Company: LICN
Filing Date: 2025-04-29
Form Type: 20-F
Source: 0001213900-25-036244
Chunk: 36

Company: Lichen International Ltd
Filing Date: 2025-04-29
Form: 20-F
Item: Item 4A
Chunk 36
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 relating to income taxes have been incurred during the years
ended December 31, 2024, 2023 and 2022. All of the tax returns of the Company’s subsidiaries in PRC remain subject to examination
by the tax authorities for five years from the date of filing.

Statutory surplus reserves

The Company’s PRC subsidiaries
are required to allocate at least 10% of their after-tax profit to the general reserve in accordance with the PRC accounting standards
and regulations. The allocation to the general reserve will cease if such reserve has reached to 50% of the registered capital of respective
company. These reserves can only be used for specific purposes and are not transferable to the Company in form of loans, advances, or
cash dividends. There is no such regulation of providing statutory reserve in Hong Kong.

Advertising expenses

Advertising expenditures are
expensed as incurred and such expenses were included as part of selling and marketing expenses. For the years ended December 2024, 2023
and 2022, the advertising expenses amounted to approximately $11.87 million, $2.37 million and $1.43 million, respectively.

Comprehensive (loss) income

Comprehensive income consists
of two components, net income and other comprehensive income. Other comprehensive income refers to revenue, expenses, gains and losses
that under GAAP are recorded as an element of equity but are excluded from net income. Other comprehensive income consists of a foreign
currency translation adjustment resulting from the Company not using the U. S. dollar as its functional currencies.

(Loss) Earnings per share

The Company computes earnings
per share (“ EPS”) in accordance with ASC 260, Earnings per Share. ASC 260 requires companies to present basic and diluted
EPS. Basic EPS is measured as net income divided by the weighted average common share outstanding for the period. Diluted EPS presents
the dilutive effect on a per-share basis of the potential Ordinary Shares (e. g., convertible securities, options and warrants) as if they
had been converted at the beginning of the periods presented, or issuance date, if later. Potential Ordinary Shares that have an anti-dilutive
effect (i. e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There
were no dilutive or anti-dilutive potential Ordinary Shares or effect for the years ended 2024, 2023 and 2022.

Business combination

Business combinations are
record