YOUL 20-F Report ended July 9, 2025

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended 

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report: July 9, 2025

Commission File Number: 001-42682

Youlife Group Inc.

(Exact name of Registrant as specified in its charter)

Yunlei Wang

Room C431, Changjiang Software Park

No.180 South Changjiang Road

Baoshan District, Shanghai 201900, China

+86 21 6173-6744

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the shell company report: 76,048,600 ordinary shares (consisting of 64,887,792 Class A ordinary shares or Class A ordinary shares represented by American depositary shares and 11,160,808 Class B ordinary shares) and 7,617,500 warrants outstanding as of July 9, 2025.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☐

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting over Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☐

TABLE OF CONTENTS 

EXPLANATORY NOTE

On July 9, 2025, Youlife Group Inc. (the “Company” or “We”) consummated the previously announced business combination with Distoken Acquisition Corporation (“Distoken”), pursuant to the business combination agreement, dated as of May 17, 2024, as amended on November 13, 2024 and January 17, 2025 (as it may be further amended, supplemented and/or restated from time to time, the “Business Combination Agreement”) by and among Distoken, the Company, Xiaosen Sponsor LLC, a Cayman Islands limited liability company (the “Sponsor”), Youlife I Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of the Company (“First Merger Sub”), Youlife II Limited, a Cayman Islands exempted company and a wholly-owned subsidiary of the Company (“Second Merger Sub”), and Youlife International Holdings Inc., a Cayman Islands exempted company (“Youlife”).

Under the Business Combination Agreement, the Business Combination (as defined below) were effected in two steps. On July 8, 2025, First Merger Sub merged with and into Youlife (the “First Merger”), with Youlife surviving the First Merger as a wholly-owned subsidiary of the Company and the outstanding shares of Youlife being converted into the right to receive shares of the Company. On July 9, 2025, Second Merger Sub merged with and into Distoken (the “Second Merger,” and together with First Merger, the “Mergers”), with Distoken surviving the Second Merger as a wholly-owned subsidiary of the Company and the outstanding securities of Distoken being converted into the right to receive substantially equivalent securities of the Company (in the form of the Company ADSs, except for certain restricted securities) (the Mergers together with the other transactions contemplated by the Business Combination Agreement and other ancillary documents, the “Business Combination”).

Under the Business Combination Agreement, the aggregate merger consideration amount paid to the shareholders of Youlife is $700,000,000 and was paid entirely in newly issued Company Class A Ordinary Shares (as defined below) (including the Company Class A Ordinary Shares in the form of the Company ADSs) and the Company Class B Ordinary Shares, in each case as defined below, at the Closing, with each share valued at $10.00 (the “Merger Consideration”). 

Prior to the First Merger Effective Time (as defined below), the Company has caused a sponsored American depositary share facility for the Company Class A Ordinary Shares to be established with a reputable depositary bank reasonably acceptable to Distoken (such bank or any successor depositary bank, the “Depositary Bank”) for the purpose of issuing and distributing the American depositary shares of the Company , each representing one Company Class A Ordinary Share (“Company ADSs”).

As a result of the Mergers, (a) (i) each security of Youlife that was not subject to any lock-up restrictions, other than the ordinary shares of Youlife held by Youtch Investment Co., Ltd., a holding company wholly owned by Mr. Yunlei Wang, Chief Executive Officer and Chairman of the Board of Directors of Youlife and the Company (the “Youlife Founder Shares”), that was issued and outstanding immediately prior to the time the First Merger was effective (the “First Merger Effective Time”) was cancelled and converted into the right to receive such number of Class A ordinary shares of the Company (“Company Class A Ordinary Shares”) equal to the Exchange Ratio (as defined below) in the form of the Company ADSs, and (ii) each security of Youlife that was subject to lock-up restrictions, other than the Youlife Founder Shares, that was issued and outstanding immediately prior to the time the First Merger Effective Time was cancelled and converted into the right to receive such number of the Company Class A Ordinary Shares equal to the Exchange Ratio, in each case in accordance with the Business Combination Agreement, (b) each Youlife Founder Share that was issued and outstanding immediately prior to the First Merger Effective Time was cancelled and converted into the right to receive such number of Class B ordinary shares of the Company (“Company Class B Ordinary Shares”) equal to the Exchange Ratio and in accordance with the Business Combination Agreement, with each such Company Class B Ordinary Share entitling each holder thereof to 20 votes for each Company Class B Ordinary Share held by such holder, (c) each outstanding ordinary share of Distoken that was issued and outstanding immediately prior to the time the Second Merger was effective was cancelled and converted into the right to receive an equivalent number of the Company Class A Ordinary Shares in the form of the Company ADSs (excluding certain restricted securities held by the Sponsor which was exchanged for the Company Class A Ordinary Shares), (d) each outstanding public warrant and Private Warrant (as defined below) of Distoken was convert into one Company public warrant and one Company private warrant, respectively (which has the right to acquire the Company ADSs), and (e) each issued and outstanding purchaser right of Distoken (excluding certain restricted securities held by the Sponsor which was exchanged for the Company Class A Ordinary Shares) was automatically converted into one-tenth of one Company Class A Ordinary Share in the form of the Company ADSs. “Exchange Ratio” means (i) the Merger Consideration as of the First Merger Effective Time divided by (ii) the total number of ordinary shares and preferred shares of Youlife. The Company Class A Ordinary Shares and the Company Class B Ordinary Shares are collectively referred to as “Company Ordinary Shares.” 

On April 16, 2025 and April 28, 2025, the Company entered into certain Subscription Agreements (the “PIPE Subscription Agreements”) with Distoken and certain investors (the “PIPE Investors”), pursuant to which, among other things, the PIPE Investors agreed to subscribe for and purchase, and the Company agreed to issue and sell to the PIPE Investors, an aggregate of 2,704,949 Class A Ordinary Shares, at a purchase price equal to $10.00 per share (the “PIPE Private Placement”) in connection with a financing effort related to the transactions contemplated by the Business Combination Agreement. The PIPE Private Placement was consummated simultaneously with the closing of the Business Combination. 

As a result of the foregoing transactions, there were 76,048,600 Ordinary Shares (consisting of 64,887,792 Class A Ordinary Shares and 11,160,808 Class B Ordinary Shares) and 7,617,500 Warrants (consisting of 6,900,000 Public Warrants and 717,500 Private Warrants) outstanding as of July 9, 2025.

On July 10, 2025, the ADSs of the Company commenced trading on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “YOUL.” The Warrants of the Company are quoted on the Over-the-Counter market (“OTC market”).

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Report contains forward-looking statements, which statements involve substantial risks and uncertainties. These forward-looking statements include, among other things, statements about the parties’ ability to close the Business Combination, the timing of the closing of the Business Combination, the anticipated benefits of the Business Combination, the financial conditions, results of operations, earnings outlook and prospects of Distoken, Youlife and the Company for the period following the consummation of the Business Combination. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would,” “will,” “seek,” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

These forward-looking statements are based on information available as of the date of this Report and on the current expectations, forecasts and assumptions of the management of Distoken and Youlife, involve a number of judgments, risks and uncertainties and are inherently subject to changes in circumstances and their potential effects and speak only as of the date of such statements. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed, contemplated or implied by these forward-looking statements. The forward-looking statements contained in this Report include, but are not limited to, statements about:

Forward-looking statements are provided for illustrative purposes only and are not guarantees of performance. You should understand that the factors discussed under the heading “Risk Factors” and elsewhere in this Report could affect the future results of Youlife and Distoken, and the Company following the Business Combination, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements in this Report. 

In addition, the risks described under the heading “Risk Factors” are not exhaustive. Other sections of this Report describe additional factors that could adversely affect the businesses, financial conditions, or results of operations of Youlife or Distoken, and the Company following the Business Combination. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can Youlife or Distoken assess the impact of all such risk factors on the businesses of Youlife or Distoken, and the Company following the Business Combination, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Youlife, Distoken, and the Company following the Business Combination, undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 

Market, ranking and industry data used throughout this Report, including statements regarding market size, is based on independent industry surveys and publications, including reports by CIC. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While Youlife is not aware of any misstatements regarding the industry data presented herein, its estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Youlife” in this Report.

In addition, this Report contains statements of belief and similar statements that reflect the beliefs and opinions of Youlife or Distoken, as applicable, on the relevant subject. These statements are based upon information available to Youlife or Distoken, as applicable, as of the date of this Report, and while such party believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that Youlife or Distoken, as applicable, has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

All subsequent written and oral forward-looking statements concerning the Business Combination or other matters addressed in this Report and attributable to Distoken or Youlife or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Report.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Information regarding the directors and executive officers of Youlife Group Inc. after the completion of the Business Combination is included under the section “Item 6. Directors, Senior Management and Employees.”

The business address for each of our directors and executive officers is Room C431, Changjiang Software Park, No.180 South Changjiang Road, Baoshan District, Shanghai 201900, China.

Baker & McKenzie LLP acted as counsel for the Company and Youlife, and will act as counsel to the Company upon and following the consummation of the Business Combination. The address of Baker & McKenzie LLP is Suite 3401, China World Office 2, China World Trade Centre, 1 Jianguomenwai Dajie, Beijing 100004, China.

Haiwen & Partners acted as the PRC counsel for the Company and Youlife, and will act as the PRC counsel to the Company upon and following the consummation of the Business Combination. The address of Haiwen & Partners is 20/F Fortune Financial Center 5 Dong San Huan Central Road Chaoyang District Beijing 100020, China.

Campbells acted as the Cayman counsel for the Company and Youlife, and will act as the Cayman counsel to the Company upon and following the consummation of the Business Combination. The address of Campbells is 3002-04, 30/F Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong.

Onestop Assurance PAC acted as the independent registered public accounting firm of Youlife, for its financial statements as of December 31, 2022, 2023 and 2024 and for the years then ended, and will be the Company’s independent registered public accounting firm after the consummation of the Business Combination. The address of Onestop Assurance PAC is 10 Anson Road #06-15 International Plaza, Singapore.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

The following table sets forth the capitalization of the Company on an unaudited pro forma condensed combined basis as of December 31, 2024, after giving effect to the Business Combination and the PIPE Private Placement.

Not applicable.

The risk factors associated with the Company are described in the Form 424B3 filed with the Securities And Exchange Commission (the “SEC”) on May 15, 2025 (the “Form 424B3”) in the section titled “Risk Factors,” which is incorporated herein by reference.

ITEM 4. INFORMATION ON THE COMPANY

Corporate History

On February 26, 2019, Youlife was incorporated as an exempted company with limited liability in the Cayman Islands.

On March 27, 2019, Youlife Technology Limited (“Youlife Technology”) was incorporated in Hong Kong with a total issued share capital of HK$10,000. On the same day, an aggregate of 10,000 shares were allotted and issued to Youlife and Youlife Technology became a directly wholly-owned subsidiary of Youlife.

Pursuant to an investment agreement dated August 31, 2020, as a portion of the onshore part of the Series C Investment, You Service Industrial Company Limited (“You Service”) subscribed for 2.0% shareholding interest in Shanghai Youerlan Information Technology Co., Ltd. (“Shanghai Youerlan”) at a consideration of US$5 million, which was based on the pre-money valuation of RMB1.5 billion of our Group in the Series C Investment and fully settled on November 19, 2020. Upon the completion of such investment, Shanghai Youerlan became a sino-foreign joint venture.

Pursuant to the respective equity transfer agreements dated October 30, 2020, Youlife Technology acquired an aggregate of approximately 98.0% shareholding interest in Shanghai Youerlan from its then shareholders (except for You Service) at a total consideration of the US dollars equivalent to RMB406.56 million, upon the filing of the shareholding changes Shanghai Youerlan was held by Youlife Technology and You Service as to approximately 98.0% and 2.0%, respectively.

From October to November 2020, Youlife conducted a share restructuring primarily for the purpose of reflecting the onshore shareholding structure of Shanghai Youerlan at the offshore level and facilitating the aforesaid offshore part of the Series C Investment. Such share restructuring comprised:

Pursuant to a share swap agreement dated November 5, 2020, VisionGain Ventures Limited (“VisionGain Ventures”), an offshore affiliate of the then shareholders of You Service, subscribed for 4,666,667 Series C Preferred Shares, in consideration of which, the then shareholders of You Service transferred their entire shareholding interest in You Service to our Company. Upon the completion of such share swap on November 13, 2020, both You Service and Shanghai Youerlan became indirectly wholly-owned subsidiaries of Youlife.

As of the date of this Report, Youlife’s operations in mainland China are conducted by its mainland China subsidiaries and it does not have any VIE structure.

Business Combination with Distoken  

On July 9, 2025, the Company consummated the previously announced business combination with Distoken, pursuant to the Business Combination Agreement by and among Distoken, the Company, the Sponsor, the First Merger Sub, the Second Merger Sub, and Youlife. 

Under the Business Combination Agreement, the Business Combination were effected in two steps. On July 8, 2025, First Merger Sub merged with and into Youlife, with Youlife surviving the First Merger as a wholly-owned subsidiary of the Company and the outstanding shares of Youlife being converted into the right to receive shares of the Company. On July 9, 2025, Second Merger Sub merged with and into Distoken, with Distoken surviving the Second Merger as a wholly-owned subsidiary of the Company and the outstanding securities of Distoken being converted into the right to receive substantially equivalent securities of the Company (in the form of the Company ADSs, except for certain restricted securities).

Under the Business Combination Agreement, the aggregate merger consideration amount paid to the shareholders of Youlife is $700,000,000 and was paid entirely in newly issued Company Class A Ordinary Shares (including the Company Class A Ordinary Shares in the form of the Company ADSs) and the Company Class B Ordinary Shares, in each case as defined below, at the Closing, with each share valued at $10.00. 

Prior to the First Merger Effective Time, the Company has caused a sponsored American depositary share facility for the Company Class A Ordinary Shares to be established with the Depositary Bank reasonably acceptable to Distoken for the purpose of issuing and distributing the Company ADSs, each representing one Company Class A Ordinary Share. 

As a result of the Mergers, (a) (i) each security of Youlife that was not subject to any lock-up restrictions, other than the Youlife Founder Shares, that was issued and outstanding immediately prior to the time the First Merger Effective Time was cancelled and converted into the right to receive such number of Company Class A Ordinary Shares equal to the Exchange Ratio in the form of the Company ADSs, and (ii) each security of Youlife that was subject to lock-up restrictions, other than the Youlife Founder Shares, that was issued and outstanding immediately prior to the time the First Merger Effective Time was cancelled and converted into the right to receive such number of the Company Class A Ordinary Shares equal to the Exchange Ratio, in each case in accordance with the Business Combination Agreement, (b) each Youlife Founder Share that was issued and outstanding immediately prior to the First Merger Effective Time was cancelled and converted into the right to receive such number of Company Class B Ordinary Shares equal to the Exchange Ratio and in accordance with the Business Combination Agreement, with each such Company Class B Ordinary Share entitling each holder thereof to 20 votes for each Company Class B Ordinary Share held by such holder, (c) each outstanding ordinary share of Distoken that was issued and outstanding immediately prior to the time the Second Merger was effective was cancelled and converted into the right to receive an equivalent number of the Company Class A Ordinary Shares in the form of the Company ADSs (excluding certain restricted securities held by the Sponsor which was exchanged for the Company Class A Ordinary Shares), (d) each outstanding public warrant and Private Warrant (as defined below) of Distoken was convert into one Company public warrant and one Company private warrant, respectively (which has the right to acquire the Company ADSs), and (e) each issued and outstanding purchaser right of Distoken (excluding certain restricted securities held by the Sponsor which was exchanged for the Company Class A Ordinary Shares) was automatically converted into one-tenth of one Company Class A Ordinary Share in the form of the Company ADSs.

Additional Agreements in connection with the Business Combination

This section describes the material provisions of certain additional agreements entered into pursuant to or in connection with the Business Combination Agreement.

Lock-up Agreements

The Company, Youlife and Distoken entered into the Founder Lock-up Agreement with the Sponsor prior to the Closing, amending and restating the lock-up agreement that was executed by the Sponsor on May 17, 2024, and superseding the provisions of the Insider Letter Agreement with respect to transfer restrictions on the Founder Shares. The Founder Lock-up Agreement provides for a lock-up period with respect to the Founder Shares commencing on the Closing Date and ending on the one-year anniversary of the Closing Date (with respect to 50% of such shares subject to early release if the last trading price of the Company ADSs equals or exceeds $12.50 for any 20 trading days within any 30 trading day period commencing at least 150 days after the Closing).

The Company, Youlife and Distoken entered into the Company Founder Lock-up Agreement with Youtch Investment Co., Ltd., a holding company wholly owned by Mr. Yunlei Wang, prior to the Closing, amending and restating the lock-up agreement that was executed by Youtch Investment Co., Ltd., on May 17, 2024. The Company Founder Lock-up Agreement provides for a lock-up period commencing on the Closing Date and ending on the one-year anniversary of the Closing Date (with respect to 50% of such shares subject to early release if the last trading price of the Company ADSs equals or exceeds $12.50 for any 20 trading days within any 30 trading day period commencing at least 150 days after the Closing).

The Company, Youlife and Distoken also entered into the Company Lock-up Agreements with each shareholder of Youlife (other than Mr. Yunlei Wang) prior to the Closing, certain of which Company Lock-Up Agreements will amend and restate the lock-up agreements that were executed by certain shareholders of Youlife on May 17, 2024. The Company Lock-up Agreements provide for a lock-up period commencing on the Closing Date and ending on the date that is 180 calendar days after the Closing Date (with respect to 50% of such shares subject to early release if the last trading price of the Company ADSs equals or exceeds $12.50 for any 20 trading days within any 30 trading day period commencing at least 90 days after the Closing). The restrictions set forth in the Company Lock-Up Agreements are waivable in writing by the Company the Company, Youlife and Distoken at any time prior to the Closing, and they may do so to the extent required for the Company to have sufficient public float to meet Nasdaq initial listing requirements.

Prior to the Closing of the Business Combination, Distoken and Youlife released the Company Ordinary Shares issuable to certain Youlife shareholders from the transfer restrictions under the lock-up agreements in order to satisfy the initial listing requirements of the Nasdaq Stock Market.

Shareholder Support Agreements

Simultaneously with the execution of the Business Combination Agreement, Distoken, Youlife, and shareholders of Youlife collectively holding approximately 69.1% of outstanding Youlife Ordinary Shares (calculated on an as-converted basis) have entered into a Shareholder Support Agreement (the “Shareholder Support Agreement”), pursuant to which, among other things, the shareholders of Youlife have agreed (a) to vote all of Youlife Ordinary Shares held by the respective Youlife shareholders in favor of the adoption of the Business Combination Agreement, the Ancillary Documents and the Transactions (including the First Merger), subject to certain customary conditions, and (b) not to transfer any of their subject shares (or enter into any arrangement with respect thereto), subject to certain customary conditions.

Non-Competition and Non-Solicitation Agreements

Simultaneously with the execution of the Business Combination Agreement, certain Youlife Shareholders entered into non-competition and non-solicitation agreements (the “Non-Competition and Non-Solicitation Agreements”) in favor of the Company, Distoken and Youlife. Under the Non-Competition and Non-Solicitation Agreements, certain Youlife Shareholders agreed not to compete with the Company during the three-year period following the Closing and, during such three-year restricted period, not to solicit employees or customers of the Company. The Non-Competition and Non-Solicitation Agreement also contains customary confidentiality and non-disparagement provisions.

Registration Rights Agreement

Pursuant to a registration rights agreement entered into on February 15, 2023, the holders of the Founder Shares, Representative Shares, Private Units and any units that may be issued on conversion of the Working Capital Loans (and any securities underlying the Private Units or units issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to a registration rights agreement. The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

PIPE Subscription Agreements with PIPE Investors

On April 16, 2025 and April 28, 2025, the Company entered into certain PIPE Subscription Agreements with Distoken and PIPE Investors, pursuant to which, among other things, the PIPE Investors agreed to subscribe for and purchase, and the Company agreed to issue and sell to the PIPE Investors, an aggregate of 2,704,949 Class A Ordinary Shares, at a purchase price equal to $10.00 per share in connection with a financing effort related to the transactions contemplated by the Business Combination Agreement. The PIPE Private Placement was consummated simultaneously with the closing of the Business Combination. 

For details for the terms of the Subscription Agreements please refer to Exhibits 4.3 and 4.4 to this Report.

Following and as a result of the Business Combination, all business of the Company is conducted through the Company and its subsidiaries. A description of the business of the Company is included in the Form 424B3 in the sections titled “Information about Youlife”, which is incorporated herein by reference.

Upon consummation of the Business Combination, Distoken became a wholly owned subsidiary of the Company. A description of the organizational structure of the Company is included in the Form 424B3 in the section entitled “Summary of the Proxy Statement/Prospectus—Organizational Structure—Structure of Pubco after the Business Combination” which is incorporated herein by reference.

The Company’s principal executive offices are located at Room C431, Changjiang Software Park, No.180 South Changjiang Road, Baoshan District, Shanghai 201900, China. As of December 31, 2024, the Company leased 147 properties with an aggregate GFA of approximately 20,041.71 square meters, which are primarily used as offices purpose. Such leased properties are described in the Form 424B3 in the section entitled “Information about Youlife—Properties” and are incorporated herein by reference.

ITEM 4A. UNRESOLVED STAFF COMMENTS

None.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS  

Following the Business Combination, our business is conducted through Youlife, the PRC subsidiaries, which are the direct wholly-owned subsidiaries of Youlife. You should read the following discussion and analysis of the financial condition and results of operations of Youlife in conjunction with its consolidated financial statements and the related notes included elsewhere in this Report. This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations. The actual results of Youlife and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those we describe under “Item 3. Key Information — D. Risk Factors” and elsewhere in this Report. 

Key Factors Affecting Our Results of Operations

Our results of operations and financial condition are affected by the general factors affecting China’s blue-collar lifetime service market, including, among others, China’s overall economic growth, the competitive environment in China and greater challenges in hiring. In addition, our results of operations and financial condition are also affected by factors driving the blue-collar lifetime service market in China, such as growth of the blue-collar sector. Unfavorable changes in any of these general factors could materially and adversely affect our results of operations.

While our business is influenced by general factors affecting our industry, our results of operations are more directly affected by the following specific factors.

Our business mix

We have broad and diversified blue-collar lifetime service offerings, each of which complement and benefit each other and ensure our ability to withstand market while maintaining a strong financial growth trajectory. A shift in our revenue mix would affect our gross profit margin, as the gross profit margin of each business segment varies. Any change in the revenue mix or change in the profitability of any service offered may have a corresponding impact on our overall profitability. We may in the future further adjust our business structure and strategies to improve our profitability. Any further changes on our business mix may affect our profitability.

Our brand positioning and pricing ability

We rely on our well-established brand awareness and recognition, such as our brands “Youlan” and “Tiankun Education,” and our reputation in providing quality services. Our ability to maintain our relationship with existing customers and attract new customers depends, to a large extent, on our ability to continue to enhance brand recognition. We believe trusted brands enable us to expand our customer base, collaborate with more third parties, make our services more acceptable and lead to more business opportunities.

Our results of operations are also affected by the level of fees which we are able to charge. As we operate in a highly competitive and fragmented industry, our ability to price our services at the level we desire, while at the same time maintaining competitive, is dependent on a number of factors, including the pricing guideline and/or restriction issued or imposed by the relevant government authorities, the demand for our services, the supply of similar services in the market, prices set by our competitors and the competitive landscape of blue-collar lifetime service industry in China. To maintain our prices, we endeavor to diversify our services by offering more solution based, customized curricula and services. We aim to achieve a balance between pricing our services competitively while maintaining our position as a quality blue-collar lifetime service provider and ensuring an attractive profit margin. Failure to balance various factors in determining our pricing could materially and adversely affect our financial condition and results of operations.

Our ability to control operating costs and expenses

Our profitability is also affected by our ability to control our operating costs and expenses. We have been continuously improving our cost efficiency. In 2023 and 2024, our cost of sales represented 85.3% and 85.5% of our total revenue, respectively. Our cost of sales primarily consists of personnel costs, constituting approximately 79.8% and 89.7% of our cost of sales in 2023 and 2024, respectively, and most of the personnel costs were the staff costs of blue-collar talent associated with our employee management services.

We expect the cost of sales to continue to be our most significant operating costs and expenses going forward, in light of our continuous expansion. If we are unable to control our operating costs and expenses, our profitability may be materially and adversely affected.

Our ability to timely and continuously source adequate blue-collar talent who meets the requirements of our customers

We generated a significant portion of our revenue from our employee management services in 2023 and 2024. Our business depends on our ability to timely and continuously source large number of suitable blue-collar talent to support our corporate customers’ staffing needs. Our ability to continue to drive the organic growth of our blue-collar talent potential is primarily driven by factors including our ability to match them with career opportunities, the quality of our services, the range and effectiveness of our recruitment service and delivery sites, and our brand reputation.

Competition for blue-collar talent with certain skills and experience may be intense, and qualified blue-collar talent may not be available to us in a sufficient number and on terms of employment acceptable to us. Going forward, our ability to recruit enough blue-collar talent who possesses the skills and experience necessary to meet the requirements of our corporate customers in a timely manner will be largely affected by various factors including our customers’ willingness to pay, the competition in the market and the customer stickiness with us.

Our ability to maintain major customers and expand our customer base

Our success is largely dependent on our ability to attract and maintain major customers and expand our customer base, which in turn is affected by our ability to deliver quality services amid a changing landscape of the blue-collar lifetime service industry in China. In 2023 and 2024, approximately 25.5% and 28.5% of our total revenue were generated from our top five customers, respectively. There is no guarantee that we will continue to obtain new contracts with these major customers or maintain our relationships with them in the future. In addition, we have a proven record of serving leading domestic and international corporate customers with a deep understanding of their needs and delivery, which we believe would be important to enhance our branding. Our continuous growth will be driven by our ability to expand our customer base to attract larger and medium-sized customers of different industries in more cities and regions. In addition, our success will also be affected by our ability to explore relationships with customers focused on emerging industries with great growth potential.

Our ability to keep up with rapid changes in the blue-collar lifetime service industry

Our ability to grow our business and increase profitability largely depends on our ability to keep up with the rapid changes in both market conditions and relevant laws and regulations of the blue-collar lifetime service industry. Government policies have strengthened supervision requirements in the blue-collar lifetime service industry. Although we have taken measures to comply with the laws and regulations that are applicable to our business operations and avoid conducting any non-compliant activities under the applicable laws and regulations, the PRC government authorities may promulgate new laws and regulations regulating the blue-collar lifetime service industry from time to time. Any of these changes in the blue-collar lifetime service industry may result in the prohibition or restriction of certain types of services we offer, or the imposition of new or additional licensing or other requirements could also reduce our revenue and earnings.

Seasonality

Our financial condition and results of operations are subject to seasonal fluctuations due to various factors. The seasonality for each of our business segments varies. For example, we may generate lower revenue from our employee management services and HR recruitment services in the first quarter of a year, when blue-collar talent tend to return to their hometown to celebrate the Chinese New Year holidays with their families. As a result, any comparison of our sales and operating results between different periods within a single financial year, or between different periods in different financial years is not necessarily meaningful and may not indicate our future performance.

Non-GAAP Financial Measures

To supplement our consolidated financial statements which are presented in accordance with U.S. GAAP, we use adjusted net profit/loss and adjusted EBITDA, which are non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes. Adjusted net profit/loss represents net profit before share-based compensation expenses, fair value gains from financial assets at fair value through profit or loss and deemed dividend to Series C and Series C+ preferred shareholders at modification of Series C and Series C+ Preferred Shares. Adjusted EBITDA represents adjusted net profit/loss before income tax expense, depreciation, amortization and interest expense. We believe that adjusted net profit/loss and adjusted EBITDA help identify underlying trends in our business that could otherwise be distorted by the effect of non-GAAP adjustments. We believe that such non-GAAP financial measures also provide useful information about our operating results, enhance the overall understanding of our past performance and prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision making.

The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. It should not be considered in isolation or construed as alternatives to net loss or any other measure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical non-GAAP financial measures considering the most directly comparable GAAP measures, as shown below. The non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financial information in its entirety and not rely on a single financial measure.

Key Components of Results of Operations

Revenues

We generated revenues from our vocational education services, HR recruitment services, employee management services and market services and solutions. The following table sets forth a breakdown of our revenues by business line, both by absolute amount and as a percentage of our total revenues for the periods indicated.

We have provided vocational education services since our inception, and we usually charge the relevant service fee. The service fees are decided based on the size and fee level of the schools we provide service with.

We provide our corporate customers with comprehensive HR recruitment services and charge them service fees, which are mainly determined by the number of blue-collar talents we recruited and the fee level.

Our employee management services primarily include outsourcing services and other HR solutions. We charge our corporate customers service fees for outsourcing services, which are determined by several factors, including, among others, costs and expenses of the services, the industries and the competitive landscape.

We also provide blue-collar talents, students of school customers and corporate customers and other end customers with market services comprising sale of retail goods via online platform and value-added services, such as shopping services, catering services, student and blue-collar talents dormitory services and welfare services.

Cost of revenues

Our cost of sales primarily consists of (i) personnel costs; (ii) procurement costs, mainly including our costs of procuring third party recruitment services, the commodities and raw materials. The following table sets forth a breakdown of our cost of revenues by nature, both by absolute amount and as a percentage of our total revenues for the periods indicated.

Operating expenses

Our operating expenses primarily consist of sales and distribution expenses, administrative expenses and research and development expenses. The following table sets forth the components of our operating expenses, both by absolute amount and as a percentage of our total revenues for the periods indicated.

Selling and marketing expenses. Our selling and marketing expenses primarily consist of (i) personnel costs of our sales team; (ii) marketing and promotion expenses paid to online channels for advertising; (iii) office and rental fees; (iv) travel expenses; and (v) depreciation and amortization.

Administrative expenses. Our administrative expenses primarily include (i) personnel costs of our administrative staff; (ii) professional service fees relating to our financing and listing activities; (iii) depreciation and amortization; (iv) credit impairment losses and (v) office and other miscellaneous expenses.

Research and development expenses. Our research and development expenses mainly consist of (i) payroll expenses, (ii) technologies service expenses related to platform development and data analysis to support our business operations, and (iii) other expenses related to research and development functions.

Taxation

Cayman Islands

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, capital gains or appreciation and there is no taxation in inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in or brought within the jurisdiction of the Cayman Islands. In addition, the Cayman Islands does not impose withholding tax on payments of dividends.

Hong Kong

Under the current Hong Kong Inland Revenue Ordinance, our subsidiaries incorporated in Hong Kong are subject to 16.5% Hong Kong profit tax on their taxable income generated from operations in Hong Kong. Additionally, payments of dividends by our subsidiaries incorporated in Hong Kong are not subject to any Hong Kong withholding tax.

China

Generally, our subsidiaries incorporated in China are subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of 25%. One of our PRC Subsidiaries is entitled to a favorable statutory tax rate of 15% for the three years from 2021 to 2024 because of its qualification as a “High and New Technology Enterprise.”

Dividends paid by our wholly foreign-owned subsidiary in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and receives approval from the relevant tax authority. If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the relevant tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%.

Results of Operations

The following table sets forth a summary of our results of operations for the periods presented.

In January 2024, we completed our reorganization and discontinued operations of some of our business operations. In accordance with ASC 205-20-45, the results of all discontinued operations, less applicable income taxes, are reported as components of net income (loss) separate from the net loss of continuing operations for the years ended December 31, 2023 and 2024, as comparative statements of operations.

This information should be read together with our consolidated financial statements and related notes included elsewhere in this Report. Our results of operations in any period are not necessarily indicative of our future trends.

Year ended December 31, 2024, compared to year ended December 31, 2023

Revenues

Our revenues increased by 16.1% from RMB1,365.9 million for the year ended December 31, 2023 to RMB1,585.6 million (US$217.2 million) for the year ended December 31, 2024, with increases in revenues generated from employee management services as the mainly driven to the increase. The following table sets forth a breakdown of our revenues, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated:

Vocational education services. Revenues generated from vocational education services decreased by 72.1% from RMB179.0 million for the year ended December 31, 2023 to RMB50.0 million (US$6.9 million) for the year ended December 31, 2024, primarily due to (i) the decrease in our smart campus services resulting from we had completed most of our smart campus projects in 2023; and (ii) our vocational training services and self-operated vocational school services had been disposed with the discontinued operations.

Employee management services. Revenues generated from employee management services increased by 33.7% from RMB1,033.8 million for the year ended December 31, 2023 to RMB1,382.6 million (US$189.4 million) for the year ended December 31, 2024, primarily due to (i) the increase of our corporate customers and their growing demands of blue-collar labors, which was attributable to comprehensive adjustments and optimizations we have achieved on business control and development under fully utilizing our mix business model of blue-collar lifecycle value chain service; and (ii) greater likelihood that our target customers are focusing on new economy industries with high customer value and large scale of outsourcing services demands.

HR recruitment services. Revenues generated from HR recruitment services decreased by 67.9% from RMB75.5 million for the year ended December 31, 2023 to RMB24.2 million (US$3.3 million) for the year ended December 31, 2024, primarily due to (i) our average service fee decreased as our large-scale corporate customers would choose multi-settlement of high fluidity jobs; and (ii) part of our HR recruitment services had been disposed with the discontinued operations.

Marketing services. Revenues generated from marketing services remained relatively stable at RMB129.7 million for the year ended December 31, 2023, and RMB128.8 million (US$17.6 million) for the year ended December 31, 2024.

Cost of revenues

Our cost of revenues increased by 15.6% from RMB1,165.4 million for the year ended December 31, 2023 to RMB1,347.4 million (US$184.6 million) for the year ended December 31, 2024, in line with the growth of our business scale. The following table sets forth a breakdown of our cost of revenues, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated:

Procurement costs. Costs related to personnel procurement costs increased by 54.9% from RMB217.5 million for the year ended December 31, 2023, to RMB336.8 million (US$46.1 million) for the year ended December 31, 2023, primarily due to the increase in cost paid to third-party services providers engaged in the employee management services, generally in line with our revenue growth.

Gross profits and margin

Our gross margin decreased from 14.7% for the year ended December 31, 2023 to 14.5% for the year ended December 31, 2024, primarily due to the decrease of HR recruitment services which has a higher gross margin with almost 55.5% margin. The percentage of the gross profit from HR recruitment services decreased from 25.1% for the year ended December 31, 2023 to 5.9% for the year ended December 31, 2024.

Operating expenses

Our operating expenses decreased from RMB219.3 million for the year ended December 31, 2023, to RMB196.5 million (US$26.9 million) for the year ended December 31, 2024, representing a decrease of 10.4%. The following table sets forth a breakdown of our cost of revenues, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated:

Selling and marketing expenses. Our selling and marketing expenses decreased by 47.1% from RMB98.1 million for the year ended December 31, 2023, to RMB51.9 million (US$7.1 million) for the year ended December 31, 2024, primarily because we reduced related marketing and promotion activities for retail services.

Administrative expenses. Our administrative expenses decreased by 2.3% from RMB129.7 million for the year ended December 31, 2023 to RMB126.7 million (US$17.4 million) for the year ended December 31, 2024, primarily because RMB13.0 million of credit losses of other receivables and RMB2.4 million of credit losses of accounts receivable were reversed in 2023 due to effective receivables collection but RMB1.6 million (US$0.2 million) credit losses of other receivables were reversed and RMB1.8 million (US$0.3 million) credit losses of accounts receivable charged to expense in 2024.

Research and development expenses. Our research and development expenses decreased by 18.5% from RMB12.3 million for the year ended December 31, 2023, to RMB10.0 million (US$1.4 million) for the year ended December 31, 2024, primarily due to the decrease in technologies services expenses resulting from the continuous investment in our platforms.

(Loss)/income from operations

As a result of the foregoing, we recorded profits from operations of RMB40.5 million (US$5.6 million) for the year ended December 31, 2024, compared with loss from operation of RMB18.9 million for the year ended December 31, 2023, primarily due to our business development and increased efficiency.

Other income/(expense), net

We incurred other incomes, net of RMB67.9 million and other expense, net of RMB81.8 million (US$11.2 million) for the year ended December 31, 2023, and 2024, respectively, primarily due to the fair value loss and disposal loss from our equity investment.

Income taxes

Our income tax expenses were RMB11.1 million (US$1.5 million) for the year ended December 31, 2024, compared to income tax benefits RMB30.3 million for the year ended December 31, 2023, primarily due to the recognition of deferred tax assets have been utilized.

Net profit/(loss)

As a result of the foregoing, we recorded net loss of RMB51.2 million (US$7.2 million) for the year ended December 31, 2024, compared to net profit of RMB79.3 million for the year ended December 31, 2023.

Year ended December 31, 2023 compared to year ended December 31, 2022

Revenues

Our revenues increased by 88.6% from RMB724.1 million in 2022 to RMB1,365.9 million (US$187.9 million) in 2023, with increases in revenues generated from vocational education services, HR recruitment services, employee management services and marketing services and solutions. The increase of our revenues was mainly driven by the growth in employee management services. The following table sets forth a breakdown of our revenues, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated:

Vocational education services. Revenues generated from vocational education services increased by 160.7% from RMB68.7 million in 2022 to RMB179.0 million (US$24.6 million) in 2023, primarily due to (i) the easing of the impact of COVID-19 and the resumption of existing business; (ii) we have expanded our businesses in vocational qualification certification, characteristic college entrance examination, international study abroad, and co-construction projects with emerging industry colleges of vocational colleges; and (iii) the government vigorously promote relevant policies beneficial for vocational business.

Employee management services. Revenues generated from employee management services increased by 83.5% from RMB563.3 million in 2022 to RMB1,033.8 million (US$142.3 million) in 2023, primarily due to (i) the increase of our corporate customers and their growing demands of blue-collar labors, which was attributable to comprehensive adjustments and optimizations we have achieved on business control and development under fully utilizing our mix business model of blue-collar lifecycle value chain service; and (ii) our target customers are more likely focusing on new economy industries with high customer value and large scale of outsourcing services demands.

HR recruitment services. Revenues generated from HR recruitment services decreased by 32.0% from RMB111.0 million in 2022 to RMB75.5 million (US$10.4 million) in 2023, primarily due to (i) since the beginning of 2022, a few waves of COVID-19 outbreaks have emerged in various regions of China and various restrictions were reinstated. The lack of blue-collar resources under these restrictions increased our average service fee per talent recruited; and (ii) our average service fee decreased in 2023 as our large-scale corporate customers would choose multi-settlement of high fluidity jobs.

Marketing services and solutions. Revenues generated from marketing services and solutions increased by 357.2% from RMB28.4 million in 2022 to RMB129.7 million (US$17.8 million) in 2023, primarily due to the addition of sale of retail goods at the end of 2022.

Our revenues from the discontinued operations primarily generated from vocational education services for self-operated vocational school services and vocational training services.

Cost of revenues

Our cost of revenues increased by 95.2% from RMB596.9 million in 2022 to RMB1,165.4 million (US$164.2 million) in 2023, in line with the growth of our business scale. The following table sets forth a breakdown of our cost of revenues, each expressed in the absolute amount and as a percentage of our total revenues, for the periods indicated:

Personnel costs. Costs related to personnel costs increased by 90.4% from RMB487.9 million in 2022 to RMB929.1 million (US$127.8 million) in 2023, primarily due to the increase of our outsourcing services scale and higher average labor cost per blue-collar talent.

Procurement costs. Costs related to personnel procurement costs increased by 99.2% from RMB109.2 million in 2022 to RMB217.5 million (US$29.9 million) in 2023, primarily due to the addition of retail services.

Our cost of revenues from the discontinued operations primarily consists of teachers’ labor cost and other teaching materials.

Gross profits and margin

Our gross margin decreased from 17.6% in 2022 to 14.7% in 2023, primarily due to (i) the increase in cost paid to each talent, generally in line with our revenue growth in outsourcing services and other services; and (ii) we engaged certain third-party services providers to supplement our own blue-collar talent resources to satisfy the increased demands of certain corporate customers thus incurred procurement costs.

Operating expenses

Our operating expenses decreased from RMB296.6 million in 2022 to RMB219.3 million (US$30.2 million) in 2023, representing a year-over-year decrease of 26.1%, primarily due to the following: