
The resulted foreign currency translation adjustments are recorded as a component of other comprehensive loss in the consolidated statements
of comprehensive loss, and the accumulated foreign currency translation adjustments are recorded as a component of accumulated other
comprehensive loss in the consolidated statements of changes in shareholders’ deficit. RMB
is not a freely convertible currency. The PRC State Administration for Foreign Exchange, under the authority of the PRC government, controls
the conversion of RMB to foreign currencies. The value of RMB is subject to changes of central government policies and international
economic and political developments affecting supply and demand in the PRC foreign exchange trading system market. |
| Concentration and Risk | (dd)
Concentration and Risk Concentration
of customers and suppliers No No One 11.1 One 17.4 Two 21.0 17.1 Two 12.7 10.5 Two 11.2 11.1 One 11.4 no Two 26.1 13.9 one 21.5 Concentration
of credit risk Financial
instruments that potentially expose the Group to concentrations of credit risk consist principally of cash, restricted cash, term deposits,
short-term investments and accounts receivable. The total amount of these financial instruments was RMB 2,553 1,989 The
Group’s investment policy requires cash, restricted cash, term deposits and short-term investments to be placed with high-quality
financial institutions and to limit the amount of credit risk from any one issuer. The Group regularly evaluates the credit standing
of the counterparties or financial institutions. The
Group conducts credit evaluations on its customers prior to delivery of goods or services. The assessment of customer creditworthiness
is primarily based on historical collection records, research of publicly available information and customer on-site visits by senior
management. Based on this analysis, the Group determines what credit terms, if any, to offer to each customer individually. If the assessment
indicates a likelihood of collection risk, the Company will not deliver the services or sell the products to the customer or require
the customer to pay cash, post letters of credit to secure payment or to make significant down payments. Interest
rate risk The
Group’s short-term bank borrowings bears interests at fixed rates. If the Group were to renew these loans, the Group might be subject
to interest rate risk. |
| Loss per Share | (ee)
Loss per Share In
accordance with ASC 260, Earnings per Share, The
Company’s preferred shares and restricted ordinary shares are participating securities. The preferred shares are participating
securities as they participate in undistributed earnings on an as-if-converted basis and the restricted ordinary shares are participating
securities as the holders of the restricted ordinary shares have a non-forfeitable right to receive dividends with all ordinary shares.
Neither the preferred shares nor the restricted ordinary shares has a contractual obligation to fund or otherwise absorb the Group’s
losses. Accordingly, any undistributed net income is allocated on a pro rata basis to the ordinary shares, preferred shares and restricted
ordinary shares; whereas any undistributed net loss is allocated to ordinary shares only. Unvested
restricted ordinary shares are excluded from the weighted average number of ordinary shares outstanding because the restricted ordinary
shareholders must return the restricted ordinary shares to the Company, if the specified condition are not met. Diluted
loss per share is calculated by dividing net loss attributable to ordinary shareholders, as adjusted for the effect of dilutive ordinary
equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the
period. Ordinary equivalent shares consist of shares issuable upon the conversion of the preferred shares and shares issuable upon the
exercise of warrants, and ordinary shares issuable upon the vest of restricted ordinary shares or exercise of outstanding share option
(using the treasury stock method). Ordinary equivalent shares are calculated based on the most advantageous conversion rate or exercise
price from the standpoint of the security holder. Ordinary equivalent shares are not included in the denominator of the diluted loss
per share calculation when inclusion of such shares would be anti-dilutive. |
| Segment Reporting | (ff)
Segment Reporting The
Company’s chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when
making decisions about allocating resources and assessing performance of the Group. For the purpose of internal reporting and management’s
operation review, the Company’s chief executive officer and management personnel do not segregate the Group’s business by
product or service. All products and services are viewed as in one and the only operating segment. |
| Treasury Stock | (gg)
Treasury Stock The
Company accounts for treasury stock using the cost method. Under this method, the cost incurred to purchase the stock is recorded in
the treasury stock account on the consolidated balance sheets. At retirement of the treasury stock, the ordinary shares account is charged
only for the aggregate par value of the shares. The excess of the acquisition cost of treasury stock over the aggregate par value is
allocated between additional paid-in capital and retained earnings. |
| Statutory Reserves | (hh)
Statutory Reserves In
accordance with the PRC Company Laws, the Group’s PRC subsidiary, VIE and VIE’s subsidiaries must make appropriations from
their after-tax profits as determined under the generally accepted accounting principles in the PRC (“PRC GAAP”) to non-distributable
reserve funds including statutory surplus fund and discretionary surplus fund. The appropriation to the statutory surplus fund must be
10% of the after-tax profits as determined under PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50%
of the registered capital of the PRC companies. Appropriation to the discretionary surplus fund is made at the discretion of the PRC
companies. The
statutory surplus fund and discretionary surplus fund are restricted for use. They may only be applied to offset losses or increase the
registered capital of the respective companies. These reserves are not allowed to be transferred to the Company by way of cash dividends,
loans or advances, nor can they be distributed except for liquidation. During
the years ended December 31, 2021 and 2022, no |
| Impact of newly adopted accounting pronouncement | (ii)
Impact of newly adopted accounting pronouncement In
November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) — Disclosures by Business Entities about
Government Assistance adopted January 1, 2022 no |
| Recently issued accounting pronouncements not yet adopted | (jj)
Recently issued accounting pronouncements not yet adopted In
June 2016, the FASB amended ASU 2016-13, Financial Instruments— Credit Losses (Topic 326) Financial Instruments—Credit Losses
(Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Financial Instruments –
Credit Losses In
October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities
from Contracts with Customers, In
June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to
Contractual Sale Restrictions In
September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier
Finance Program Obligations In
March 2023, the FASB issued ASU No. 2023-02, Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments
in Tax Credit Structures Using the Proportional Amortization Method In
October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure
Update and Simplification Initiative In
December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
