Company: LICN
Filing Date: 2025-04-29
Form Type: 20-F
Source: 0001213900-25-036244
Chunk: 134

Company: Lichen International Ltd
Filing Date: 2025-04-29
Form: 20-F
Item: Item 19
Chunk 134
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 accordance with U. S. GAAP differ from those reflected in the statutory financial statements of the PRC entities.

The PRC entities are
required to set aside at least10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve
funds reach50% of its registered capital. In addition, the PRC entities may allocate a portion of its after-tax profits based on PRC
accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. The PRC entities may allocate a
portion of its after-tax profits based on PRC accounting standards to a discretionary surplus fund at its discretion. The statutory reserve
funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out
of China is subject to examination by the banks designated by State Administration of Foreign Exchange.

As a result of the foregoing
restrictions, the PRC entities are restricted in their ability to transfer their assets to the Company. Foreign exchange and other regulation
in the PRC may further restrict the PRC entities from transferring funds to the Company in the form of dividends, loans and advances.
As of December 31, 2024 and 2023, amounts restricted are the paid-in-capital and statutory reserve of the PRC entities, which amount to
$8.66million and $3.2million, respectively.

  19.      Risks              
           and Concentration  
 ──────────────────────────────

  Concentration   

Financial instruments
that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. As of December 31, 2024 and
2023, approximately $14.65million and $22.13million were deposited with financial institutions located in the PRC, respectively. These
balances are not covered by insurance. While management believes that these financial institutions are of high credit quality, it also
continually monitors their credit worthiness.

The Company is also exposed
to risk from its accounts receivable and other receivables. These assets are subjected to credit evaluations. An allowance has been made
for estimated unrecoverable amounts which have been determined by reference to past default experience and the current economic environment.

A majority of the Company’s
expense transactions are denominated in RMB and a significant portion of the Company and its subsidiaries’ assets and liabilities
are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC