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Qudian Inc.

Qudian Inc.HTTEarnings & Financial Report

NYSE · Financials · Finance Services

Qudian Inc. is a China-based fintech service provider that mainly offers small consumer credit solutions, risk management technical services, and related digital financial products. Its core target users are young mass consumers across China, with all key business operations focused on the domestic Chinese market.

What changed in Qudian Inc.'s 20-F — 2022 vs 2023

Top changes in Qudian Inc.'s 2023 20-F

485 paragraphs added · 582 removed · 320 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

122 edited+89 added−20 removed448 unchanged
For example, there have been media reports alleging that former employees of the Group have misappropriated and sold borrower data. The Group is not aware of any former employee who has been identified by law enforcement authorities to have engaged in such misconduct, and we do not believe such allegations have had a material impact on the Group’s business.
For example, there had been media reports alleging that former employees of the Group have misappropriated and sold borrower data. The Group is not aware of any former employee who has been identified by law enforcement authorities to have engaged in such misconduct, and we do not believe such allegations have had a material impact on the Group’s business.
After we filed our annual report on Form 20-F for the fiscal year ended December 31, 2021 that included an audit report issued by Ernst & Young Hua Ming LLP on April 29, 2022, the SEC conclusively identified us as an SEC-identified issuer on May 26, 2022.
After we filed our annual report on Form 20-F for the fiscal year ended December 31, 2021 that included an audit report issued by Ernst & Young Hua Ming LLP on April 29, 2022, the SEC conclusively identified us as an SEC-identified issuer on May 26, 2022.
These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction.
These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction.
Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business; ● inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits including the failure to successfully further develop the acquired technology; ● difficulties in retaining, training, motivating and integrating key personnel; ● diversion of management’s time and resources from the Group’s normal daily operations and potential disruptions to the Group’s ongoing businesses; ● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; ● difficulties in retaining relationships with users, business partners, employees and other partners of the acquired business; ● risks of entering markets in which the Group has limited or no prior experience; ● regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; ● assumption of contractual obligations that contain terms that are not beneficial to the Group, require the Group to license or waive intellectual property rights or increase the Group’s risk for liability; ● liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and ● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, products and services of the acquired business; ● inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits including the failure to successfully further develop the acquired technology; ● difficulties in retaining, training, motivating and integrating key personnel; ● diversion of management’s time and resources from the Group’s normal daily operations and potential disruptions to the Group’s ongoing businesses; ● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; ● difficulties in retaining relationships with customers, business partners, employees and other partners of the acquired business; ● risks of entering markets in which the Group has limited or no prior experience; ● regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; ● assumption of contractual obligations that contain terms that are not beneficial to the Group, require the Group to license or waive intellectual property rights or increase the Group’s risk for liability; ● liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and ● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
Public Company Accounting Oversight Board was unable to inspect and investigate completely before 2022 and, as such, our investors have been deprived of the benefits of such inspections in the past, and may be deprived of the benefits of such inspections in the future. ● If the PCAOB determines that it is unable to inspect or investigate completely our auditor at any point in the future, our ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended, or the HFCA Act, and any such trading prohibition on our ADSs or threat thereof may materially and adversely affect the price of our ADSs and value of your investment. ● The opinions on supervision of illegal securities activities issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject us to additional compliance requirements in the future. ● The approval or filing requirement of the China Securities Regulatory Commission, or the CSRC, may be required in connection with any future offering we may conduct, and, if required, we cannot predict whether we will be able to obtain such approval or complete such filings. ● PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits. ● Any failure to comply with PRC regulations regarding our employee share incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions. ● We rely to a significant extent on dividends and other distributions on equity paid by our principal operating subsidiaries to fund offshore cash and financing requirements.
Public Company Accounting Oversight Board was unable to inspect and investigate completely before 2022 and, as such, our investors have been deprived of the benefits of such inspections in the past, and may be deprived of the benefits of such inspections in the future. ● If the PCAOB determines that it is unable to inspect or investigate completely our auditor at any point in the future, our ADSs may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended, or the HFCA Act, and any such trading prohibition on our ADSs or threat thereof may materially and adversely affect the price of our ADSs and value of your investment. ● The opinions on supervision of illegal securities activities issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject us to additional compliance requirements in the future. ● The approval or filing requirement of the China Securities Regulatory Commission, or the CSRC, may be required in connection with any future offering we may conduct, and, if required, we cannot predict whether we will be able to obtain such approval or complete such filings. ● PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits. 11 Table of Contents ● Any failure to comply with PRC regulations regarding our employee share incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions. ● We rely to a significant extent on dividends and other distributions on equity paid by our principal operating subsidiaries to fund offshore cash and financing requirements.
Further, if our corporate structure and contractual arrangements are found to be in violation of any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such violations, including: ● revoking the Group’s business and operating licenses; ● levying fines on the Group; ● confiscating any of the Group’s income that they deem to be obtained through illegal operations; ● shutting down the Group’s services; ● discontinuing or restricting the Group’s operations in China; ● imposing conditions or requirements with which the Group may not be able to comply; ● requiring us to change our corporate structure and contractual arrangements; ● restricting or prohibiting the use of the proceeds from overseas offering to finance the Group VIEs’ business and operations; and ● taking other regulatory or enforcement actions that could be harmful to the Group’s business. 24 Table of Contents Furthermore, new PRC laws, rules and regulations may be introduced to impose additional requirements that may be applicable to our corporate structure and contractual arrangements.
Further, if our corporate structure and contractual arrangements are found to be in violation of any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such violations, including: ● revoking the Group’s business and operating licenses; ● levying fines on the Group; ● confiscating any of the Group’s income that they deem to be obtained through illegal operations; ● shutting down the Group’s services; ● discontinuing or restricting the Group’s operations in China; ● imposing conditions or requirements with which the Group may not be able to comply; ● requiring us to change our corporate structure and contractual arrangements; ● restricting or prohibiting the use of the proceeds from overseas offering to finance the Group VIEs’ business and operations; and ● taking other regulatory or enforcement actions that could be harmful to the Group’s business. 29 Table of Contents Furthermore, new PRC laws, rules and regulations may be introduced to impose additional requirements that may be applicable to our corporate structure and contractual arrangements.
Under the new share repurchase program, we are authorized to repurchase our ADSs from time to time through open market transactions at prevailing market prices, privately negotiated transactions, block trades or any combination thereof. Our management is authorized to determine the terms and conditions relating to the program, including, among others, the quantity, timing, price and purpose of share repurchases.
Under this new share repurchase program, we are authorized to repurchase our ADSs from time to time through open market transactions at prevailing market prices, privately negotiated transactions, block trades or any combination thereof. Our management is authorized to determine the terms and conditions relating to the program, including, among others, the quantity, timing, price and purpose of share repurchases.
Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures or Internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect the Group’s ability to provide its products.
Fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks or similar events may give rise to server interruptions, breakdowns, system failures or Internet failures, which could cause the loss or corruption of data or malfunctions of software or hardware as well as adversely affect the Group’s ability to provide its services or products.
Negative publicity about the parties that the Group collaborates with, including negative publicity about any failure by them to adequately protect the information of their users, to comply with applicable laws and regulations or to otherwise meet required quality and service standards, could also harm our reputation or result in negative perception of the products the Group offers.
Negative publicity about the parties that the Group collaborates with, including negative publicity about any failure by them to adequately protect the information of their users, to comply with applicable laws and regulations or to otherwise meet required quality and service standards, could also harm our reputation or result in negative perception of the services or products the Group offers.
Factors that may cause fluctuations in the Group’s quarterly financial results include: ● the mix of products the Group offers; ● performance of the Group’s businesses; ● the timing of expenses related to the development or acquisition of technologies or businesses; ● network outages or security breaches; ● general economic, industry and market conditions; and ● changes in applicable laws and regulations.
Factors that may cause fluctuations in the Group’s quarterly financial results include: ● the mix of services and products the Group offers; ● performance of the Group’s businesses; ● the timing of expenses related to the development or acquisition of technologies or businesses; ● network outages or security breaches; ● general economic, industry and market conditions; and ● changes in applicable laws and regulations.
If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in the Group’s technology infrastructure are exposed and exploited, the Group’s relationships with users could be severely damaged, the Group could incur significant liability and its business and operations could be adversely affected.
If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in the Group’s technology infrastructure are exposed and exploited, the Group’s relationships with users and customers could be severely damaged, the Group could incur significant liability and its business and operations could be adversely affected.
Any failure of the Group’s efforts to pursue new business opportunities could have a material adverse effect on the Group’s business, prospects, financial condition and results of operations. In addition, if the Group is unable to identity suitable new business opportunity to persue, the Group may not be able to continue its business.
Any failure of the Group’s efforts to pursue new business opportunities could have a material adverse effect on the Group’s business, prospects, financial condition and results of operations. In addition, if the Group is unable to identity suitable new business opportunity to pursue, the Group may not be able to continue its business.
We believe that developing and maintaining awareness of our brands effectively is critical to attracting new and retaining existing customers. Successful promotion of our brands and the Group’s ability to attract customers depend largely on the effectiveness of the Group’s marketing efforts and the success of the channels the Group uses to promote its brands and products.
We believe that developing and maintaining awareness of our brands effectively is critical to attracting new and retaining existing customers. Successful promotion of our brands and the Group’s ability to attract customers depend largely on the effectiveness of the Group’s marketing efforts and the success of the channels the Group uses to promote its brands and services and products.
The 2019 Law of Foreign Investment stipulates four forms of foreign investment, namely, (1) a foreign investor, individually or collectively with other investors, establishes a foreign-invested enterprise within China; (2) a foreign investor acquires stock shares, equity shares, interests in assets, or other like rights and interests of an enterprise within China; (3) a foreign investor, individually or collectively with other investors, invests in a new project within China; and (4) foreign investments in other forms as provided by law, administrative regulations, or by the State Council. 27 Table of Contents As mentioned above, the 2019 Law of Foreign Investment and its implementation regulations do not mention concepts including “de facto control” and “controlling through contractual arrangements,” nor does it specify the regulation on controlling through contractual arrangements.
The 2019 Law of Foreign Investment stipulates four forms of foreign investment, namely, (1) a foreign investor, individually or collectively with other investors, establishes a foreign-invested enterprise within China; (2) a foreign investor acquires stock shares, equity shares, interests in assets, or other like rights and interests of an enterprise within China; (3) a foreign investor, individually or collectively with other investors, invests in a new project within China; and (4) foreign investments in other forms as provided by law, administrative regulations, or by the State Council. 32 Table of Contents As mentioned above, the 2019 Law of Foreign Investment and its implementation regulations do not mention concepts including “de facto control” and “controlling through contractual arrangements,” nor does it specify the regulation on controlling through contractual arrangements.
Any accidental or willful security breaches or other unauthorized access to the Group’s system could cause confidential user information to be stolen and used for criminal purposes. Security breaches or unauthorized access to confidential information could also expose the Group to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity.
Any accidental or willful security breaches or other unauthorized access to the Group’s system could cause confidential information to be stolen and used for criminal purposes. Security breaches or unauthorized access to confidential information could also expose the Group to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity.
Secretary of Commerce with certain “Chinese connected software applications,” including Alipay and WeChat Pay; 21 Table of Contents ● the imposition and application of sanction blocking statutes by the Chinese government, including the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures promulgated by the MOFCOM, on January 9, 2021, which will apply to Chinese individuals or entities that are purportedly barred by a foreign country’s law from dealing with nationals or entities of a third country; and ● the implementation of comprehensive export controls by the U.S. government to restrict the export of advanced semiconductors and the equipment required to manufacture them to China.
Secretary of Commerce with certain “Chinese connected software applications,” including Alipay and WeChat Pay; 26 Table of Contents ● the imposition and application of sanction blocking statutes by the Chinese government, including the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures promulgated by the MOFCOM, on January 9, 2021, which will apply to Chinese individuals or entities that are purportedly barred by a foreign country’s law from dealing with nationals or entities of a third country; and ● the implementation of comprehensive export controls by the U.S. government to restrict the export of advanced semiconductors and the equipment required to manufacture them to China.
Min Luo has the ability to control or exert significant influence over important corporate matters, investors may be prevented from affecting important corporate matters involving our company that require approval of shareholders, including: ● the composition of our board of directors and, through it, any determinations with respect to the Group’s operations, business direction and policies, including the appointment and removal of officers; ● any determinations with respect to mergers or other business combinations; ● our disposition of substantially all of the Group’s assets; and ● any change in control. 26 Table of Contents These actions may be taken even if they are opposed by our other shareholders, including the holders of the ADSs.
Min Luo has the ability to control or exert significant influence over important corporate matters, investors may be prevented from affecting important corporate matters involving our company that require approval of shareholders, including: ● the composition of our board of directors and, through it, any determinations with respect to the Group’s operations, business direction and policies, including the appointment and removal of officers; ● any determinations with respect to mergers or other business combinations; ● our disposition of substantially all of the Group’s assets; and ● any change in control. 31 Table of Contents These actions may be taken even if they are opposed by our other shareholders, including the holders of the ADSs.
Specifically, foreign investors are not allowed to own more than a 50% equity interest in any PRC company providing value-added telecommunications services, or VATS, with certain exceptions relating to e-commerce, domestic multi-party, communication, store-and-forward and call center. 23 Table of Contents Because we are an exempted company incorporated in the Cayman Islands, we are classified as a foreign enterprise under PRC laws and regulations, and our wholly-owned PRC subsidiary, Ganzhou Qufenqi is a foreign-invested enterprise, or FIE.
Specifically, foreign investors are not allowed to own more than a 50% equity interest in any PRC company providing value-added telecommunications services, or VATS, with certain exceptions relating to e-commerce, domestic multi-party, communication, store-and-forward and call center. 28 Table of Contents Because we are an exempted company incorporated in the Cayman Islands, we are classified as a foreign enterprise under PRC laws and regulations, and our wholly-owned PRC subsidiary, Ganzhou Qufenqi is a foreign-invested enterprise, or FIE.
If dividends payable to our non-PRC investors, or gains from the transfer of our ADSs or Class A ordinary shares by such investors, are deemed as income derived from sources within the PRC and thus are subject to PRC tax, the value of your investment in our ADSs or Class A ordinary shares may decline significantly. 32 Table of Contents We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies.
If dividends payable to our non-PRC investors, or gains from the transfer of our ADSs or Class A ordinary shares by such investors, are deemed as income derived from sources within the PRC and thus are subject to PRC tax, the value of your investment in our ADSs or Class A ordinary shares may decline significantly. 37 Table of Contents We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies.
As the official guidance and interpretation of the Opinions still remain unclear in several respects at this time, we cannot assure you that we will remain fully compliant with all new regulatory requirements of the Opinions or any future implementation rules on a timely basis, or at all. 29 Table of Contents The approval or filing requirement of the China Securities Regulatory Commission, or the CSRC, may be required in connection with any future offering we may conduct, and, if required, we cannot predict whether we will be able to obtain such approval or complete such filings.
As the official guidance and interpretation of the Opinions still remain unclear in several respects at this time, we cannot assure you that we will remain fully compliant with all new regulatory requirements of the Opinions or any future implementation rules on a timely basis, or at all. 34 Table of Contents The approval or filing requirement of the China Securities Regulatory Commission, or the CSRC, may be required in connection with any future offering we may conduct, and, if required, we cannot predict whether we will be able to obtain such approval or complete such filings.
In addition, any system failure or breach of the Group’s privacy policy by the Group’s current or former employees that may compromise of the Group’s security and result in an unauthorized access to or release of the Group’s users’ or other customers’ data could greatly limit the user engagement of the Group’s products and services, harm our reputation and brand image, as well as affect the Group’s business operations. 38 Table of Contents PRC government authorities have promulgated laws and regulations to protect personal information from any abuse or unauthorized disclosure.
In addition, any system failure or breach of the Group’s privacy policy by the Group’s current or former employees that may compromise of the Group’s security and result in an unauthorized access to or release of the Group’s users’ or other customers’ data could greatly limit the user engagement of the Group’s products and services, harm our reputation and brand image, as well as affect the Group’s business operations. 43 Table of Contents PRC government authorities have promulgated laws and regulations to protect personal information from any abuse or unauthorized disclosure.
As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer. 46 Table of Contents As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NYSE corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the NYSE corporate governance listing standards.
As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer. 51 Table of Contents As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NYSE corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the NYSE corporate governance listing standards.
Limitations on the ability of the Group VIEs to make remittance to the wholly-foreign owned enterprise and on the ability of our subsidiaries to pay dividends to us could limit our ability to access cash generated by the operations of those entities, including to make investments or acquisitions that could be beneficial to our businesses, pay dividends to our shareholders or otherwise fund and conduct our business. 31 Table of Contents We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.
Limitations on the ability of the Group VIEs to make remittance to the wholly-foreign owned enterprise and on the ability of our subsidiaries to pay dividends to us could limit our ability to access cash generated by the operations of those entities, including to make investments or acquisitions that could be beneficial to our businesses, pay dividends to our shareholders or otherwise fund and conduct our business. 36 Table of Contents We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.
Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount. 34 Table of Contents PRC regulations establish more complex procedures for acquisitions conducted by foreign investors which could make it more difficult for us to pursue growth through acquisitions.
Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount. 39 Table of Contents PRC regulations establish more complex procedures for acquisitions conducted by foreign investors which could make it more difficult for us to pursue growth through acquisitions.
As a result, we may be required to expend valuable resources to comply with SAT Circular 37 and Bulletin 7 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations. 33 Table of Contents We are subject to restrictions on currency exchange.
As a result, we may be required to expend valuable resources to comply with SAT Circular 37 and Bulletin 7 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations. 38 Table of Contents We are subject to restrictions on currency exchange.
If we fail to complete such registrations or obtain such approvals, our ability to use foreign currency and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 14 Table of Contents We may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all.
If we fail to complete such registrations or obtain such approvals, our ability to use foreign currency and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. 19 Table of Contents We may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all.
There can be no assurance that these transactions will offer the expected benefits, and we may suffer significant investment losses as a result of such transactions. 12 Table of Contents We purchased 10,204,082 Class A ordinary shares issued by Secoo Holding Limited (NASDAQ: SECO), or Secoo, for an aggregate consideration of US$100 million in June 2020.
There can be no assurance that these transactions will offer the expected benefits, and we may suffer significant investment losses as a result of such transactions. 17 Table of Contents We purchased 10,204,082 Class A ordinary shares issued by Secoo Holding Limited (NASDAQ: SECO), or Secoo, for an aggregate consideration of US$100 million in June 2020.
In addition, the Companies Law differs from laws applicable to United States corporations and their shareholders. 45 Table of Contents Our second amended and restated memorandum and articles of association contain anti-takeover provisions that could discourage a third party from acquiring us, which could limit our shareholders’ opportunity to sell their shares, including Class A ordinary shares represented by our ADSs, at a premium.
In addition, the Companies Law differs from laws applicable to United States corporations and their shareholders. 50 Table of Contents Our second amended and restated memorandum and articles of association contain anti-takeover provisions that could discourage a third party from acquiring us, which could limit our shareholders’ opportunity to sell their shares, including Class A ordinary shares represented by our ADSs, at a premium.
On June 10, 2021, the SCNPC promulgated the Data Security Law to regulate data processing activities and security supervision in the PRC, which took effect in September 2021. 39 Table of Contents On November 14, 2021, the CAC published the Draft Regulations on the Network Data Security Administration (Draft for Comments), or the Security Administration Draft, which provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to network data security review by the relevant Cyberspace Administration of the PRC.
On June 10, 2021, the SCNPC promulgated the Data Security Law to regulate data processing activities and security supervision in the PRC, which took effect in September 2021. 44 Table of Contents On November 14, 2021, the CAC published the Draft Regulations on the Network Data Security Administration (Draft for Comments), or the Security Administration Draft, which provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to network data security review by the relevant Cyberspace Administration of the PRC.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. 18 Table of Contents If we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected. 23 Table of Contents If we are unable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements.
Cybersecurity review and network data security review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations. 40 Table of Contents Uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and its implementing rules and how they may impact our business, financial condition and results of operations.
Cybersecurity review and network data security review could also result in negative publicity with respect to our Company and diversion of our managerial and financial resources, which could materially and adversely affect our business, financial conditions, and results of operations. 45 Table of Contents Uncertainties exist with respect to the interpretation and implementation of the Foreign Investment Law and its implementing rules and how they may impact our business, financial condition and results of operations.
Taxation⸺Certain United States Federal Income Tax Considerations-Passive Foreign Investment Company.” Based on the past and projected composition and classification of the Group’s income and assets, we believe there is a significant risk that we were classified as a PFIC for United States federal income tax purposes for 2022 and will be a PFIC for the current taxable year, and that we may be classified as a PFIC for future taxable years.
Taxation⸺Certain United States Federal Income Tax Considerations-Passive Foreign Investment Company.” Based on the past and projected composition and classification of the Group’s income and assets, we believe there is a significant risk that we were classified as a PFIC for United States federal income tax purposes for 2023 and will be a PFIC for the current taxable year, and that we may be classified as a PFIC for future taxable years.
These measures may cause decreased economic activity, which in turn could lead to a reduction in demand for the Group’s services and consequently have a material adverse effect on the Group’s businesses, financial condition and results of operations. 28 Table of Contents There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.
These measures may cause decreased economic activity, which in turn could lead to a reduction in demand for the Group’s services and consequently have a material adverse effect on the Group’s businesses, financial condition and results of operations. 33 Table of Contents There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.
Certain of our subsidiaries, the Group VIEs and their subsidiaries did not have any retained earnings available for distribution in the form of dividends as of December 31, 2022. In addition, registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to the amount of net assets held in each operating subsidiary.
Certain of our subsidiaries, the Group VIEs and their subsidiaries did not have any retained earnings available for distribution in the form of dividends as of December 31, 2023. In addition, registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to the amount of net assets held in each operating subsidiary.
Therefore, you may not be able to enjoy the same protection provided by various U.S. authorities as it is provided to investors in U.S. domestic companies. Privacy concerns relating to the Group’s products and services and the use of user information could damage our reputation, deter current and potential users and customers from using the Group’s products.
Therefore, you may not be able to enjoy the same protection provided by various U.S. authorities as it is provided to investors in U.S. domestic companies. Privacy concerns relating to the Group’s products and services and the use of confidential information could damage our reputation, deter current and potential users and customers from using the Group’s products and services.
We cannot assure you that the Group’s existing user information protection system and technical measures will be considered sufficient under applicable laws and regulations.
We cannot assure you that the Group’s existing information protection system and technical measures will be considered sufficient under applicable laws and regulations.
These risks may have a material adverse effect on the Group’s business, financial condition and results of operations. 30 Table of Contents Any failure to comply with PRC regulations regarding our employee share incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.
These risks may have a material adverse effect on the Group’s business, financial condition and results of operations. 35 Table of Contents Any failure to comply with PRC regulations regarding our employee share incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.
We have established stringent cash management policies and procedures for cash flows within the Group. Each transfer of funds among our Cayman Islands holding company, our subsidiaries and the VIE is subject to internal approval. In general, transfer of funds is required to be effected through online banking system. Our management is directly supervising cash management.
We have established stringent cash management policies and procedures for cash flows within the Group. Each transfer of funds among our Cayman Islands holding company, our subsidiaries and the Group VIEs is subject to internal approval. In general, transfer of funds is required to be effected through online banking system. Our management is directly supervising cash management.
Risks Factors⸺Risks Related to Doing Business in China⸺The greater oversight by the Cyberspace Administration of China, or the CAC, over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering.” Cash Transfers within Our Corporate Structure Our subsidiaries and the Group VIEs conduct business transactions that include intercompany loans and other intercompany transactions related to operating activities, subject to satisfaction of applicable government registration and approval requirements.
Risks Factors⸺Risks Related to Doing Business in China⸺The greater oversight by the Cyberspace Administration of China, or the CAC, over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering.” 4 Table of Contents Cash Transfers within Our Corporate Structure Our subsidiaries and the Group VIEs conduct business transactions that include intercompany loans and other intercompany transactions related to operating activities, subject to satisfaction of applicable government registration and approval requirements.
The decrease in revenues generated from Dabai Auto business and any further write-down that may be recorded during the process of winding down such business may adversely affect the Group’s business, financial condition and results of operations. 15 Table of Contents The Group’s quarterly results may fluctuate significantly and may not fully reflect the underlying performance of the Group’s business.
The decrease in revenues generated from Dabai Auto business and any further write-down that may be recorded during the process of winding down such business may adversely affect the Group’s business, financial condition and results of operations. 20 Table of Contents The Group’s quarterly results may fluctuate significantly and may not fully reflect the underlying performance of the Group’s business.
Because the courts of the Cayman Islands have yet to rule on whether such judgments are penal or punitive in nature, it is uncertain whether they would be enforceable in the Cayman Islands. 44 Table of Contents The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law.
Because the courts of the Cayman Islands have yet to rule on whether such judgments are penal or punitive in nature, it is uncertain whether they would be enforceable in the Cayman Islands. 49 Table of Contents The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedure Law.
Taxation⸺Certain United States Federal Income Tax Considerations-Passive Foreign Investment Company.” 47 Table of Contents We will continue to incur increased costs as a result of being a public company. As a U.S. public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.
Taxation⸺Certain United States Federal Income Tax Considerations-Passive Foreign Investment Company.” 52 Table of Contents We will continue to incur increased costs as a result of being a public company. As a U.S. public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.
The Group’s information technology systems infrastructure is currently deployed and the Group’s data is currently maintained on customized cloud computing services in China.
The Group’s information technology systems infrastructure is currently deployed and the Group’s data is currently maintained primarily on customized cloud computing services in China.
Controls and Procedures⸺Management’s Annual Report on Internal Control over Financial Reporting.” Our independent registered public accounting firm has issued a report, which has concluded that we maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022.
Controls and Procedures⸺Management’s Annual Report on Internal Control over Financial Reporting.” Our independent registered public accounting firm has issued a report, which has concluded that we maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023.
In addition, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. As of December 31, 2022, our management has concluded that our internal control over financial reporting is effective. See “Item 15.
In addition, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. As of December 31, 2023, our management has concluded that our internal control over financial reporting is effective. See “Item 15.
Accordingly, you may be unable to participate in our rights offerings in the future and may experience dilution in your holdings. 43 Table of Contents You may not receive cash dividends if the depositary decides it is impractical to make them available to you.
Accordingly, you may be unable to participate in our rights offerings in the future and may experience dilution in your holdings. 48 Table of Contents You may not receive cash dividends if the depositary decides it is impractical to make them available to you.
For example, the Group is in the process of winding down its budget auto financing business, the Wanlimu e-commerce platform and the QD Food business. The Group had closed all of its Wanlimu education centers in November 2022 and completely wound down its Wanlimu Kids Clubs business in March 2023.
For example, the Group is in the process of winding down its budget auto financing business, the Wanlimu e-commerce platform. The Group had closed all of its Wanlimu education centers in November 2022 and completely wound down its Wanlimu Kids Clubs business in March 2023.
On February 17, 2023, the China Securities Regulatory Commission, or the CSRC, released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), and five supporting guidelines, which came into effect on March 31, 2023.
On February 17, 2023, the China Securities Regulatory Commission, or the CSRC, released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), and several supporting guidelines, which came into effect on March 31, 2023.
You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs. 42 Table of Contents Substantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.
You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs. 47 Table of Contents Substantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.
As a result, the Group’s business and results of operations may be materially and adversely affected. 19 Table of Contents We may continue to repurchase our shares, and such repurchases may be at prices that exceed the trading price of our ADSs.
As a result, the Group’s business and results of operations may be materially and adversely affected. 24 Table of Contents We may continue to repurchase our shares, and such repurchases may be at prices that exceed the trading price of our ADSs.
Any interruptions or delays in the Group’s service, whether as a result of third-party error, the Group’s error, natural disasters or security breaches, whether accidental or willful, could harm the Group’s relationships with users and business partners and our reputation.
Any interruptions or delays in the Group’s service, whether as a result of third-party error, the Group’s error, natural disasters or security breaches, whether accidental or willful, could harm the Group’s relationships with customers and business partners and our reputation.
Since the Group receives substantially all of its revenues in Renminbi and cash flow will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit the Group’s ability to utilize cash generated in Renminbi to fund the Group’s business activities outside of the PRC or pay dividends in foreign currencies to our shareholders, including holders of the ADSs, and may limit our ability to obtain foreign currency through debt or equity financing for our PRC subsidiaries and the affiliated consolidated entities.
Since the Group receives a portion of its revenues in Renminbi and cash flow will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit the Group’s ability to utilize cash generated in Renminbi to fund the Group’s business activities outside of the PRC or pay dividends in foreign currencies to our shareholders, including holders of the ADSs, and may limit our ability to obtain foreign currency through debt or equity financing for our PRC subsidiaries and the affiliated consolidated entities.
Secoo is a large online integrated upscale products and services platform. As of March 31, 2023, we had sold substantially all of the equity interests we previously held in Secoo.
Secoo is a large online integrated upscale products and services platform. As of March 31, 2024, we had sold substantially all of the equity interests we previously held in Secoo.
We generally execute legal documents by affixing chops or seals, rather than having the designated legal representatives sign the documents. We have three major types of chops-corporate chops, contract chops and finance chops.
In China, we generally execute legal documents by affixing chops or seals, rather than having the designated legal representatives sign the documents. We have three major types of chops-corporate chops, contract chops and finance chops.
Since substantially all of the Group’s future net income and cash flow will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our ability to utilize cash generated in Renminbi to fund our business activities outside of the PRC or pay dividends in foreign currencies to our shareholders, including holders of our ADSs, and may limit our ability to obtain foreign currency through debt or equity financing for our subsidiaries and the Group VIEs.
Since a portion of the Group’s future net income and cash flow will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our ability to utilize cash generated in Renminbi to fund our business activities outside of the PRC or pay dividends in foreign currencies to our shareholders, including holders of our ADSs, and may limit our ability to obtain foreign currency through debt or equity financing for our subsidiaries and the Group VIEs.
See “Item 8. Financial Information⸺A. Consolidated Statements and Other Financial Information⸺Dividend Policy.” For certain Cayman Islands, PRC and United States federal income tax considerations of an investment in the ADSs and Class A ordinary shares, see “Item 10. Additional Information⸺E.
See “Item 8. Financial Information⸺A. Consolidated Statements and Other Financial Information⸺Dividend Policy.” 5 Table of Contents For certain Cayman Islands, PRC and United States federal income tax considerations of an investment in the ADSs and Class A ordinary shares, see “Item 10. Additional Information⸺E.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.” Following the Statement of Protocol signed between the PCAOB and the China Securities Regulatory Commission and the Ministry of Finance of the PRC in August 2022 and the on-site inspections and investigations conducted by the PCAOB staff in Hong Kong from September to November 2022, the PCAOB Board voted in December 2022 to vacate the previous 2021 determinations, and as a result, our auditor, Ernst & Young Hua Ming LLP, is no longer a registered public accounting firm that the PCAOB is unable to inspect or investigate completely as of the date of this annual report or at the time of issuance of the audit report included herein.
Following the Statement of Protocol signed between the PCAOB and the China Securities Regulatory Commission and the Ministry of Finance of the PRC in August 2022 and the on-site inspections and investigations conducted by the PCAOB staff in Hong Kong from September to November 2022, the PCAOB Board voted in December 2022 to vacate the previous 2021 determinations, and as a result, our auditor, Ernst & Young Hua Ming LLP, is no longer a registered public accounting firm that the PCAOB is unable to inspect or investigate completely as of the date of this annual report or at the time of issuance of the audit report included herein.
See “⸺Risks Related to Doing Business in China⸺There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. In addition, rules and regulations in China can change quickly with little advance notice.” 25 Table of Contents Ganzhou Qudian and Xiamen Qudian became Group VIEs in 2017. Min Luo, our founder, chairman and chief executive officer, and Mr.
See “⸺Risks Related to Doing Business in China⸺There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. In addition, rules and regulations in China can change quickly with little advance notice.” 30 Table of Contents Ganzhou Qudian became one of the Group VIEs in 2017. Min Luo, our founder, chairman and chief executive officer, and Mr.
Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs. 22 Table of Contents The Group’s operations depend on the performance of the Internet infrastructure and fixed telecommunications networks in China.
Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs. 27 Table of Contents The Group’s operations primarily depend on the performance of the Internet infrastructure and fixed telecommunications networks in China.
If the Group fails to retain its employees, the Group could incur significant expenses in hiring and training their replacements, and the quality of the Group’s services and the Group’s ability to serve borrowers and investors could diminish, resulting in a material adverse effect to the Group’s business. 20 Table of Contents Increases in labor costs in the PRC may adversely affect the Group’s business and results of operations.
If the Group fails to retain its employees, the Group could incur significant expenses in hiring and training their replacements, and the quality of the Group’s services and the Group’s ability to serve customers and investors could diminish, resulting in a material adverse effect to the Group’s business. 25 Table of Contents Increases in labor costs in the PRC may adversely affect the Group’s business and results of operations.
Therefore, we operate such businesses in China through the Group VIEs. Currently, the Group VIEs are (i) Beijing Happy Time, (ii) Ganzhou Qudian and (iii) Xiamen Qudian.
Therefore, we operate such businesses in China through the Group VIEs. Currently, the Group VIEs are (i) Beijing Happy Time and (ii) Ganzhou Qudian.
In addition to the above factors, the price and trading volume of our ADSs may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting the Group’s or its industry; 41 Table of Contents ● announcements of studies and reports relating to the quality of the Group’s product offerings or those of our competitors; ● changes in the economic performance or market valuations of other consumer finance service providers; ● actual or anticipated fluctuations in the Group’s quarterly results of operations and changes or revisions of the Group’s expected results; ● changes in financial estimates by securities research analysts; ● conditions in the market for consumer finance services; ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; ● additions to or departures of our senior management; ● fluctuations of exchange rates between the Renminbi and the U.S. dollar; ● release or expiry of lock-up or other transfer restrictions on our outstanding shares or ADSs; and ● sales or perceived potential sales of additional Class A ordinary shares or ADSs.
In addition to the above factors, the price and trading volume of our ADSs may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting the Group’s or its industry; 46 Table of Contents ● announcements of studies and reports relating to the quality of the Group’s product and service offerings or those of our competitors; ● changes in the economic performance or market valuations of other competitors in the industry the Group operates in; ● actual or anticipated fluctuations in the Group’s quarterly results of operations and changes or revisions of the Group’s expected results; ● changes in financial estimates by securities research analysts; ● conditions in the market which the Group operates in; ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; ● additions to or departures of our senior management; ● fluctuations of exchange rates between the Renminbi and the U.S. dollar; ● release or expiry of lock-up or other transfer restrictions on our outstanding shares or ADSs; and ● sales or perceived potential sales of additional Class A ordinary shares or ADSs.
In addition, the Group has commenced construction of its innovation park in Xiamen, Fujian Province, and the construction is expected to be completed in the third quarter of 2023. If the costs and expenses incurred for the construction exceed our planned limits, the Group’s financial results may be negatively affected.
In addition, the Group has commenced construction of its innovation park in Xiamen, Fujian Province, and the construction is expected to be completed in the second quarter of 2024. If the costs and expenses incurred for the construction exceed our planned limits, the Group’s financial results may be negatively affected.
Substantially all of the Group’s operations are conducted in the PRC and all of the Group’s revenue is sourced from the PRC. Accordingly, the Group’s financial condition and results of operations are affected to a significant extent by economic, political and legal developments in the PRC.
A significant portion of the Group’s operations are conducted in the PRC and a significant portion of the Group’s revenue is sourced from the PRC. Accordingly, the Group’s financial condition and results of operations are affected to a significant extent by economic, political and legal developments in the PRC.
These factors could prevent the Group from maintaining business operations, damage our brands and reputation, divert the Group’s employees’ attention, reduce the Group’s revenue, subject the Group to liability and cause users to abandon the Group’s products, any of which could adversely affect the Group’s business, financial condition and results of operations.
These factors could prevent the Group from maintaining business operations, damage our brands and reputation, divert the Group’s employees’ attention, reduce the Group’s revenue, subject the Group to liability and cause customers to abandon the Group’s services or products, any of which could adversely affect the Group’s business, financial condition and results of operations.
If any of the Group’s employees or business partners take, convert or misuse funds, documents or data or fail to follow the Group’s rules and procedures when interacting with users, the Group could be liable for damages and subject to regulatory actions and penalties.
If any of the Group’s employees or business partners take, convert or misuse funds, documents or data or fail to follow the Group’s rules and procedures when interacting with customers or end consumers, the Group could be liable for damages and subject to regulatory actions and penalties.
In addition, the Group may also explore business opportunities overseas. As such, the Group may face risks associated with entering into markets where the Group has limited or no experience, the Group may be less well-known or have fewer local resources and it may need to localize its business practices, culture and operations.
In addition, the Group has been and may continue exploring business opportunities overseas. As such, the Group may face risks associated with entering into markets where the Group has limited or no experience, the Group may be less well-known or have fewer local resources and it may need to localize its business practices, culture and operations.
Business Overview⸺Overview⸺Our Contractual Arrangements with the Group VIEs and Their Shareholders.” All of the Group’s revenue are attributed to the Group VIEs. These contractual arrangements may be less effective than direct ownership in providing us with control over the Group VIEs.
Business Overview⸺Overview⸺Our Contractual Arrangements with the Group VIEs and Their Shareholders.” A significant portion of the Group’s revenue are attributed to the Group VIEs. These contractual arrangements may be less effective than direct ownership in providing us with control over the Group VIEs.
Errors or other design defects within the software on which the Group relies may result in a negative experience for users, delay introductions of new features or enhancements, result in errors or compromise our ability to protect user data or the Group’s intellectual property, or affect the accuracy of the Group’s operating data.
Errors or other design defects within the software on which the Group relies may result in a negative experience for customers and end consumers, delay introductions of new features or enhancements, result in errors or compromise our ability to protect user data or the Group’s intellectual property, or affect the accuracy of the Group’s operating data.
Risks Factors⸺Risks Related to Doing Business in China.” Furthermore, the Holding Foreign Companies Accountable Act, or the HFCA Act, may affect our ability to maintain our listing on the NYSE.
Risks Factors⸺Risks Related to Doing Business in China.” 3 Table of Contents Furthermore, the Holding Foreign Companies Accountable Act, or the HFCA Act, may affect our ability to maintain our listing on the NYSE.
In addition, rules and regulations in China can change quickly with little advance notice. Substantially all of the Group’s operations are conducted in the PRC, and are governed by PRC laws, rules and regulations. Our PRC subsidiaries and the Group VIEs are subject to laws, rules and regulations applicable to foreign investment in China.
In addition, rules and regulations in China can change quickly with little advance notice. A significant portion of the Group’s operations are conducted in the PRC, and are governed by PRC laws, rules and regulations. Our PRC subsidiaries and the Group VIEs are subject to laws, rules and regulations applicable to foreign investment in China.
See “Item 3. Key Information⸺D. Risk Factors⸺Risks Related to Our Corporate Structure.” 3 Table of Contents Operations in China The Group faces various legal and operational risks and uncertainties associated with being based in and having its operations primarily in China and the country’s complex and evolving laws and regulations.
See “Item 3. Key Information⸺D. Risk Factors⸺Risks Related to Our Corporate Structure.” Operations in China The Group faces various legal and operational risks and uncertainties associated with being based in and having a significant portion of its operations in China and the country’s complex and evolving laws and regulations.
There can be no assurance that we would not be identified as a SEC-identified issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCA Act. See “Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections” and “Item 3. Key Information⸺D.
There can be no assurance that we would not be identified as a SEC-identified issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCA Act. See “Item 3. Key Information⸺D.
Any errors, bugs or defects discovered in the software on which the Group relies could result in harm to the Group’s reputation, loss of users, liability for damages, any of which could adversely affect the Group’s business, financial condition and results of operations. 16 Table of Contents Any significant disruption in the Group’s information technology systems, including events beyond our control, could prevent the Group from offering its products, thereby reduce the attractiveness of the Group’s products and result in a loss of borrowers or institutional funding partners.
Any errors, bugs or defects discovered in the software on which the Group relies could result in harm to the Group’s reputation, loss of customers and liability for damages, any of which could adversely affect the Group’s business, financial condition and results of operations. 21 Table of Contents Any significant disruption in the Group’s information technology systems, including events beyond our control, could prevent the Group from offering its services and products, thereby reduce the attractiveness of the Group’s services and products and result in a loss of customers.
In addition, rules and regulations in China can change quickly with little advance notice.” 4 Table of Contents Furthermore, the PRC authorities have recently promulgated new or proposed laws and regulations to further regulate securities offerings that are conducted overseas by China-based issuers. For more detailed information, see “Item 4. Information on the Company—B.
In addition, rules and regulations in China can change quickly with little advance notice.” Furthermore, the PRC authorities have recently promulgated new or proposed laws and regulations to further regulate securities offerings that are conducted overseas by China-based issuers. For more detailed information, see “Item 4. Information on the Company—B. Business Overview—Regulations—Regulations on M&A Rules and Overseas Listings”.
In addition, a majority of our directors and executive officers reside within China. There are significant legal and other obstacles for U.S. authorities to obtain information needed for investigations or litigation against us or our directors, executive officers or other gatekeepers in case we or any of these individuals engage in fraud or other wrongdoing.
There are significant legal and other obstacles for U.S. authorities to obtain information needed for investigations or litigation against us or our directors, executive officers or other gatekeepers in case we or any of these individuals engage in fraud or other wrongdoing.
Mr. Min Luo, our founder, chairman of the board and chief executive officer, beneficially owns 2,836,200 Class A ordinary shares and all the Class B ordinary shares issued and outstanding, representing 80.1% of our aggregate voting power as of March 31, 2023. As a result, Mr.
Mr. Min Luo, our founder, chairman of the board and chief executive officer, beneficially owns 2,836,200 Class A ordinary shares and all the Class B ordinary shares issued and outstanding, representing 83.8% of our aggregate voting power as of March 31, 2024. As a result, Mr.
As such, we do not expect to be identified as an SEC-identified issuer again in 2023. However, the PCAOB may change its determinations under the HFCA Act at any point in the future.
Moreover, we do not expect to be identified as an SEC-identified issuer in 2024. However, the PCAOB may change its determinations under the HFCA Act at any point in the future.
All of the Group’s net income is denominated in Renminbi. The Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries or the Group VIEs.
The Renminbi is currently convertible under the “current account,” which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries or the Group VIEs.
The Group’s business depends on its employees and/or business partners to interact with users and its business may involve the collection and use of personal information.
The Group’s business depends on its employees and/or business partners to interact with customers or end consumers and its business may involve the collection and use of personal information.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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The contractual arrangements for each Group VIE, including those as to the new Group VIEs, contain substantively identical provisions that afford us, through our wholly-owned subsidiary Ganzhou Qufenqi, the right to control all of the Group VIEs in the same manner and degree. Mr. Min Luo, our founder, chairman and chief executive officer, and Mr.
The contractual arrangements for each Group VIE, including those as to the new Group VIE, contain substantively identical provisions that afford us, through our wholly-owned subsidiary Ganzhou Qufenqi, the right to control all of the Group VIEs in the same manner and degree. Mr. Min Luo, our founder, chairman and chief executive officer, and Mr.
On 26 May 2020, the China Banking and Insurance Regulatory Commission, or the CBIRC, promulgated the Interim Measures for the Supervision and Administration of , or the Interim Measures, which made supplement and further requirements for finance lease enterprises on the basis of the Administrative Measures.
On 26 May 2020, the China Banking and Insurance Regulatory Commission, or the CBIRC, promulgated the Interim Measures for the Supervision and Administration, or the Interim Measures, which made supplement and further requirements for finance lease enterprises on the basis of the Administrative Measures.
On December 26, 2019, the State Council issued the Regulations on Implementing the Law of Foreign Investment of the PRC, which came into effect on January 1, 2020.
On December 26, 2019, the State Council issued the Regulations on Implementing the Law of Foreign Investment of the PRC, which came into effect on January 1, 2020.
Any violation of these laws and regulations may subject the Internet information service provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities. ​ 56 Table of Contents Pursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in 2013, and the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations.
Any violation of these laws and regulations may subject the Internet information service provider to warnings, fines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities. ​ 59 Table of Contents Pursuant to the Notice of the Supreme People’s Court, the Supreme People’s Procuratorate and the Ministry of Public Security on Legally Punishing Criminal Activities Infringing upon the Personal Information of Citizens, issued in 2013, and the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues regarding Legal Application in Criminal Cases Infringing upon the Personal Information of Citizens, which was issued on May 8, 2017 and took effect on June 1, 2017, the following activities may constitute the crime of infringing upon a citizen’s personal information: (i) providing a citizen’s personal information to specified persons or releasing a citizen’s personal information online or through other methods in violation of relevant national provisions; (ii) providing legitimately collected information relating to a citizen to others without such citizen’s consent (unless the information is processed, not traceable to a specific person and not recoverable); (iii) collecting a citizen’s personal information in violation of applicable rules and regulations when performing a duty or providing services; or (iv) collecting a citizen’s personal information by purchasing, accepting or exchanging such information in violation of applicable rules and regulations.
We have the power to direct the activities that most significantly impact the economic performance of the Group VIEs and provide us with economic benefits of each Group VIE through a series of contractual arrangements with such Group VIE, its shareholders and Ganzhou Qufenqi, as described in more detail below, which collectively enables us to: ● exercise power to direct the activities that most significantly impact the economic performance of each of the Group VIEs and its subsidiaries; ● receive substantially all the economic benefits of each of the Group VIEs; and ● have an exclusive option to purchase all or part of the equity interests in the equity interest in or all or part of the assets of each of the Group VIEs when and to the extent permitted by PRC law. 82 Table of Contents In addition, pursuant to the resolutions of the board of directors of Qudian Inc. and/or the resolutions of all shareholders of Qudian Inc., the board of directors of Qudian Inc. or any officer authorized by such board shall cause Ganzhou Qufenqi to exercise its rights under the power of attorney agreements entered into among Ganzhou Qufenqi, each of the Group VIEs and the nominee shareholders of each of the Group VIEs and the rights of Ganzhou Qufenqi under the exclusive call option agreement between Ganzhou Qufenqi and each of the Group VIEs.
We have the power to direct the activities that most significantly impact the economic performance of the Group VIEs and provide us with economic benefits of each Group VIE through a series of contractual arrangements with such Group VIE, its shareholders and Ganzhou Qufenqi, as described in more detail below, which collectively enables us to: ● exercise power to direct the activities that most significantly impact the economic performance of each of the Group VIEs and its subsidiaries; ● receive substantially all the economic benefits of each of the Group VIEs; and ● have an exclusive option to purchase all or part of the equity interests in the equity interest in or all or part of the assets of each of the Group VIEs when and to the extent permitted by PRC law. 77 Table of Contents In addition, pursuant to the resolutions of the board of directors of Qudian Inc. and/or the resolutions of all shareholders of Qudian Inc., the board of directors of Qudian Inc. or any officer authorized by such board shall cause Ganzhou Qufenqi to exercise its rights under the power of attorney agreements entered into among Ganzhou Qufenqi, each of the Group VIEs and the nominee shareholders of each of the Group VIEs and the rights of Ganzhou Qufenqi under the exclusive call option agreement between Ganzhou Qufenqi and each of the Group VIEs.
Pursuant to the Announcement, cross-border e-commerce payment enterprises, logistics enterprises shall obtain the relevant qualification certificate pursuant to the provisions of the Announcement on Regulatory Matters Relating to Cross-border E-commerce Retail Imports and Exports and submit the relevant qualification certificate pursuant to the relevant provisions of the authorities in charge when completing customs registration formalities. 78 Table of Contents Regulations Related to M&A and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission, the SAT, the SAIC, the China Securities Regulatory Commission, or CSRC, and the SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and was amended on June 22, 2009.
Pursuant to the Announcement, cross-border e-commerce payment enterprises, logistics enterprises shall obtain the relevant qualification certificate pursuant to the provisions of the Announcement on Regulatory Matters Relating to Cross-border E-commerce Retail Imports and Exports and submit the relevant qualification certificate pursuant to the relevant provisions of the authorities in charge when completing customs registration formalities. 73 Table of Contents Regulations Related to M&A and Overseas Listings On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission, the SAT, the SAIC, the China Securities Regulatory Commission, or CSRC, and the SAFE, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and was amended on June 22, 2009.
We have entered into a series of contractual arrangements with each new Group VIE and its shareholders, which allows us to have the power to direct the activities that most significantly impact the economic performance of each new Group VIE and realize substantially all of the economic risks and benefits arising from such new Group VIE.
We have entered into a series of contractual arrangements with the new Group VIE and its shareholders, which allows us to have the power to direct the activities that most significantly impact the economic performance of such new Group VIE and realize substantially all of the economic risks and benefits arising from such new Group VIE.
In addition, according to the 2020 Specification, personal biometric information should be stored separately from personal identity information and in principle, the original personal biometric information should not be stored; besides, it further requires that the privacy policy is to disclose the scope and rules of personal information collection and use by the personal information controller, which should not be regarded as a contract signed by the subject of personal information. 57 Table of Contents On January 23, 2019, the Office of the Central Cyberspace Affairs Commission, the Ministry of Public Security, the State Administration for Market Regulation and the MIIT jointly issued the Announcement of Launching Special Crackdown Against Illegal Collection and Use of Personal Information by Apps, or the Announcement.
In addition, according to the 2020 Specification, personal biometric information should be stored separately from personal identity information and in principle, the original personal biometric information should not be stored; besides, it further requires that the privacy policy is to disclose the scope and rules of personal information collection and use by the personal information controller, which should not be regarded as a contract signed by the subject of personal information. 60 Table of Contents On January 23, 2019, the Office of the Central Cyberspace Affairs Commission, the Ministry of Public Security, the State Administration for Market Regulation and the MIIT jointly issued the Announcement of Launching Special Crackdown Against Illegal Collection and Use of Personal Information by Apps, or the Announcement.
The tax basis for the equity is the capital contribution costs actually paid by the equity transferor to a PRC resident enterprise at the time of the investment and equity participation, or the equity transfer costs actually paid at the time of acquisition of such equity to the original transferor of such equity. 74 Table of Contents Pursuant to 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, the withholding tax rate with respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise.
The tax basis for the equity is the capital contribution costs actually paid by the equity transferor to a PRC resident enterprise at the time of the investment and equity participation, or the equity transfer costs actually paid at the time of acquisition of such equity to the original transferor of such equity. 69 Table of Contents Pursuant to 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, the withholding tax rate with respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise.
Property, Plants and Equipment The Group’s corporate headquarters are located in Xiamen, Fujian Province, China, where the Group leases 5,167 square meters of office space pursuant to a series of lease expiring in the fourth quarter of 2024.
Property, Plants and Equipment The Group’s corporate headquarters are located in Xiamen, Fujian Province, China, where the Group leases 5,167 square meters of office space pursuant to a series of leases expiring in the fourth quarter of 2024.
Risk Factors⸺Risks Related to Our Corporate Structure.” The following is a summary of the currently effective contractual arrangements by and among our wholly-owned subsidiary, Ganzhou Qufenqi, the applicable Group VIEs, and their respective shareholders. 83 Table of Contents Equity Interest Pledge Agreements Pursuant to the equity interest pledge agreements, the shareholders of the Group VIEs have pledged all of their equity interest in the Group VIEs as a continuing first priority security interest, as applicable, to respectively guarantee the Group VIEs and their shareholders’ performance of their obligations under the relevant contractual arrangements, which include the exclusive business cooperation agreements, exclusive call option agreements and power of attorney agreements.
Risk Factors⸺Risks Related to Our Corporate Structure.” The following is a summary of the currently effective contractual arrangements by and among our wholly-owned subsidiary, Ganzhou Qufenqi, the applicable Group VIEs, and their respective shareholders. 78 Table of Contents Equity Interest Pledge Agreements Pursuant to the equity interest pledge agreements, the shareholders of the Group VIEs have pledged all of their equity interest in the Group VIEs as a continuing first priority security interest, as applicable, to respectively guarantee the Group VIEs and their shareholders’ performance of their obligations under the relevant contractual arrangements, which include the exclusive business cooperation agreements, exclusive call option agreements and power of attorney agreements.
The regulations restrict the ultimate capital contribution percentage held by foreign investor(s) in a foreign-invested value-added telecommunications enterprise to 50% or less and require the primary foreign investor in a foreign invested value-added telecommunications enterprise to have a good track record and operational experience in the VATS industry. ​ 54 Table of Contents In July 2006, the predecessor, the MIIT issued the Circular of the Ministry of Information Industry on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Business, or the MIIT Circular, according to which, a foreign investor in the telecommunications service industry of China must establish a foreign invested enterprise and apply for a telecommunications businesses operation license.
The regulations restrict the ultimate capital contribution percentage held by foreign investor(s) in a foreign-invested value-added telecommunications enterprise to 50% or less and require the primary foreign investor in a foreign invested value-added telecommunications enterprise to have a good track record and operational experience in the VATS industry. ​ 57 Table of Contents In July 2006, the predecessor, the MIIT issued the Circular of the Ministry of Information Industry on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Business, or the MIIT Circular, according to which, a foreign investor in the telecommunications service industry of China must establish a foreign invested enterprise and apply for a telecommunications businesses operation license.
The Security Administration Draft has not been enacted as of the date of this annual report. 58 Table of Contents On December 28, 2021, the Cybersecurity Review Measures was promulgated and became effective on February 15, 2022, which requires that the purchase of network products and services by critical information infrastructure operator and the data processing activities carries out online platform operators, which affects or may affect national security, shall be subject to cybersecurity review.
The Security Administration Draft has not been enacted as of the date of this annual report. 61 Table of Contents On December 28, 2021, the Cybersecurity Review Measures was promulgated and became effective on February 15, 2022, which requires that the purchase of network products and services by critical information infrastructure operator and the data processing activities carries out online platform operators, which affects or may affect national security, shall be subject to cybersecurity review.
This notice has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. 72 Table of Contents PRC residents or entities who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration as required before the implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified banks.
This notice has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. 67 Table of Contents PRC residents or entities who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration as required before the implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified banks.
Unless otherwise agreed by the parties, this agreement will continue remaining effective. 84 Table of Contents Exclusive Call Option Agreements Pursuant to the exclusive call option agreements, the Group VIEs and each of their shareholders have irrevocably granted Ganzhou Qufenqi an exclusive option to purchase, or have its designated person or persons to purchase, at its discretion at any time, to the extent permitted under PRC law, all or part of such shareholder’s equity interests in the applicable, or any or all of the assets of such Group VIE.
Unless otherwise agreed by the parties, this agreement will continue remaining effective. 79 Table of Contents Exclusive Call Option Agreements Pursuant to the exclusive call option agreements, the Group VIEs and each of their shareholders have irrevocably granted Ganzhou Qufenqi an exclusive option to purchase, or have its designated person or persons to purchase, at its discretion at any time, to the extent permitted under PRC law, all or part of such shareholder’s equity interests in the applicable, or any or all of the assets of such Group VIE.
We cannot assure you that the VAT rates will not be raised in the future, which could have a material adverse effect on the Group’s financial condition and results of operations. 75 Table of Contents Regulations Relating to E-Commerce The Administrative Measures on Online Transactions issued by the State Administration for Market Regulation, or SAMR, on January 26, 2014 which became effective on March 15, 2014, or the Online Trading Measures.
We cannot assure you that the VAT rates will not be raised in the future, which could have a material adverse effect on the Group’s financial condition and results of operations. 70 Table of Contents Regulations Relating to E-Commerce The Administrative Measures on Online Transactions issued by the State Administration for Market Regulation, or SAMR, on January 26, 2014 which became effective on March 15, 2014, or the Online Trading Measures.
According to the Administrative Measures on Telecommunications Business Operating Licenses, the ICP license has a term of five years and can be renewed within 90 days before expiration. ​ 55 Table of Contents Beijing Happy Time, one of the Group VIEs, had obtained ICP licenses for provision of commercial Internet information services issued by Beijing Telecommunication Administration in February 2019.
According to the Administrative Measures on Telecommunications Business Operating Licenses, the ICP license has a term of five years and can be renewed within 90 days before expiration. ​ 58 Table of Contents Beijing Happy Time, one of the Group VIEs, had obtained ICP licenses for provision of commercial Internet information services issued by Beijing Telecommunication Administration in February 2019.
Such unfair competition conducts include, but are not limited to, carrying out any fictitious transactions and making up user evaluations. 76 Table of Contents The Law of the People’s Republic of China on the Protection of Rights and Interests of Consumers, or the Consumer Protection Law, as amended on October 25, 2013, sets out the obligations of business operators and the rights and interests of the consumers.
Such unfair competition conducts include, but are not limited to, carrying out any fictitious transactions and making up user evaluations. 71 Table of Contents The Law of the People’s Republic of China on the Protection of Rights and Interests of Consumers, or the Consumer Protection Law, as amended on October 25, 2013, sets out the obligations of business operators and the rights and interests of the consumers.
The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration. 71 Table of Contents On March 30, 2015, SAFE promulgated the Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide.
The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration. 66 Table of Contents On March 30, 2015, SAFE promulgated the Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise, or Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide.
Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. 73 Table of Contents The 2019 Law of Foreign Investment was adopted at the second meeting of the thirteenth National People’s Congress on March 15, 2019, which became effective on January 1, 2020.
Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. 68 Table of Contents The 2019 Law of Foreign Investment was adopted at the second meeting of the thirteenth National People’s Congress on March 15, 2019, which became effective on January 1, 2020.
Violation against such requirements would constitute a direct violation of both Provisional Regulations on Enterprise Information Disclosure and Measures for Penalties for Infringement upon Rights and Interests of Consumers and would be punished severely. 77 Table of Contents The customs declaration, clearance and inspection procedures for goods and articles are different.
Violation against such requirements would constitute a direct violation of both Provisional Regulations on Enterprise Information Disclosure and Measures for Penalties for Infringement upon Rights and Interests of Consumers and would be punished severely. 72 Table of Contents The customs declaration, clearance and inspection procedures for goods and articles are different.
On the same day, the CSRC held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that (1) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, such as completion of registration in the market of the United States, but have not completed the overseas listing; and (2) domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges on or prior to the effective date of the Trial Measures, may reasonably arrange the timing for submitting their filing applications with the CSRC, and shall complete the filing before the completion of their overseas offering and listing. ​ 80 Table of Contents C.
On the same day, the CSRC held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that (1) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, such as completion of registration in the market of the United States, but have not completed the overseas listing; and (2) domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges on or prior to the effective date of the Trial Measures, may reasonably arrange the timing for submitting their filing applications with the CSRC, and shall complete the filing before the completion of their overseas offering and listing.
It omits certain entities that are immaterial to the Group’s results of operations, business and financial condition, such as Xiamen Qudian Financial Lease Ltd. and Xiamen Wanlimu Growth, which do not currently engage in material business operations. Except as otherwise specified, equity interests depicted in this diagram are held as to 100%.
It omits certain entities that are immaterial to the Group’s results of operations, business and financial condition, such as Xiamen Qudian Financial Lease Ltd. and Xiamen Wanlimu Growth, which do not currently engage in material business operations. Except as otherwise specified, equity interests depicted in this diagram are beneficially owned as to 100%.
(3) The following table sets forth the shareholders of Beijing Happy Time, their respective equity interests in Beijing Happy Time as of the date of this annual report. ​ ​ ​ ​ ​ ​ ​ Amount Percentage ​ ​ of ​ of ​ ​ Registered ​ Equity Shareholders ​ Capital ​ Interests ​ RMB ​ ​ Mr.
(3) The following table sets forth the shareholders of Beijing Happy Time, their respective equity interests in Beijing Happy Time as of the date of this annual report. ​ 76 Table of Contents ​ ​ ​ ​ ​ ​ Amount Percentage ​ ​ of ​ of ​ ​ Registered ​ Equity Shareholders ​ Capital ​ Interests ​ RMB ​ ​ Mr.
The Draft Rules Regarding Overseas Listing lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect overseas listing in overseas markets. ​ 79 Table of Contents On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), and five supporting guidelines, which came into effect on March 31, 2023.
The Draft Rules Regarding Overseas Listing lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect overseas listing in overseas markets. ​ 74 Table of Contents On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), and several supporting guidelines, which came into effect on March 31, 2023.
Organizational Structure The following diagram illustrates the Group’s organizational structure, and the place of formation, ownership interest and affiliation of each of our principal subsidiaries and affiliated entities as of December 31, 2022.
Organizational Structure The following diagram illustrates the Group’s organizational structure, and the place of formation, ownership interest and affiliation of each of our principal subsidiaries and affiliated entities as of December 31, 2023.
Instead of relying on several shareholders’ compliance with their respective contractual obligations, we will only rely on one or two shareholders’ compliance for each Group VIE and would only need to enforce against such shareholder(s) in the event of a breach.
Instead of relying on several shareholders’ compliance with their respective contractual obligations, we will only rely on two shareholders’ compliance for such Group VIE and would only need to enforce against such shareholder(s) in the event of a breach.
Exclusive Business Cooperation Agreements Under the exclusive business cooperation agreements, Ganzhou Qufenqi has the exclusive right to provide the Group VIEs and their subsidiaries that generate substantial income, including Ganzhou Happy Fenqi, Ganzhou Network, and Fuzhou Microcredit, or the profitable Group VIEs and their subsidiaries, with technical support, consulting services and other services.
Exclusive Business Cooperation Agreements Under the exclusive business cooperation agreements, Ganzhou Qufenqi has the exclusive right to provide the Group VIEs and their subsidiaries that generate substantial income, including Ganzhou Happy Fenqi, or the profitable Group VIEs and their subsidiaries, with technical support, consulting services and other services.
Xiamen Qu Plus Plus Technology Development Co., Ltd., or Xiamen Qu Plus Plus, became a Group VIE in 2019. In December 2022, we completed the dissolution of Xiamen Qu Plus Plus and terminated the contractual arrangements with Xiamen Qu Plus Plus and its shareholders.
In April 2022, we completed the dissolution of Xiamen Weipujia and terminated the contractual arrangements with Xiamen Weipujia and its shareholders. Xiamen Qu Plus Plus Technology Development Co., Ltd., or Xiamen Qu Plus Plus, became a Group VIE in 2019.
The Anti-Monopoly Law promulgated by the Standing Committee of the National People’s Congress on August 30, 2007 and effective on August 1, 2008 requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by MOFCOM before they can be completed.
The Anti-Monopoly Law promulgated by the Standing Committee of the National People’s Congress on August 30, 2007, effective on August 1, 2008, and last amended on June 24, 2022, requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by MOFCOM before they can be completed.
The Group has commenced construction of its innovation park on such parcel of land, and the construction is expected to be completed in the third quarter of 2023. We believe that the Group will be able to obtain adequate facilities to accommodate the Group’s future expansion plans. ​ ITEM 4A. UNRESOLVED STAFF COMMENTS None. ​ 85 Table of Contents
The Group has commenced construction of its innovation park on such parcel of land, and the construction is expected to be completed in the second quarter of 2024. We believe that the Group will be able to obtain adequate facilities to accommodate the Group’s future expansion plans. ​ ITEM 4A. UNRESOLVED STAFF COMMENTS None. ​ 80 Table of Contents
In September 2020, the ICP license of Beijing Happy Time expired and we did not renew such license due to adjustments to our business structure. In addition, Xiamen Qudian and Xiamen Wanlimu Growth have obtained ICP licenses for provision of Internet information services issued by Fujian Telecommunication Administration in September 2019 and January 2021, respectively.
In September 2020, the ICP license of Beijing Happy Time expired and we did not renew such license due to adjustments to our business structure. In addition, Xiamen Wanlimu Growth has obtained the ICP license for provision of Internet information services issued by Fujian Telecommunication Administration in January 2021.
Our Contractual Arrangements with the Group VIEs and Their Shareholders Due to PRC legal restrictions on foreign ownership and investment in, among other areas, VATS, which include the operations of Internet content providers, or ICPs, we currently conduct part of such operations through Beijing Happy Time and its subsidiaries.
Our Contractual Arrangements with the Group VIEs and Their Shareholders Due to PRC legal restrictions on foreign ownership and investment in, among other areas, VATS, which include the operations of Internet content providers, or ICPs, we currently conduct part of such operations through Beijing Happy Time and its subsidiaries. We established one additional Group VIE, Ganzhou Qudian, in 2017.
The Group historically generated (i) financing income, loan facilitation income and other related income and guarantee income from cash credit products, (ii) sales income from the QD Food business, (iii) financing income and sales commission fee from merchandise credit products and (iv) transaction services fee and other related income from the Group’s transaction services business.
The Group historically generated (i) financing income, loan facilitation income and other related income and guarantee income from cash credit products, (ii) sales income from the QD Food business, (iii) educational services income from the Group’s Wanlimu Kids Clubs business, (iv) financing income and sales commission fee from merchandise credit products and (v) transaction services fee and other related income from the Group’s transaction services business.
In January 2021, we completed the dissolution of Hunan Qudian and terminated the contractual arrangements with Hunan Qudian and its shareholders. Xiamen Weipujia Technology Co., Ltd., or Xiamen Weipujia, became a Group VIEs in 2018. In April 2022, we completed the dissolution of Xiamen Weipujia and terminated the contractual arrangements with Xiamen Weipujia and its shareholders.
Hunan Qudian Technology Development Co., Ltd., or Hunan Qudian, became a VIE of the Group in 2017. In January 2021, we completed the dissolution of Hunan Qudian and terminated the contractual arrangements with Hunan Qudian and its shareholders. Xiamen Weipujia Technology Co., Ltd., or Xiamen Weipujia, became a Group VIEs in 2018.
In addition, rules and regulations in China can change quickly with little advance notice.” Company Name Company Status Name of Permission/License Governing Government Authority Beijing Happy Time Technology Development Co., Ltd.( 北京快乐时代科技发展有限公司 ) ​ Group VIE ​ Business License ​ Administration for Market Regulation Haidian District of Beijing City ​ ​ ​ ​ ​ ​ ​ Qufenqi (Ganzhou) Information Technology Co., Ltd.( 趣分期 （ 赣州 ） 信息技术有限公司 ) ​ Our PRC subsidiary ​ Business License ​ Administration for Market Regulation of Ganzhou City ​ ​ ​ ​ ​ ​ ​ Xiamen Happy Time Technology Co., Ltd.( 厦门快乐时代科技有限公司 ) ​ Our PRC subsidiary ​ Business License ​ Administration for Market Regulation of Xiamen City ​ ​ ​ ​ ​ ​ ​ Xiamen Qudian Financial Lease Ltd.( 厦门趣店融资租赁有限公司 ) ​ Subsidiary of a Group VIE ​ Business License ​ Administration for Market Regulation of Xiamen City ​ ​ ​ ​ ​ ​ ​ Ganzhou Qudian Technology Co., Ltd.( 赣州趣店科技有限公司 ) ​ Group VIE ​ Business License ​ Administrative Examination and Approval Bureau of Ganzhou Economic Technological Development Zone ​ ​ ​ ​ ​ ​ ​ Xiamen Qudian Technology Co., Ltd.( 厦门趣店科技有限公司 ) ​ Group VIE ​ Business License ​ Administration for Market Regulation of Xiamen City ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Service Provider License ​ Ministry of Industry and Information Technology of the PRC ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ICP License ​ Fujian Communications Administration ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ODPTP License ​ Fujian Communications Administration ​ ​ ​ ​ ​ ​ ​ Ganzhou Happy Fenqi Network Service Co., Ltd.( 赣州快乐分期网络服务有限公司 ) ​ Subsidiary of a Group VIE ​ Business License ​ Administration for Market Regulation of Ganzhou City ​ ​ ​ ​ ​ ​ ​ Xiamen Xincheng Youda Financing Guarantee Ltd.( 厦门信诚友达融资担保有限公司 ) ​ Our PRC subsidiary ​ Business License Financing Guarantee Business Permit ​ Administration for Market Regulation of Xiamen City Local Financial Supervision and Administration of Xiamen City ​ ​ ​ ​ ​ ​ ​ Xiamen Qudian Commercial Factoring Co., Ltd.( 厦门趣店商业保理有限公司 ) ​ Subsidiary of a Group VIE ​ Business License ​ Administration for Market Regulation of Xiamen City ​ Regulation The following is a summary of the most significant rules and regulations that affect the Group’s business activities in China or the rights of our shareholders to receive dividends and other distributions from the Group. 53 Table of Contents Regulation Related to Foreign Investment Restrictions The 2019 Law of Foreign Investment was adopted at the second meeting of the thirteenth National People’s Congress on March 15, 2019, which became effective on January 1, 2020.
In addition, rules and regulations in China can change quickly with little advance notice.” Company Name Company Status Name of Permission/License Governing Government Authority Beijing Happy Time Technology Development Co., Ltd.( 北京快乐时代科技发展有限公司 ) ​ Group VIE ​ Business License ​ Administration for Market Regulation Haidian District of Beijing City ​ ​ ​ ​ ​ ​ ​ Qufenqi (Ganzhou) Information Technology Co., Ltd.( 趣分期 （ 赣州 ） 信息技术有限公司 ) ​ Our PRC subsidiary ​ Business License ​ Administration for Market Regulation of Ganzhou City ​ ​ ​ ​ ​ ​ ​ Xiamen Happy Time Technology Co., Ltd.( 厦门快乐时代科技有限公司 ) ​ Our PRC subsidiary ​ Business License ​ Administration for Market Regulation of Xiamen City ​ ​ ​ ​ ​ ​ ​ Xiamen Qudian Financial Lease Ltd.( 厦门趣店融资租赁有限公司 ) ​ Our PRC subsidiary ​ Business License ​ Administration for Market Regulation of Xiamen City ​ ​ ​ ​ ​ ​ ​ Ganzhou Qudian Technology Co., Ltd.( 赣州趣店科技有限公司 ) ​ Group VIE ​ Business License ​ Administrative Examination and Approval Bureau of Ganzhou Economic Technological Development Zone ​ ​ ​ ​ ​ ​ ​ Xiamen Qudian Technology Co., Ltd.( 厦门趣店科技有限公司 ) ​ Our PRC subsidiary ​ Business License ​ Administration for Market Regulation of Xiamen City ​ ​ ​ ​ ​ ​ ​ Ganzhou Happy Fenqi Network Service Co., Ltd.( 赣州快乐分期网络服务有限公司 ) ​ Subsidiary of a Group VIE ​ Business License ​ Administration for Market Regulation of Ganzhou City ​ Regulation Regulations Related to the Group’s Operations in the PRC The following is a summary of the most significant rules and regulations that affect the Group’s business activities in China or the rights of our shareholders to receive dividends and other distributions from the Group. 56 Table of Contents Regulation Related to Foreign Investment Restrictions The 2019 Law of Foreign Investment was adopted at the second meeting of the thirteenth National People’s Congress on March 15, 2019, which became effective on January 1, 2020.
Under finance lease contracts, the lessor shall conclude a purchase contract based on the lessee’s selections in respect of the seller and the leased property, and the seller shall deliver the leased property to the lessee as agreed.
Under finance lease contracts, the lessor shall conclude a purchase contract based on the lessee’s selections in respect of the seller and the leased property, and the seller shall deliver the leased property to the lessee as agreed. The lessee has the rights of a buyer when taking delivery of the leased property.
The relationships between (i) each of Ganzhou Qudian, Xiamen Qudian and Beijing Happy Time and (ii) Ganzhou Qufenqi are governed by contractual arrangements and do not constitute equity ownership. (1) Investors in our ADSs hold equity interest in Qudian Inc., which does not conduct operations. 81 Table of Contents (2) Mr.
The relationships between (i) each of Ganzhou Qudian and Beijing Happy Time and (ii) Ganzhou Qufenqi are governed by contractual arrangements and do not constitute equity ownership. (1) Investors in our ADSs hold equity interest in Qudian Inc., which does not conduct operations. (2) Mr. Min Luo, our founder, chairman and chief executive officer, and Mr.
We have been further advised by our PRC legal counsel that if the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC government restrictions on foreign investment in the aforesaid business we engage in, we could be subject to severe penalties including being prohibited from continuing operations. See “Item 3.
We have been further advised by our PRC legal counsel that if the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC government restrictions on foreign investment in the aforesaid business we engage in, we could be subject to severe penalties including being prohibited from continuing operations and our ability to enforce its rights under these contractual arrangements could be limited.
The lessee has the rights of a buyer when taking delivery of the leased property. 68 Table of Contents Without the consent of the lessee, the lessor may not modify relevant details related to the lessee of the purchase contract that has been concluded based on the lessee’s selections in respect of the seller and the leased property.
Without the consent of the lessee, the lessor may not modify relevant details related to the lessee of the purchase contract that has been concluded based on the lessee’s selections in respect of the seller and the leased property.
The Group started to wind down its budget auto financing business in the second quarter of 2019. The Group’s total revenues decreased from RMB3,688.0 million in 2020 to RMB1,654.0 million in 2021, and decreased to RMB577.5 million (US$83.7 million) in 2022.
The Group started to wind down its budget auto financing business in the second quarter of 2019. The Group’s total revenues decreased from RMB1,654.0 million in 2021 to RMB577.5 million in 2022, and decreased to RMB126.3 million (US$17.8 million) in 2023.
As of the date of this annual report, the sole general partner of Tianjin Happy Share is Mr. Lianzhu Lv, and the limited partners are certain employees and a third party consultant. The 2015 Share Incentive Plan was terminated in December 2016. (4) The main subsidiary of Ganzhou Qudian is Xiamen Qudian Commercial Factoring Co., Ltd.
As of the date of this annual report, the sole general partner of Tianjin Happy Share is Mr. Lianzhu Lv, and the limited partners are certain employees and a third party consultant. The 2015 Share Incentive Plan was terminated in December 2016. (4) Xiamen Qudian was a VIE of the Company before June 30, 2023.
Lianzhu Lv, our head of user experience department, are the only shareholders of Ganzhou Qudian. Mr. Min Luo is the only shareholder of Xiamen Qudian. We believe such shareholding structure will enhance our administrative efficiency and reduce uncertainties associated with the enforcement of the relevant contractual arrangements entered into with the Group VIEs and their respective shareholder(s).
Lianzhu Lv, our head of user experience department, are the only shareholders of Ganzhou Qudian. We believe such shareholding structure will enhance our administrative efficiency and reduce uncertainties associated with the enforcement of the relevant contractual arrangements entered into with the Group VIE and its shareholders.
Anti-money Laundering Regulations The PRC Anti-money Laundering Law, which became effective in January 2007, sets forth the principal anti-money laundering requirements applicable to financial institutions as well as non-financial institutions with anti-money laundering obligations, including the adoption of precautionary and supervisory measures, establishment of various systems for client identification, retention of clients’ identification information and transactions records, and reports on large transactions and suspicious transactions.
Our subsidiary Xiamen Qudian Financial Lease Ltd. has obtained the approval to operate finance lease business as issued by the MOFCOM. 64 Table of Contents Anti-money Laundering Regulations The PRC Anti-money Laundering Law, which became effective in January 2007, sets forth the principal anti-money laundering requirements applicable to financial institutions as well as non-financial institutions with anti-money laundering obligations, including the adoption of precautionary and supervisory measures, establishment of various systems for client identification, retention of clients’ identification information and transactions records, and reports on large transactions and suspicious transactions.
The Group was also granted 75 copyrights that corresponding to the Group’s proprietary techniques in connection with its systems. Insurance The Group provides social security insurance including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for its employees. The Group also purchased employer’s liability insurance and additional commercial health insurance to increase insurance coverage of its employees.
The Group was also granted 117 copyrights that corresponding to the Group’s proprietary techniques in connection with its systems. 55 Table of Contents Insurance The Group provides social security insurance including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for its employees.
Since, there is uncertainty as to how the cybersecurity requirements for maintaining cybersecurity and protecting customers’ personal information will be interpreted and implemented, we cannot assure you that the Group’s existing policies and procedures will be deemed to be in full compliance with any laws and regulations that are applicable, or may become applicable to the Group in the future. 59 Table of Contents Regulations Related to Loans and Intermediation The PRC Civil Code governs the formation, validity, performance, enforcement and assignment of contracts.
Since, there is uncertainty as to how the cybersecurity requirements for maintaining cybersecurity and protecting personal information will be interpreted and implemented, we cannot assure you that the Group’s existing policies and procedures will be deemed to be in full compliance with any laws and regulations that are applicable, or may become applicable to the Group in the future.
Min Luo, our founder, chairman and chief executive officer, and Mr. Lianzhu Lv, our head of user experience department, respectively hold 99.0% and 1.0% of equity interests in Ganzhou Qudian.
Lianzhu Lv, our head of user experience department, respectively hold 99.0% and 1.0% of equity interests in Ganzhou Qudian.
Risk Factors-Risks Related to Our Corporate Structure⸺We rely on contractual arrangements with the Group VIEs and their shareholders to operate our business, which may be less effective than direct ownership in providing operational control and otherwise have a material adverse effect than to our business.” We currently conduct business in China mainly through the Group VIEs and their subsidiaries. 48 Table of Contents Hunan Qudian Technology Development Co., Ltd., or Hunan Qudian, became a VIE of the Group in 2017.
Risk Factors-Risks Related to Our Corporate Structure⸺We rely on contractual arrangements with the Group VIEs and their shareholders to operate our business, which may be less effective than direct ownership in providing operational control and otherwise have a material adverse effect than to our business.” 53 Table of Contents Xiamen Qudian was a VIE of the Company before June 30, 2023.
Further, if the enacted version of the Security Administration Draft mandate clearance of cybersecurity review and other specific actions to be completed by companies like us, we face uncertainties as to whether such clearance can be timely obtained, or at all.
Further, if the enacted version of the Security Administration Draft mandate clearance of cybersecurity review and other specific actions to be completed by companies like us, we face uncertainties as to whether such clearance can be timely obtained, or at all. 62 Table of Contents In providing the Group’s service, the Group has access to a large amount of confidential information in its day-to-day operations.
The Company has decided to cease new credit offerings since September 6, 2022 and, as of December 31, 2022, there was no outstanding balance from the Group’s loan book business. Loan Book Business Small Credit Products Under the Group’s loan book business, the Group offered small cash credit products to consumers and undertook the related credit risk.
The Group historically operated a loan book business in China, whereby the Group offered small credit products to consumers and undertook the related credit risk. The Group has ceased new credit offerings in China since September 6, 2022 and there was no outstanding loan balance from the Group’s historical loan book business since the end of 2022.
Risk Factors- Risks Related to Doing Business in China⸺There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.
However, the Group is subject to risks relating to the regulatory environment in China. See “Item 3. Key Information⸺D. Risk Factors- Risks Related to Doing Business in China⸺There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.
The Group had closed all of its Wanlimu education centers in November 2022 and completely wound down its Wanlimu Kids Clubs business in March 2023. 51 Table of Contents QD Food The Group launched its ready-to-cook meal business, or “QD Food,” in March 2022. After assessing current market conditions, the Group has decided to wind down its QD Food business.
The Group offered various early childhood education services for young children to participate in. The Group had closed all of its Wanlimu education centers in November 2022 and completely wound down its Wanlimu Kids Clubs business in March 2023. QD Food The Group launched its ready-to-cook meal business, or “QD Food,” in March 2022.
A foreign-invested finance lease company that undergoes such changes shall go through approval and other procedures according to the relevant provisions.
A foreign-invested finance lease company that undergoes such changes shall go through approval and other procedures according to the relevant provisions. A finance lease company shall, within five business days after registering such changes, log into the National Finance Lease Company Management Information System to modify the above information.
The Group does not maintain business interruption insurance or general third-party liability insurance, nor does the Group maintain product liability insurance or key-man insurance.
The Group does not maintain business interruption insurance or general third-party liability insurance, nor does the Group maintain product liability insurance or key-man insurance. We consider the Group’s insurance coverage to be sufficient for the Group’s business operations in China.
Besides, any “online platform operators” controlling personal information of more than one million users which seeks to list on a foreign stock exchange should also be subject to cybersecurity review. On June 10, 2021, the SCNPC promulgated the PRC Data Security Law, which became effective on September 1, 2021.
Besides, any “online platform operators” controlling personal information of more than one million users which seeks to list on a foreign stock exchange should also be subject to cybersecurity review. On October 16, 2023, the State Council promulgated the Regulation on the Protection of Minors in Cyberspace, or Cyberspace Regulation on Minors Protection, which became effective on January 1, 2024.
The Group has obtained consent from borrowers to collect and use their personal information, and have also established information security systems to protect the user information and to abide by other cybersecurity requirements under such laws and regulations.
The Group has established information security systems to protect personal information that it obtained during its day-to-day operations and to abide by other cybersecurity requirements under such laws and regulations.
Min Luo in October 2020. We are still in the process of completing the registration of such share transfer with the relevant regulatory authorities . (b) Tianjin Happy Share was established in connection with the share incentive plan of Beijing Happy Time adopted in 2015. Tianjin Happy Share is a limited partnership established under the laws of PRC.
Min Luo in October 2020. However, the parties eventually decided not to proceed with this transaction. (b) Tianjin Happy Share was established in connection with the share incentive plan of Beijing Happy Time adopted in 2015. Tianjin Happy Share is a limited partnership established under the laws of PRC.
As of March 31, 2023, the Group had registered 597 trademarks in the PRC for “ 趣店 ”, “Qufenqi” and other trademarks and had 15 trademarks under application in the PRC. As of March 31, 2023, the Group was the registered holder of 174 domain names in the PRC that include qudian.com and laifenqi.com.
As of March 31, 2024, the Group was the registered holder of 119 domain names in the PRC and 35 domain names in other jurisdictions that include qudian.com and laifenqi.com.
The PRC Trademark Law, adopted in 1982 and revised in 1993, 2001, 2013 and 2019 respectively, with its implementation rules adopted in 2002 and revised in 2014, protects registered trademarks.
The PRC Trademark Law, adopted in 1982 and revised in 1993, 2001, 2013 and 2019 respectively, with its implementation rules adopted in 2002 and revised in 2014, protects registered trademarks. The PRC Trademark Office of the State Administration for Industry and Commerce, or the SAIC, handles trademark registrations and grants a protection term of ten years to registered trademarks.
Ganzhou Qudian and Xiamen Qudian became Group VIEs in 2017.
Ganzhou Qudian became a Group VIE in 2017.
Finance lease enterprises shall not engage in deposits, loans, entrusted loans or other financial services or inter-bank borrowing unless permission has been granted from the relevant departments. Finance lease enterprises must not carry out illegal fund-raising activities under the name of a finance lease company.
Finance lease enterprises should use real entities, which have clear ownership and capable of generating revenue, as lessor to carry out the finance lease business. Finance lease enterprises shall not engage in deposits, loans, entrusted loans or other financial services or inter-bank borrowing unless permission has been granted from the relevant departments.
The Group also leases office space of 13 square meters, 36 square meters, 65 square meters and 263 square meters in Beijing, Xinjiang Autonomous Region, Fuzhou and Ganzhou in Jiangxi Province, respectively.
As of March 31, 2024, the Group also leased office space of 155 square meters, 65 square meters and 263 square meters in Shenzhen in Guangdong Province, Fuzhou and Ganzhou in Jiangxi Province, respectively.
A finance lease company shall give adequate consideration to and objectively evaluate assets leased back, set purchasing prices for subject matter thereof with reference to reasonable pricing basis in compliance with accounting principles, and shall not purchase any subject matter at a price in excess of the value thereof.
A finance lease company shall give adequate consideration to and objectively evaluate assets leased back, set purchasing prices for subject matter thereof with reference to reasonable pricing basis in compliance with accounting principles, and shall not purchase any subject matter at a price in excess of the value thereof. 63 Table of Contents The Guiding Opinions on Accelerating the Development of Finance Lease Industry, or the Guiding Opinion, was promulgated by the General Office of the State Council of the PRC on August 31, 2015; the Guiding Opinion’s main task is to accelerate the development of the finance lease industry in four aspects: system and mechanism reform, development in major fields, innovative development and industry supervision.
Pursuant to the ECL, employment contracts lawfully concluded prior to the implementation of the ECL and continuing as of the date of its implementation will continue to be performed.
The ECL requires employers to enter into written contracts with their employees, restricts the use of temporary workers and aims to give employees long-term job security. Pursuant to the ECL, employment contracts lawfully concluded prior to the implementation of the ECL and continuing as of the date of its implementation will continue to be performed.
Our principal executive offices are located at Tower A, AVIC Zijin Plaza, Siming District, Xiamen, Fujian Province 361000, People’s Republic of China, and our telephone number is +(86) 592 591 1580. Our website address is www.qudian.com. The information on our website does not form a part of this annual report.
In December 2022, we completed the dissolution of Xiamen Qu Plus Plus and terminated the contractual arrangements with Xiamen Qu Plus Plus and its shareholders. Our principal executive offices are located at Tower A, AVIC Zijin Plaza, Siming District, Xiamen, Fujian Province 361000, People’s Republic of China, and our telephone number is +(86) 592 591 1580.
The Group is in the process of winding down this business. Early Childhood Education Business The Group launched Wanlimu Kids Clubs, an early childhood education business in January 2021. The Group offered various early childhood education services for young children to participate in.
E-commerce Business The Group launched the Wanlimu e-commerce platform, which offers online luxury fashion products, in March 2020. The Group is in the process of winding down this business. Early Childhood Education Business The Group launched Wanlimu Kids Clubs, an early childhood education business in January 2021.
The Group has received all material permissions that are, or may be, required for its operations in China, and no material permission has been denied from the Group by relevant authorities in China. However, the Group is subject to risks relating to the regulatory environment in China. See “Item 3. Key Information⸺D.
Licenses and Permissions Requirements The below table sets forth material permissions and/or licenses the Group has obtained for its operations in China as of March 31, 2024. The Group has received all material permissions that are, or may be, required for its operations in China, and no material permission has been denied from the Group by relevant authorities in China.
The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the SEC. Our annual report and some of the other information submitted by us to the SEC may be accessed through this web site. B. Business Overview Overview The Group is a consumer-oriented technology company in China.
Our website address is www.qudian.com. The information on our website does not form a part of this annual report. The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the SEC.
Regulations Related to Employment On June 29, 2007, the SCNPC, adopted the Employment Contract Law, or ECL, which became effective as of January 1, 2008 and was revised in 2012. The ECL requires employers to enter into written contracts with their employees, restricts the use of temporary workers and aims to give employees long-term job security.
A domain name applicant will become the domain name holder upon the completion of the application procedure. 65 Table of Contents Regulations Related to Employment On June 29, 2007, the SCNPC, adopted the Employment Contract Law, or ECL, which became effective as of January 1, 2008 and was revised in 2012.
The PRC Trademark Office of the State Administration for Industry and Commerce, or the SAIC, handles trademark registrations and grants a protection term of ten years to registered trademarks. 70 Table of Contents Domain names are protected under the Administrative Measures on Internet Domain Names, which was promulgated by the MIIT on August 24 and became effective on November 1, 2017.
Domain names are protected under the Administrative Measures on Internet Domain Names, which was promulgated by the MIIT on August 24 and became effective on November 1, 2017. The MIIT is in charge of the overall administration of domain names in China. The registration of domain names in PRC is on a “first-apply-first-registration” basis.
We cannot assure you that the Group’s existing anti-money laundering policies and procedures will be deemed to be in full compliance with any anti-money laundering laws and regulations. 69 Table of Contents Regulations Related to the Food Industry The Food Safety Law of the PRC, or the Food Safety Law, was promulgated by the Standing Committee on February 28, 2009, became effective on June 1, 2009 and most recently amended on April 24, 2021, and the Implementing Regulations for the Food Safety Law of the PRC, were promulgated by the State Council on July 20, 2009, became effective on the same day and most recently amended October 11, 2019.
We cannot assure you that the Group’s existing anti-money laundering policies and procedures will be deemed to be in full compliance with any anti-money laundering laws and regulations.
The Group historically focused on providing credit solutions to consumers. The Group has been exploring new business opportunities to promote long-term value for its shareholders. The Group historically operated a loan book business, whereby the Group offered small credit products to consumers and undertook the related credit risk. The Group has ceased new credit offerings since September 6, 2022.
Our annual report and some of the other information submitted by us to the SEC may be accessed through this web site. B. Business Overview Overview The Group is a consumer-oriented technology company in China. The Group historically focused on providing credit solutions to consumers. The Group has been exploring new business opportunities to promote long-term value for its shareholders.
(5) Main subsidiaries of Xiamen Qudian include Xiamen Qudian Financial Lease Co., Ltd. and Xiamen Xincheng Youda Financing Guarantee Ltd. (6) The main subsidiary of Beijing Happy Time is Ganzhou Happy Fenqi Network Service Co., Ltd. Bejing Happy Time currently operates the Group’s websites and mobile apps under the Laifenqi brand.
(6) The main subsidiary of Beijing Happy Time is Ganzhou Happy Fenqi Network Service Co., Ltd. Beijing Happy Time currently operates the Group’s websites. (7) Formerly known as Qu Plus Plus Inc. (8) Formerly known as Qu Plus Plus Limited. (9) The main subsidiary of Fast Horse Express Limited is LAST MILE EXPRESS PTY LTD.
Removed
As of December 31, 2022, there was no outstanding loan balance from the Group’s loan book business.
Added
On June 30, 2023, Xiamen Happy Time Technology Co., Ltd. entered into an investment agreement with Xiamen Qudian to obtain control over Xiamen Qudian. We continued to consolidate Xiamen Qudian in 2023 and we currently conduct business in China mainly through Xiamen Quadian and its subsidiaries.
Removed
The Group recorded net income of RMB958.8 million, RMB585.9 million and net loss of RMB362.1 million (US$52.5 million) in 2020, 2021 and 2022, respectively. Credit Business The Group historically operated a credit business.
Added
In December 2022, the Group launched its last-mile delivery business under the name of “Fast Horse.” The business was initially launched on a trial basis and has gradually achieved meaningful scale in Australia during the second quarter of 2023. We believe there is a surging demand for cross-border e-commerce transaction globally.
Removed
Users accessed the Group’s small credit products through the Group’s mobile apps. The Group’s cash credit products comprised short-term, unsecured lines of credit that could be drawn down at any time, subject to the Group’s approval at the time of each drawdown request.
Added
We expect such surging demand will lead to an increase in the demand for the Group’s last-mile delivery service to deliver goods to end consumers. The Group’s last-mile delivery service is currently available in Australia and New Zealand.
Removed
Borrowers were typically charged financing service fees for cash credit drawdowns. 49 Table of Contents Historically, the Group also offered merchandise credit products to finance borrowers’ direct purchase of merchandise offered on the Qudian marketplace on installment basis. The Qudian marketplace connected consumers with merchandise suppliers. The Group neither sold merchandise nor held inventory for the Qudian marketplace.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

87 edited+34 added−103 removed63 unchanged
This non-GAAP financial measure has limitations as analytical tools, and when assessing the Group’s operating performance, cash flows or the Group’s liquidity, investors should not consider them in isolation, or as a substitute for net income, cash flows provided by operating activities or other consolidated statements of operation and cash flow data prepared in accordance with U.S. GAAP.
This non-GAAP financial measure has limitations as analytical tools, and when assessing the Group’s operating performance, cash flows or the Group’s liquidity, investors should not consider them in isolation, or as a substitute for net income, cash flows provided by operating activities or other consolidated statements of operation and cash flow data prepared in accordance with U.S.
Product returns are estimated using the expected value method based on historical return patterns. Revenues are recognized at a point in time when the products are accepted by the customers. As of December 31, 2021 and 2022, estimated product returns were not material. Transaction services fee The Group entered into credit transaction arrangements with certain institutional funding partners.
Product returns are estimated using the expected value method based on historical return patterns. Revenues are recognized at a point in time when the products are accepted by the customers. As of December 31, 2021, 2022 and 2023, estimated product returns were not material. Transaction services fee The Group entered into credit transaction arrangements with certain institutional funding partners.
Prior to January 1, 2020, the release of the non-contingent aspect of the risk assurance liability is recognized in earnings as a reduction of changes in guarantee liabilities and risk assurance liabilities. The contingent loss arising from the obligation to make future payments is recognized when borrower default is probable, and the amount of loss is estimable.
Prior to January 1, 2020, the release of the non-contingent aspect of the risk assurance liability is recognized in earnings as a reduction of changes in guarantee liabilities and risk assurance liabilities. The contingent loss arising from the obligation to make future payments was recognized when borrower default was probable, and the amount of loss was estimable.
We consider the loan facilitation service, post-origination services and guarantee service as separate services, of which the guarantee service and the post origination service is accounted for in accordance with ASC 815, Derivatives and Hedging, (“ASC 815”), ASC 460, Guarantees, (“ASC 460”) (refer to “Guarantee liabilities” and “Risk Assurance Liabilities” for additional information) and ASC 860, Transfers and servicing of financial assets, respectively (“ASC 860”). 96 Table of Contents The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised services to the customer, net of value-added tax.
We consider the loan facilitation service, post-origination services and guarantee service as separate services, of which the guarantee service and the post origination service is accounted for in accordance with ASC 815, Derivatives and Hedging, (“ASC 815”), ASC 460, Guarantees, (“ASC 460”) (refer to “Guarantee liabilities” and “Risk Assurance Liabilities” for additional information) and ASC 860, Transfers and servicing of financial assets, respectively (“ASC 860”). 88 Table of Contents The transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring the promised services to the customer, net of value-added tax.
The service fees payable to the Group, net of guarantee liabilities and risk assurance liabilities which were deducted from the consideration in connection with such transaction, are recognized as loan facilitation income and other related income.
The service fees payable to the Group, net of guarantee liabilities and risk assurance liabilities which were deducted from the consideration in connection with such transaction, were recognized as loan facilitation income and other related income.
If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. 95 Table of Contents Critical Accounting Policies We prepare the Group’s consolidated financial statements in conformity with U.S.
If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. 87 Table of Contents Critical Accounting Policies We prepare the Group’s consolidated financial statements in conformity with U.S.
The financing service fees are recorded as financing income in the consolidated statement of comprehensive income in accordance with ASC 310 Receivables (ASC 310) using the effective interest method. 97 Table of Contents Incentives are provided to certain borrowers and can only be applied as a reduction to the borrower’s repayments and cannot be withdrawn by the borrowers in cash.
The financing service fees are recorded as financing income in the consolidated statement of comprehensive income in accordance with ASC 310 Receivables (ASC 310) using the effective interest method. 89 Table of Contents Incentives are provided to certain borrowers and can only be applied as a reduction to the borrower’s repayments and cannot be withdrawn by the borrowers in cash.
Risk Factors⸺Risks Related to Our Business and Our Industry⸺We may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all.” Our ability to manage the Group’s working capital, including receivables and other assets and accrued expenses and other liabilities, may materially affect the Group’s financial condition and results of operations.
Risk Factors⸺Risks Related to Our Business and Our Industry⸺We may need additional capital to pursue business objectives and respond to business opportunities, challenges or unforeseen circumstances, and financing may not be available on terms acceptable to us, or at all.” 95 Table of Contents Our ability to manage the Group’s working capital, including receivables and other assets and accrued expenses and other liabilities, may materially affect the Group’s financial condition and results of operations.
Additionally, revenues from post-origination services are recognized evenly over the term of the loans as the services are performed. Transaction Services Fee and Other Related Income Transaction services fee and other related income represent commissions and fees earned from financial service providers in connection with the Group’s transaction services business.
Additionally, revenues from post-origination services were recognized evenly over the term of the loans as the services were performed. Transaction Services Fee and Other Related Income Transaction services fee and other related income represent commissions and fees earned from financial service providers in connection with the Group’s transaction services business.
Subsequent to January 1, 2020, the non-contingent aspect of the risk assurance liability is subsequently recognized as guarantee income over the term of the arrangement as the Group is released from the stand ready obligation based on the borrower’s repayment of the loan principal.
Subsequent to January 1, 2020, the non-contingent aspect of the risk assurance liability was subsequently recognized as guarantee income over the term of the arrangement as the Group was released from the stand ready obligation based on the borrower’s repayment of the loan principal.
We will continue to make efforts to ensure that the Group is compliant with the existing laws, regulations and governmental policies relating to our business and to comply with new laws and regulations or changes under existing laws and regulations that may arise in the future.
We will continue to make efforts to ensure that the Group is compliant with the existing laws, regulations and governmental policies relating to the Group’s business and to comply with new laws and regulations or changes under existing laws and regulations that may arise in the future.
The contingent liability relating to the expected credit losses arising from the contingent aspect of the risk assurance liability is initially measured under the CECL model. The subsequent changes in the contingent aspect of the risk assurance liability is adjusted through earnings as changes in guarantee liabilities and risk assurance liabilities.
The contingent liability relating to the expected credit losses arising from the contingent aspect of the risk assurance liability was initially measured under the CECL model. The subsequent changes in the contingent aspect of the risk assurance liability was adjusted through earnings as changes in guarantee liabilities and risk assurance liabilities.
The Group has focused on and will continue to invest in its technology system, which supports all key aspects of the Group’s online platform and is designed to optimize for scalability and flexibility. See “Item 4. Information of the Company⸺B. Business Overview⸺The Group’s Information Technology and Security.” D.
The Group has focused on and will continue to invest in its technology system, which supports all key aspects of the Group’s online platform and is designed to optimize for scalability and flexibility. See “Item 4. Information of the Company⸺B. Business Overview⸺Intellectual Property.” D.
Comparison of Year Ended December 31, 2021 and Year Ended December 31, 2020 For a discussion of the Group’s results of operations for the year ended December 31, 2021 compared with the year ended December 31, 2020, see “Item 5. Operating and Financial Review and Prospects⸺A.
Comparison of Year Ended December 31, 2022 and Year Ended December 31, 2021 For a discussion of the Group’s results of operations for the year ended December 31, 2022 compared with the year ended December 31, 2021, see “Item 5. Operating and Financial Review and Prospects⸺A.
Research and Development Research and development expenses consist primarily of share-based compensation, salaries and benefits related to technology and product development personnel, as well as rental expenses related to offices for the Group’s technology and product development personnel. 93 Table of Contents Changes in Guarantee Liabilities and Risk Assurance Liabilities At the inception of each off-balance sheet transaction, the Group records the fair value of (i) guarantee liabilities, which represent the present value of the Group’s expected payout based on the estimated delinquency rate and the applicable discount rate for time value; or (ii) risk assurance liabilities, which considers the premium required by a third-party market participant to issue the same risk assurance in a standalone transaction, as applicable.
Research and Development Research and development expenses consist primarily of share-based compensation, salaries and benefits related to technology and product development personnel, third-party services fees as well as rental expenses related to offices for the Group’s technology and product development personnel. 85 Table of Contents Changes in Guarantee Liabilities and Risk Assurance Liabilities At the inception of each off-balance sheet transaction, the Group recorded the fair value of (i) guarantee liabilities, which represent the present value of the Group’s expected payout based on the estimated delinquency rate and the applicable discount rate for time value; or (ii) risk assurance liabilities, which considers the premium required by a third-party market participant to issue the same risk assurance in a standalone transaction, as applicable.
The Group’s total revenues are presented net of VAT. Financing income represents financing service fees that the Group collects from borrowers for on-balance sheet transactions, which the Group has facilitated since inception in April 2014. Sales commission fee represents fee earned from merchandise suppliers in connection with merchandise credit products.
The Group’s total revenues are presented net of VAT. Financing income represents financing service fees that the Group collected from borrowers for on-balance sheet transactions, which the Group had facilitated since inception in April 2014. Sales commission fee represents fee earned from merchandise suppliers in connection with merchandise credit products.
Cost of Revenues and Operating Expenses The Group’s cost of revenues and operating expenses consist of cost of revenues, sales and marketing expenses, general and administrative expenses, research and development expenses, changes in guarantee liabilities, changes in risk assurance liabilities and expected credit loss for receivables and other assets.
Cost of Revenues and Operating Expenses The Group’s cost of revenues and operating expenses consist of cost of goods sold, cost of other revenues, sales and marketing expenses, general and administrative expenses, research and development expenses, changes in guarantee liabilities, changes in risk assurance liabilities and expected credit (reversal)/loss for receivables and other assets.
Adjustment for changes in working capital primarily consisted of a decrease in other current and non-current assets of RMB254.6 million (US$36.9 million) as a result of decrease in receivables from third-party payment service providers.
Adjustment for changes in working capital primarily consisted of a decrease in other current and non-current assets of RMB254.6 million as a result of decrease in receivables from third-party payment service providers.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material effect on the Group’s total net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. 108 Table of Contents E.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material effect on the Group’s total net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
For comparison of the Group’s results of operations for the years ended December 31, 2021 to December 31, 2020, refer to “Item 5. Operating and Financial Review and Prospects” in our annual report on Form 20-F for the year ended December 31, 2021, filed with the SEC on April 29, 2022. A.
For comparison of the Group’s results of operations for the years ended December 31, 2022 to December 31, 2021, refer to “Item 5. Operating and Financial Review and Prospects” in our annual report on Form 20-F for the year ended December 31, 2022, filed with the SEC on April 28, 2023. A.
Loan Facilitation Income and Other Related Income Loan facilitation income and others represent loan facilitation fees earned from certain institutional funding partners for credit directly funded by them and vehicle sales with guarantee. Revenues from loan facilitation services are recognized when the Group matches borrower with the funding partners and the funds are transferred to the borrower.
Loan Facilitation Income and Other Related Income Loan facilitation income and others represent loan facilitation fees earned from certain institutional funding partners for credit directly funded by them and vehicle sales with guarantee. Revenues from loan facilitation services were recognized when the Group matched borrower with the funding partners and the funds were transferred to the borrower.
The Group mitigates these limitations by reconciling the non-GAAP financial measure to the most comparable U.S. GAAP performance measure, all of which should be considered when evaluating the Group’s performance.
GAAP. 82 Table of Contents The Group mitigates these limitations by reconciling the non-GAAP financial measure to the most comparable U.S. GAAP performance measure, all of which should be considered when evaluating the Group’s performance.
These incentives are recorded as a reduction in financing service fees using the effective interest method.
These incentives were recorded as a reduction in financing service fees using the effective interest method.
The financing service fees are recorded as financing income in the statement of comprehensive income in accordance with ASC 310 using the effective interest method. Incentives are provided to certain borrowers and can only be applied as a reduction to the borrower’s repayments and cannot be withdrawn by the borrowers in cash.
The financing service fees were recorded as financing income in the statement of comprehensive income in accordance with ASC 310 using the effective interest method. 83 Table of Contents Incentives were provided to certain borrowers and can only be applied as a reduction to the borrower’s repayments and cannot be withdrawn by the borrowers in cash.
We believe that such non-GAAP financial measure provides useful information about the Group’s operating results, enhance the overall understanding of the Group’s past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2018 ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ ​ RMB RMB RMB RMB RMB US$ ​ ​ (in thousands) Adjusted net income attributable to Qudian Inc.’s shareholders (1) 2,549,297 3,351,587 382,344 612,372 (347,938) (50,446) (1) Defined as net income attributable to Qudian Inc.’s shareholders excluding share-based compensation expenses and convertible senior notes buyback income.
We believe that such non-GAAP financial measure provides useful information about the Group’s operating results, enhance the overall understanding of the Group’s past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB RMB RMB RMB RMB US$ ​ ​ (in thousands) Adjusted net income/(loss) attributable to Qudian Inc.’s shareholders (1) 3,351,587 382,344 612,372 (347,938) 44,070 6,207 (1) Defined as net income attributable to Qudian Inc.’s shareholders excluding share-based compensation expenses and convertible senior notes buyback income.
Guarantee Income Guarantee income represents the non-contingent aspect of the risk assurance liability that the Group recognizes over the term of the arrangement as the Group is released from the stand ready obligation on the borrowers’ repayment of the loan principal.
Guarantee Income Guarantee income represents the non-contingent aspect of the risk assurance liability that the Group recognized over the term of the arrangement as the Group was released from the stand ready obligation on the borrowers’ repayment of the loan principal.
Revenues from transaction services are recognized when the Group matches borrower with the financial service provider and the funds are transferred to the borrower. Additionally, revenues from post-origination services are recognized evenly over the term of the loans as the services are performed.
Revenues from transaction services were recognized when the Group matched borrower with the financial service provider and the funds were transferred to the borrower. Additionally, revenues from post-origination services were recognized evenly over the term of the loans as the services were performed.
The Group historically generated (i) financing income, loan facilitation income and other related income and guarantee income from cash credit products and (ii) sales income from the QD Food business, (iii) financing income and sales commission fee from merchandise credit products and (iv) transaction services fee and other related income from the Group’s transaction services business.
The Group historically generated (i) financing income, loan facilitation income and other related income and guarantee income from cash credit products and (ii) sales income from the QD Food business, (iii) educational services income from the Group’s Wanlimu Kids Clubs business, (iv) financing income and sales commission fee from merchandise credit products and (v) transaction services fee and other related income from the Group’s transaction services business.
The decrease in such line item since December 31, 2020 is in line with the Group’s shifting business strategy. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ ​ RMB RMB RMB US$ ​ ​ (in thousands) Short-term loan principal and financing service fee receivables 3,940,461 2,371,966 — — ​ We believe that the cash we received from our initial public offering and the anticipated cash flows from operating activities will be sufficient to meet the Group’s anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months.
The decrease in such line item since December 31, 2021 is in line with the Group’s shifting business strategy. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB RMB RMB US$ ​ ​ (in thousands) Short-term loan principal and financing service fee receivables 2,371,966 — — — ​ We believe that the anticipated cash flows from operating activities will be sufficient to meet the Group’s anticipated working capital requirements and capital expenditures in the ordinary course of business for the next 12 months.
We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements. Revenue recognition The Group generates revenues primarily by providing borrowers with merchandise and cash installment credit services, credit facilitation services, transaction services, automobile financing services, e-commerce sales and educational services.
We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements. Revenue recognition The Group generates revenues primarily by providing borrowers with merchandise and cash installment credit services, credit facilitation services, transaction services, automobile financing services, ready-to-cook meal sales, educational services and delivery services.
The Group is subject to VAT at a rate of 6% on the services the Group provides to borrowers, less any deductible VAT the Group has already paid or borne. The Group is subject to VAT at a rate of 13% on the budget auto financing services the Group provides to borrowers and sales of ready-to-cook dishes.
The Group is subject to VAT at a rate of 6% on the services the Group provides to borrowers, less any deductible VAT the Group has already paid or borne. The Group is subject to VAT at a rate of 13% on the budget auto financing services the Group provides to borrowers.
Penalty Fees Penalty fees represent fees the Group charges borrowers for late repayment. Penalty fees are recognized on a cash basis when the penalty fees will not be reversed.
Penalty Fees Penalty fees represent fees the Group charged borrowers for late repayment. Penalty fees were recognized on a cash basis when the penalty fees will not be reversed.
Sales income represents the sales price of cars the Group sells to car buyers in connection with the Group’s budget auto financing products and revenues from product sales through the Group’s Wanlimu e-commerce platform and QD foods. Penalty fees represent fees the Group charges borrowers for late repayment.
Sales income represents the sales price of cars the Group sold to car buyers in connection with the Group’s budget auto financing products, revenues from product sales through the Group’s Wanlimu e-commerce platform and QD foods and revenues generated from the Group’s last-mile delivery business. Penalty fees represent fees the Group charged borrowers for late repayment.
Additionally, revenues from post-origination services are recognized evenly over the term of the loans as the services are performed. Sales income The Group recognizes revenue from product sales through our platform of e-commerce and ready-to-cook meal business. The Group’s single performance obligation is to sell products to customers.
Additionally, revenues from post-origination services are recognized evenly over the term of the loans as the services are performed. Sales income The Group recognizes revenue from product sales through our platform of ready-to-cook meal business under “sales income and others” in the consolidated statements of comprehensive income/(loss). The Group’s single performance obligation is to sell products to customers.
The following table sets forth the expected credit loss for receivables and other assets, both in an absolute amount and as a percentage of total revenues, for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Expected credit loss for receivables and other assets 1,621,362 44.0 (151,817) (9.2) (221,121) (32,060) (38.3) ​ Impairment loss from other assets The Group reviews the impairment for long-lived assets in accordance with authoritative guidance for impairment or disposal of long-lived assets.
The following table sets forth the expected credit (reversal)/loss for receivables and other assets, both in an absolute amount and as a percentage of total revenues, for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Expected credit (reversal)/loss for receivables and other assets (151,817) (9.2) (221,121) (38.3) 24,653 3,472 19.5 ​ Impairment loss from other assets The Group reviews the impairment for long-lived assets in accordance with authoritative guidance for impairment or disposal of long-lived assets.
Operating Results⸺Comparison of Year Ended December 31, 2021 and Year Ended December 31, 2020” in our annual report on Form 20-F for the year ended December 31, 2021, filed with the SEC on April 29, 2022 . 104 Table of Contents B.
Operating Results⸺Comparison of Year Ended December 31, 2022 and Year Ended December 31, 2021” in our annual report on Form 20-F for the year ended December 31, 2022, filed with the SEC on April 28, 2023 . ​ 94 Table of Contents B.
Net loss attributable to the Company’s shareholders per diluted share was RMB1.47 (US$0.21), compared to net income of RMB2.27 in the prior year. Adjusted net loss attributable to Qudian Inc.’s shareholders.
Net income attributable to the Company’s shareholders per diluted share was RMB0.18 (US$0.03) in 2023, compared to a loss of RMB1.47 in the prior year. Adjusted net income attributable to Qudian Inc.’s shareholders.
The Group started to wind down its budget auto financing business in the second quarter of 2019. The Group’s total revenues decreased from RMB3,688.0 million in 2020 to RMB1,654.0 million in 2021, and decreased to RMB577.5 million (US$83.7 million) in 2022.
The Group started to wind down its budget auto financing business in the second quarter of 2019. The Group’s total revenues decreased from RMB1,654.0 million in 2021 to RMB577.5 million in 2022, and decreased to RMB126.3 million (US$17.8 million) in 2023.
Operating Results Overview The Group is a consumer-oriented technology company in China. The Group historically focused on providing credit solutions to consumers. The Group has been exploring new business opportunities to promote long-term value for its shareholders. The Group historically operated a loan book business, whereby the Group offered small credit products to consumers and undertook the related credit risk.
Operating Results Overview The Group is a consumer-oriented technology company in China. The Group historically focused on providing credit solutions to consumers. The Group has been exploring new business opportunities to promote long-term value for its shareholders.
The success of these new business initiatives will depend on, among other things, the Group’s ability to ● enhance brand recognition and acquire consumer in a cost-efficient manner; ● design and offer products or services that meet consumer demand; and ● enhance operational efficiency. 86 Table of Contents New businesses may significantly change the Group’s cost structure.
The Group’s results of operations depend on its ability to execute its new business initiatives. The success of these new business initiatives will depend on, among other things, the Group’s ability to ● enhance brand recognition and acquire consumer in a cost-efficient manner; ● design and offer products or services that meet consumer demand; and ● enhance operational efficiency.
Contractual Obligations The following table sets forth the Group’s operating lease commitments and long-term borrowings and interest payable as of December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payment due by period ​ ​ ​ ​ ​ ​ Less than ​ ​ ​ ​ ​ More than ​ ​ Total ​ 1 Year 1-3 Years 3-5 Years 5 Years ​ ​ RMB US$ RMB ​ ​ (million) Operating lease commitments ​ 7.7 ​ 1.1 ​ 7.2 ​ 0.5 ​ 0.0 ​ — Long-term borrowings and interest payable 133.9 19.4 6.3 66.6 61.0 — ​ Operating lease obligations represent leasing arrangements relating to the lease of the Group’s office premises.
Contractual Obligations The following table sets forth the Group’s operating lease commitments and long-term borrowings and interest payable as of December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payment due by period ​ ​ ​ ​ ​ ​ Less than ​ ​ ​ ​ ​ More than ​ ​ Total ​ 1 Year 1-3 Years 3-5 Years 5 Years ​ ​ RMB US$ RMB ​ ​ (million) Operating lease commitments ​ 81.5 ​ 11.5 ​ 33.8 ​ 38.0 ​ 8.8 ​ 0.9 ​ Operating lease obligations represent leasing arrangements relating to the lease of the Group’s office premises.
GAAP, which is net income attributable to Qudian Inc.’s shareholders: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2018 ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ ​ RMB RMB RMB RMB RMB US$ ​ ​ (in thousands) Net income attributable to Qudian Inc.’s shareholders 2,491,316 3,264,288 958,819 589,074 (361,964) (52,480) Add: share-based compensation expenses ​ 57,981 ​ 87,299 ​ 45,634 ​ 35,345 ​ 24,054 ​ 3,488 Less: Convertible senior notes buyback income ​ — ​ — ​ 622,109 ​ 12,047 ​ 10,028 ​ 1,454 Adjusted net income attributable to Qudian Inc.’s shareholders ​ 2,549,297 ​ 3,351,587 ​ 382,344 ​ 612,372 ​ (347,938) ​ (50,446) ​ ​ 90 Table of Contents Components of Results of Operations Revenues The Group’s total revenues comprise financing income, sales commission fee, sales income, penalty fees, guarantee income, loan facilitation income and other related income and transaction services fee and other related income.
GAAP, which is net income attributable to Qudian Inc.’s shareholders: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, ​ ​ 2019 ​ 2020 ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB RMB RMB RMB RMB US$ ​ ​ (in thousands) Net income/(loss) attributable to Qudian Inc.’s shareholders 3,264,288 958,819 589,074 (361,964) 39,134 5,512 Add: share-based compensation expenses ​ 87,299 ​ 45,634 ​ 35,345 ​ 24,054 ​ 4,936 ​ 695 Less: Convertible senior notes buyback income ​ — ​ 622,109 ​ 12,047 ​ 10,028 ​ — ​ — Adjusted net income/(loss) attributable to Qudian Inc.’s shareholders ​ 3,351,587 ​ 382,344 ​ 612,372 ​ (347,938) ​ 44,070 ​ 6,207 ​ Components of Results of Operations Revenues The Group’s total revenues comprise financing income, sales commission fee, sales income, penalty fees, guarantee income, loan facilitation income and other related income and transaction services fee and other related income.
Operating Results⸺Critical Accounting Policies⸺Revenue Recognition.” The following table sets forth the breakdown of the Group’s total revenues, both in absolute amount and as a percentage of the Group’s total revenues, for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2020 2021 2022 ​ ​ ​ ​ % of total ​ ​ ​ % of total ​ ​ ​ ​ ​ % of total ​ ​ RMB ​ revenues ​ RMB ​ revenues ​ RMB ​ US$ ​ revenues ​ ​ (in thousands, except for percentages) Revenues ​ ​ ​ ​ ​ ​ ​ ​ Financing income 2,102,665 57.0 1,255,488 75.9 308,717 44,760 53.4 Sales commission fee 80,992 2.2 35,411 2.1 115 17 0.0 Sales income and others 610,793 16.5 100,668 6.1 82,617 11,978 14.3 Penalty fees 72,235 2.0 67,316 4.1 53,445 7,749 9.3 Guarantee income 826,198 22.4 3,935 0.2 — — — Loan facilitation income and other related income 131,633 3.6 39,531 2.4 18,809 2,727 3.3 Transaction services fee and other related income (136,542) (3.7) 151,694 9.2 113,790 16,498 19.7 Total revenues 3,687,974 100.0 1,654,043 100.0 577,493 83,729 100.0 ​ Financing Income The Group charges financing service fees for facilitating on-balance sheet transactions.
Operating Results⸺Critical Accounting Policies⸺Revenue Recognition.” The following table sets forth the breakdown of the Group’s total revenues, both in absolute amount and as a percentage of the Group’s total revenues, for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2022 2023 ​ ​ ​ ​ % of total ​ ​ ​ % of total ​ ​ ​ ​ ​ % of total ​ ​ RMB ​ revenues ​ RMB ​ revenues ​ RMB ​ US$ ​ revenues ​ ​ (in thousands, except for percentages) Revenues ​ ​ ​ ​ ​ ​ ​ ​ Financing income 1,255,488 75.9 308,717 53.4 — — — Sales commission fee 35,411 2.1 115 0.0 — — — Sales income and others 100,668 6.1 82,617 14.3 126,338 17,794 100.0 Penalty fees 67,316 4.1 53,445 9.3 — — — Guarantee income 3,935 0.2 — — — — — Loan facilitation income and other related income 39,531 2.4 18,809 3.3 — — — Transaction services fee and other related income 151,694 9.2 113,790 19.7 — — — Total revenues 1,654,043 100.0 577,493 100.0 126,338 17,794 100.0 ​ Financing Income The Group charged financing service fees for facilitating on-balance sheet transactions.
As a result, Qudian Inc.’s ability to pay dividends depends upon dividends paid by our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.
If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.
Increases in the amount of guarantee liabilities and risk assurance liabilities are recognized as changes in guarantee liabilities and risk assurance liabilities in the Group’s results of operations. The Group recognized a loss of RMB22.3 million, a gain of RMB53.0 million and a gain of RMB37.1 million (US$5.4 million) from changes in guarantee liabilities in 2020, 2021 and 2022, respectively.
Increases in the amount of guarantee liabilities and risk assurance liabilities were recognized as changes in guarantee liabilities and risk assurance liabilities in the Group’s results of operations. The Group recognized a gain of RMB53.0 million, a gain of RMB37.1 million and RMB nil million (US$ nil million) from changes in guarantee liabilities in 2021, 2022 and 2023, respectively.
The Group recorded the impairment loss from other assets in 2022, mainly due to the winding down of its Wanlimu Kids Clubs business and QD Food business. 94 Table of Contents Share-based Compensation The following table sets forth the effect of share-based compensation expenses on the Group’s operating expenses line items, both in an absolute amount and as a percentage of total revenues, for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Sales and marketing 1,912 0.1 1,727 0.1 528 76 0.1 General and administrative 40,895 1.1 29,684 1.8 21,102 3,061 3.7 Research and development 2,827 0.1 3,934 0.2 2,424 351 0.4 Total 45,634 1.3 35,345 2.1 24,054 3,488 4.2 ​ See “⸺Critical Accounting Policies⸺Share-based Payments” for a description of what the Group accounts for the compensation cost from share-based payment transactions.
The Group recorded the impairment loss from other assets in 2023, primarily due to credit loss for other assets. 86 Table of Contents Share-based Compensation The following table sets forth the effect of share-based compensation expenses on the Group’s operating expenses line items, both in an absolute amount and as a percentage of total revenues, for the periods presented. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Sales and marketing 1,727 0.1 528 0.1 266 37 0.2 General and administrative 29,684 1.8 21,102 3.7 4,650 655 3.7 Research and development 3,934 0.2 2,424 0.4 20 3 0.0 Total 35,345 2.1 24,054 4.2 4,936 695 3.9 ​ See “⸺Critical Accounting Policies⸺Share-based Payments” for a description of what the Group accounts for the compensation cost from share-based payment transactions.
No Hong Kong profit tax has been levied as we did not have assessable profit that was earned in or derived from the Hong Kong subsidiary during the periods presented. Hong Kong does not impose a withholding tax on dividends.
No Hong Kong profit tax has been levied as we did not have assessable profit that was earned in or derived from the Hong Kong subsidiary during the periods presented. Hong Kong does not impose a withholding tax on dividends. Australia Our subsidiaries incorporated in Australia are subject to a federal tax rate of 30% on their taxable income.
The Group has not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in the Group’s consolidated financial statements.
Operating Results.” Other than the above, the Group has not entered into any other commitments to guarantee the payment obligations of any third parties. The Group has not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in the Group’s consolidated financial statements.
The Group’s impairment loss from other assets was RMB268.9 million (US$39.0 million) for 2022, compared with RMB156.4 million for 2021, as a result of the winding down of the Group’s Wanlimu Kids Clubs business and QD Food business. Loss from operations. The Group’s loss from operations was RMB329.5 million (US$47.8 million) compared to an income of RMB922.7 million for 2021.
The Group’s impairment loss from other assets was RMB 5.8 million (US$ 0.8 million) for 2023, compared with RMB268.9 million for 2022, as a result of the winding down of the Group ’ s Wanlimu Kids Clubs business and QD Food business. Loss from operations.
The Group’s capital commitments relate primarily to commitments in connection with the Group’s plan to build an office building and innovation center. Total capital commitments contracted but not yet reflected in the financial statements amounted to RMB596.9 million (US$86.5 million) as of December 31, 2022.
The Group’s capital commitments relate primarily to commitments in connection with the Group’s plan to build an office building and innovation center. Total capital commitments contracted but not yet reflected in the financial statements amounted to RMB397.4 million (US$56.0 million) as of December 31, 2023. All of the commitments relating to the construction will be settled in installments.
Net cash used in financing activities was RMB1,591.3 million in 2020, mainly due to repayments of borrowings of RMB1,038.7 million and repurchases of convertible senior notes of RMB859.2 million. Capital Expenditures The Group made capital expenditures of RMB221.8 million, RMB478.4 million and RMB273.6 million (US$39.7 million) in 2020, 2021 and 2022, respectively.
Net cash used in financing activities was RMB84.2 million in 2021, mainly due to the repurchases of convertible senior notes. Capital Expenditures The Group made capital expenditures of RMB478.4 million, RMB273.6 million and RMB565.0 million (US$79.6 million) in 2021, 2022 and 2023, respectively.
The Group’s total revenues in 2022 decreased by 65.1% to RMB577.5 million (US$83.7 million) from RMB1,654.0 million in 2021, primarily due to the winding down of the Group’s loan book business.
The Group’s total revenues in 2023 decreased by 78.1% to RMB126.3 million (US$17.8 million) from RMB577.5 million in 2022, primarily due to the winding down of the Group’s loan book business .
Sales Commission Fee Sales commission fee represents fee earned from merchandise suppliers when borrowers purchase their merchandise on the Qudian marketplace and comprise the difference between the retail prices of the merchandise sold to borrowers and the prices of the merchandise that the Group pays to the merchandise suppliers. 91 Table of Contents Sales income and others Sales income and others comprise (i) the sales price of cars, which consists of down payment and principal under the sales-type finance leases, (ii) the amount of consideration the Group receives from the buyer for the sale of the vehicle, net of value-added tax, in vehicle sales with guarantee transactions and (iii) the sales price of fashion products the Group sold on Wanlimu e-commerce platform, (iv) the amount of consideration the Group receives from the buyer for product sales through its QD Food business, and (v) the amount of consideration the Group receives as the tutoring sessions are delivered through its Wanlimu education centers.
Sales income and others Sales income and others comprise (i) the sales price of cars, which consisted of down payment and principal under the sales-type finance leases, (ii) the amount of consideration the Group received from the buyer for the sale of the vehicle, net of value-added tax, in vehicle sales with guarantee transactions and (iii) the sales price of fashion products the Group sold on Wanlimu e-commerce platform, (iv) the amount of consideration the Group received from the buyer for product sales through its QD Food business, (v) the amount of consideration the Group received as the tutoring sessions are delivered through its Wanlimu education centers and (iv) the service income the Group receives from the customer, namely the logistics companies, for services the Group provides for its last-mile delivery business.
In 2020, 2021 and 2022, the Group had net cash provided by operating activities of RMB2,471.7 million, RMB922.1 million and RMB260.9 million (US$37.8 million), respectively. As of December 31, 2022, the Group had cash and cash equivalents of RMB3,486.4 million (US$505.5 million), as compared to cash and cash equivalents of RMB2,065.5 million as of December 31, 2021.
In 2021, 2022 and 2023, the Group had net cash provided by operating activities of RMB922.1 million, RMB260.9 million and RMB352.0 million (US$49.6 million), respectively. As of December 31, 2023, the Group had cash and cash equivalents of RMB7,207.3 million (US$1,015.1 million), as compared to cash and cash equivalents of RMB3,486.4 million as of December 31, 2022.
The Group’s adjusted net loss attributable to Qudian Inc.’s shareholders, which excludes share-based compensation expenses and convertible senior notes buyback income was RMB347.9 million (US$50.4 million), compared to an income of RMB612.4 million in the prior year. Adjusted net loss attributable to Qudian Inc, shareholders per diluted share was RMB1.41 (US$0.21) compared to income of RMB2.36 in the prior year.
The Group’s adjusted net income attributable to Qudian Inc.’s shareholders, which excludes share-based compensation expenses was RMB44.1 million (US$6.2 million), compared to a loss of RMB347.9 million in the prior year. Adjusted net income attributable to Qudian Inc., shareholders per diluted share was RMB0.20 (US$0.03), compared to a loss of RMB1.41 in the prior year.
The Group’s historical results presented below are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2020 2021 2022 ​ ​ RMB ​ RMB ​ RMB US$ ​ ​ (in thousands, except for share and per share data) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ Financing income 2,102,665 1,255,488 308,717 44,760 Sales commission fee 80,992 35,411 115 17 Sales income and others 610,793 100,668 82,617 11,978 Penalty fees 72,235 67,316 53,445 7,749 Guarantee income 826,198 3,935 — — Loan facilitation income and other related income 131,633 39,531 18,809 2,727 Transaction services fee and other related income (136,542) 151,694 113,790 16,498 Total revenues 3,687,974 1,654,043 577,493 83,729 Cost of revenues: Cost of goods sold (645,083) (78,533) (326,889) (47,394) Cost of other revenues (217,271) (220,193) (56,202) (8,149) Total cost of revenues (862,354) (298,726) (383,091) (55,543) Operating expenses: Sales and marketing (293,282) (127,376) (271,611) (39,380) General and administrative (285,905) (443,276) (287,457) (41,677) Research and development (170,691) (141,264) (58,275) (8,449) Changes in guarantee liabilities and risk assurance liabilities 87,894 201,602 103,991 15,077 Expected credit loss for receivables and other assets (1,621,362) 151,817 221,121 32,060 Impairment loss from other assets (20,000) (156,394) (268,927) (38,991) Total operating expenses (2,303,346) (514,891) (561,158) (81,360) Other operating income 343,324 82,273 37,255 5,401 Income/(Loss) from operations 865,598 922,699 (329,501) (47,773) Interest and investment income, net 708,251 129,456 112,816 16,357 (Loss)/Gain from equity method investments (370,039) (221,798) 13,998 2,030 Gain/(loss) on derivative instruments — 17,375 (70,421) (10,210) Foreign exchange (loss)/gain, net (107) (51) 250 36 Other income 26,358 5,213 19,833 2,876 Other expenses (9,263) (6,485) (16,599) (2,407) Net income/(loss) before income taxes 1,220,798 846,409 (269,624) (39,091) Income tax expenses (261,979) (260,482) (92,428) (13,401) Net income/(loss) 958,819 585,927 (362,052) (52,492) ​ ​ 102 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2020 2021 2022 ​ ​ % Revenues: ​ ​ ​ ​ ​ ​ Financing income 57.0 75.9 53.4 Sales commission fee 2.2 2.1 0.0 Sales income and others 16.5 6.1 14.3 Penalty fees 2.0 4.1 9.3 Guarantee income 22.4 0.2 — Loan facilitation income and other related income 3.6 2.4 3.3 Transaction services fee and other related income (3.7) 9.2 19.7 Total revenues 100.0 100.0 100.0 Cost of revenues: Cost of goods sold (17.5) (4.8) (56.6) Cost of other revenues (5.9) (13.3) (9.7) Total cost of revenues (23.4) (18.1) (66.3) Operating expenses: Sales and marketing (8.0) (7.7) (47.0) General and administrative (7.7) (26.8) (49.8) Research and development (4.6) (8.5) (10.1) Changes in guarantee liabilities and risk assurance liabilities 2.4 12.2 18.0 Expected credit loss for receivables and other assets (44.0) 9.2 38.3 Impairment loss from other assets (0.5) (9.5) (46.6) Total operating expenses (62.4) (31.1) (97.2) Other operating income 9.3 5.0 6.5 Income/(Loss) from operations 23.5 55.8 57.0 Interest and investment income, net 19.2 7.8 19.5 (Loss)/Gain from equity method investments (10.0) (13.4) 2.4 Gain/(loss) on derivative instruments — 1.1 (12.2) Foreign exchange (loss)/gain, net (0.0) (0.0) 0.1 Other income 0.7 0.3 3.4 Other expenses (0.3) (0.4) (2.9) Net income/(loss) before income taxes 33.1 51.2 (46.7) Income tax expenses (7.1) (15.8) (16.0) Net income/(loss) 26.0 35.4 (62.7) ​ Comparison of Year Ended December 31, 2022 and Year Ended December 31, 2021 Total revenues.
The Group’s historical results presented below are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2022 2023 ​ ​ RMB ​ RMB ​ RMB US$ ​ ​ (in thousands, except for share and per share data) Revenues: ​ ​ ​ ​ ​ ​ ​ ​ Financing income 1,255,488 308,717 — — Sales commission fee 35,411 115 — — Sales income and others 100,668 82,617 126,338 17,794 Penalty fees 67,316 53,445 — — Guarantee income 3,935 — — — Loan facilitation income and other related income 39,531 18,809 — — Transaction services fee and other related income 151,694 113,790 — — Total revenues 1,654,043 577,493 126,338 17,794 Cost of revenues: ​ ​ ​ ​ Cost of goods sold (78,533) (326,889) (27,716) (3,904) Cost of other revenues (220,193) (56,202) (132,398) (18,648) Total cost of revenues (298,726) (383,091) (160,114) (22,552) Operating expenses: ​ ​ ​ ​ Sales and marketing (127,376) (271,611) (3,796) (535) General and administrative (443,276) (287,457) (273,589) (38,534) Research and development (141,264) (58,275) (47,763) (6,727) Changes in guarantee liabilities and risk assurance liabilities 201,602 103,991 — — Expected credit reversal/(loss) for receivables and other assets 151,817 221,121 (24,653) (3,472) Impairment loss from other assets (156,394) (268,927) (5,800) (817) Total operating expenses (514,891) (561,158) (355,601) (50,085) Other operating income 82,273 37,255 58,368 8,221 Income/(Loss) from operations 922,699 (329,501) (331,009) (46,622) Interest and investment income, net 129,456 112,816 255,333 35,963 (Loss)/Gain from equity method investments (221,798) 13,998 3,207 452 Gain/(loss) on derivative instruments 17,375 (70,421) 153,835 21,667 Foreign exchange (loss)/gain, net (51) 250 (2,932) (413) Other income 5,213 19,833 29,005 4,085 Other expenses (6,485) (16,599) (5,965) (840) Net income/(loss) before income taxes 846,409 (269,624) 101,474 14,292 Income tax expenses (260,482) (92,428) (62,340) (8,780) Net income/(loss) 585,927 (362,052) 39,134 5,512 ​ ​ 92 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2022 2023 ​ ​ % Revenues: ​ ​ ​ ​ ​ ​ Financing income 75.9 53.4 0.0 Sales commission fee 2.1 — — Sales income and others 6.1 14.3 100.0 Penalty fees 4.1 9.3 — Guarantee income 0.2 — — Loan facilitation income and other related income 2.4 3.3 — Transaction services fee and other related income 9.2 19.7 — Total revenues 100.0 100.0 100.0 Cost of revenues: ​ ​ ​ Cost of goods sold (4.8) (56.6) (21.9) Cost of other revenues (13.3) (9.7) (104.8) Total cost of revenues (18.1) (66.3) (126.7) Operating expenses: ​ ​ ​ Sales and marketing (7.7) (47.0) (3.0) General and administrative (26.8) (49.8) (216.6) Research and development (8.5) (10.1) (37.8) Changes in guarantee liabilities and risk assurance liabilities 12.2 18.0 — Expected credit reversal/(loss) for receivables and other assets 9.2 38.3 (19.5) Impairment loss from other assets (9.5) (46.6) (4.6) Total operating expenses (31.1) (97.2) (281.5) Other operating income 5.0 6.5 46.2 Income/(Loss) from operations 55.8 (57.0) (262.0) Interest and investment income, net 7.8 19.5 202.1 (Loss)/Gain from equity method investments (13.4) 2.4 2.5 Gain/(loss) on derivative instruments 1.1 (12.2) 121.8 Foreign exchange (loss)/gain, net (0.0) 0.1 (2.3) Other income 0.3 3.4 23.0 Other expenses (0.4) (2.9) (4.7) Net income/(loss) before income taxes 51.2 (46.7) 80.3 Income tax expenses (15.8) (16.0) (49.3) Net income/(loss) 35.4 (62.7) 31.0 ​ Comparison of Year Ended December 31, 2023 and Year Ended December 31, 2022 Total revenues.
The following table sets forth the Group’s total assets, total liabilities and total net assets as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ ​ RMB RMB RMB US$ ​ ​ (in thousands) Total assets 13,398,032 14,091,125 12,746,435 1,848,059 Total liabilities 1,488,188 1,567,586 703,723 102,030 Total net assets (1) 11,909,844 12,523,539 12,042,712 1,746,029 (1) Defined as total assets minus total liabilities.
The following table sets forth the Group’s total assets, total liabilities and total net assets as of the dates indicated. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB RMB RMB US$ ​ ​ (in thousands) Total assets 14,091,125 12,746,435 12,482,196 1,758,081 Total liabilities 1,567,586 703,723 794,245 111,868 Total net assets (1) 12,523,539 12,042,712 11,687,951 1,646,213 (1) Defined as total assets minus total liabilities.
The Group’s expected credit loss for receivables and other assets was a reversal of RMB221.1 million (US$32.1 million) this year, compared with RMB151.8 million for 2021, primarily due to the decrease in past-due on-balance sheet outstanding principal receivables. ● Impairment loss from other assets.
The Group’s expected credit loss for receivables and other assets was RMB 24.7 million (US$ 3.5 million) this year, compared with a reversal of RMB221.1 million for 2022, primarily due to credit loss for other assets. ● Impairment loss from other assets.
The Group’s income tax expenses decreased by 64.5% to RMB92.4 million (US$13.4 million) in 2022 from RMB260.5 million in 2021. Net loss or income. The Group’s net loss was RMB362.1 million (US$52.5 million) in 2022, compared to net income of RMB585.9 million in 2021.
The Group’s income tax expenses decreased by 32.6% to RMB62.3 million (US$8.8 million) in 2023 from RMB92.4 million in 2022. Net income/(loss). The Group’s net income was RMB39.1 million (US$5.5 million) in 2023, compared to a loss of RMB362.1 million in 2022.
New Business Initiatives The Group has been exploring innovative consumer products and services by leveraging its technology capabilities. The Group’s results of operations depends on its ability to execute its new business initiatives.
As such, the Group’s results of operations depend on its ability to maintain and expand customer base and to manage costs and expenses relating to such business going forward. 81 Table of Contents New Business Initiatives The Group has been exploring innovative consumer products and services by leveraging its technology capabilities.
For example, the Group may incur significant marketing expenses to acquire new consumers. As a result, the Group is likely to incur losses initially due to its new business initiatives. Economic Conditions and Regulatory Environment in China The demand for the Group’s products and services is dependent upon overall economic conditions in China.
New businesses may significantly change the Group’s cost structure. For example, the Group may incur significant marketing expenses to acquire new consumers. As a result, the Group is likely to incur losses initially due to its new business initiatives.
Financing Activities Net cash used in financing activities was RMB835.0 million (US$121.1 million) in 2022, which was primarily attributable to the repurchases of ordinary shares and convertible senior notes. Net cash used in financing activities was RMB84.2 million in 2021, mainly due to the repurchases of convertible senior notes.
Financing Activities Net cash used in financing activities was RMB566.0 million (US$79.7 million) in 2023, which was primarily due to the repayment of short-term borrowings and repurchases of our ADSs. 96 Table of Contents Net cash used in financing activities was RMB835.0 million in 2022, which was primarily attributable to the repurchases of ordinary shares and convertible senior notes.
The following table sets forth the Group’s cost of revenues and operating expenses, both in absolute amount and as a percentage of the Group’s total revenues, for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Cost of revenues and operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues 862,354 23.4 ​ 298,726 ​ 18.1 ​ 383,091 ​ 55,543 ​ 66.3 Sales and marketing 293,282 8.0 127,376 7.7 271,611 39,380 47.0 General and administrative 285,905 7.7 443,276 26.8 287,457 41,677 49.8 Research and development 170,691 4.6 141,264 8.5 58,275 8,449 10.1 Changes in guarantee liabilities and risk assurance liabilities (87,894) (2.4) (201,602) (12.2) (103,991) (15,077) (18.0) Expected credit loss for receivables and other assets 1,621,362 44.0 (151,817) (9.2) (221,121) (32,060) (38.3) Impairment loss from other assets 20,000 0.5 156,394 9.5 268,927 38,991 46.6 Total ​ 3,165,700 ​ 85.8 ​ 813,617 ​ 49.2 ​ 944,249 ​ 136,903 ​ 163.5 ​ 92 Table of Contents Cost of Revenues The Group’s cost of revenues represent cost of goods sold, which primarily consists of the purchase price of products and packaging material.
The following table sets forth the Group’s cost of revenues and operating expenses, both in absolute amount and as a percentage of the Group’s total revenues, for the periods presented: 84 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Cost of revenues and operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenues 298,726 18.1 ​ 383,091 ​ 66.3 ​ 160,114 ​ 22,552 ​ 126.7 Sales and marketing 127,376 7.7 271,611 47.0 3,796 535 3.0 General and administrative 443,276 26.8 287,457 49.8 273,589 38,534 216.6 Research and development 141,264 8.5 58,275 10.1 47,763 6,727 37.8 Changes in guarantee liabilities and risk assurance liabilities (201,602) (12.2) (103,991) (18.0) — — — Expected credit (reversal)/loss for receivables and other assets (151,817) (9.2) (221,121) (38.3) 24,653 3,472 19.5 Impairment loss from other assets 156,394 9.5 268,927 46.6 5,800 817 4.6 Total ​ 813,617 ​ 49.2 ​ 944,249 ​ 163.5 ​ 515,715 ​ 72,637 ​ 408.2 ​ Cost of Revenues The Group’s cost of revenues represent cost of goods sold, which primarily consists of the purchase price of products, packaging material and fulfillment expenses, including (i) lease expenses for regional processing centers and outsourcing expenses charged by third-party labor service companies for workers at regional processing centers and (ii) logistics expenses charged by third party couriers; and cost of other revenues, which consist of delivery cost and other cost, including amounts paid to the drivers for delivery services, commission expenses and cost of educational services.
All of the commitments relating to the construction will be settled in installments. 107 Table of Contents Holding Company Structure Qudian Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries, the Group VIEs and their subsidiaries in China.
Holding Company Structure Qudian Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our subsidiaries, the Group VIEs and their subsidiaries in China. As a result, Qudian Inc.’s ability to pay dividends depends upon dividends paid by our PRC subsidiaries.
The Group recognized a gain of RMB110.2 million, RMB148.6 million and RMB66.9 million (US$9.7 million) from changes in risk assurance liabilities in 2020, 2021 and 2022, respectively. Expected Credit Loss for Receivables and Other Assets The Group periodically adjusts its allowance for loan principal and financing service fee receivables when it believes that the future collection of principal is unlikely.
Expected Credit (Reserval)/Loss for Receivables and Other Assets The Group periodically adjusts its allowance for loan principal and financing service fee receivables when it believes that the future collection of principal is unlikely.
Total cost of revenues and operating expenses increased by 16.1% to RMB944.2 million (US$136.9 million) in 2022 from RMB813.6 million in 2021. ● Cost of revenues.
Total cost of revenues and operating expenses decreased by 45.4% to RMB515.7 million (US$72.6 million) in 2023 from RMB944.2 million in 2022. ● Cost of revenues.
Off-Balance Sheet Arrangements Since September 2016, the Group has entered into several arrangements with financial institutions that provides funding directly to borrowers for transactions that the Group facilitates. From April 2018 to the second quarter of 2019, the Group also entered into vehicle sales with guarantee arrangements with financial institutions that provides funding directly to car buyers.
From April 2018 to the second quarter of 2019, the Group also entered into vehicle sales with guarantee arrangements with financial institutions that provides funding directly to car buyers. As of December 31, 2023, the Group did not have any outstanding off-balance sheet transactions. See “Item 5. Operating and Financial Review and Prospects⸺A.
Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. Recent Accounting Pronouncements A list of recent accounting pronouncements that are relevant to us is included in note 2 to our consolidated financial statements, which are included in this annual report.
Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.
The Group has ceased new credit offerings since September 6, 2022. As of December 31, 2022, there was no outstanding loan balance under the Group’s loan book business.
The Group historically operated a loan book business, whereby the Group offered small credit products to consumers and undertook the related credit risk. The Group has ceased new credit offerings since September 6, 2022 and there was no outstanding loan balance from the Group’s historical loan book business since the end of 2022.
Adjustment for changes in working capital primarily consisted of (i) a decrease in risk assurance liabilities of RMB2,328.0 million primarily due to a decrease in the off-balance sheet transaction for which the Group provides risk assurance, (ii) a decrease in contract assets of RMB2,899.5 million, (iii) a decrease in other current and non-current liabilities of RMB879.0 million and (iv) a decrease in other current and non-current assets of RMB438.9 million. 106 Table of Contents Investing Activities Net cash provided by investing activities was RMB1,884.8 million (US$273.3 million) in 2022, which was primarily attributable to (i) proceeds from redemption of short-term investments of RMB16,062.3 million (US$2,328.8 million) and (ii) proceeds from the collection of loan principal of RMB6,492.8 million (US$941.4 million), partially offset by purchases of short-term investments of RMB15,538.7 million (US$2,252.9 million).
Net cash provided by investing activities was RMB1,884.8 million in 2022, which was primarily attributable to (i) proceeds from redemption of short-term investments of RMB16,062.3 million and (ii) proceeds from the collection of loan principal of RMB6,492.8 million, partially offset by purchases of short-term investments of RMB15,538.7 million.
The following table sets forth a summary of the Group’s cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ ​ RMB RMB RMB US$ ​ ​ (in thousands) Summary Consolidated Cash Flow Data: Net cash provided by operating activities 2,471,712 922,065 260,871 37,823 Net cash (used in)/provided by investing activities (3,269,876) (246,580) 1,884,829 273,275 Net cash used in financing activities (1,591,272) (84,192) (834,991) (121,062) Cash and cash equivalents, and restricted cash and cash equivalent at beginning of period 4,118,587 1,672,962 2,243,420 325,265 Cash and cash equivalents, and restricted cash and cash equivalent at end of period 1,672,962 2,243,420 3,572,748 518,000 ​ Operating Activities Net cash provided by operating activities was RMB260.9 million (US$37.8 million) in 2022, mainly attributable to net loss of RMB362.1 milllion (US$52.5 million), adjusted for (i) impairment loss from other assets of RMB268.9 million (US$39.0 million), (ii) expected credit loss for receivables and other assets was a reversal of RMB221.1 million (US$32.1 million) and (iii) unrealized investment losses of derivative instruments of RMB180.5 million (US$26.2 million).
The following table sets forth a summary of the Group’s cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB RMB RMB US$ ​ ​ (in thousands) Summary Consolidated Cash Flow Data: Net cash provided by operating activities 922,065 260,871 352,020 49,581 Net cash (used in)/provided by investing activities (246,580) 1,884,829 3,895,444 548,662 Net cash used in financing activities (84,192) (834,991) (565,972) (79,715) Cash and cash equivalents, and restricted cash and cash equivalent at beginning of period 1,672,962 2,243,420 3,572,748 503,211 Cash and cash equivalents, and restricted cash and cash equivalent at end of period 2,243,420 3,572,748 7,266,779 1,023,504 ​ Operating Activities Net cash provided by operating activities was RMB352.0 million (US$49.6 million) in 2023, mainly attributable to net income of RMB39.1 million (US$5.5 million).
The Group’s sales and marketing expenses increased by 113.2% to RMB271.6 million (US$39.4 million) from RMB127.4 million for 2021. The increase was primarily due to marketing expenses related to QD Food business. ● General and administrative expenses.
The Group’s sales and marketing expenses decreased by 98.6% to RMB3.8 million (US$0.5 million) from RMB271.6 million for 2022. The decrease was primarily due to the winding down of QD Food business. 93 Table of Contents ● General and administrative expenses.
Sales income and others decreased to RMB82.6 million (US$12.0 million) in 2022 from RMB100.7 million for 2021 primarily due to the winding down of the Wanlimu e-commerce platform, partially offset by sales relating to QD Food business. Total cost of revenues and operating expenses.
The Group’s cost of revenues decreased by 58.2% to RMB160.1 million (US$22.6 million) from RMB383.1 million for 2022, primarily due to the winding down of the QD Food business, partially offset by an increase in cost from last-mile delivery business. ● Sales and marketing expenses.
The Group’s loss on derivative instrument was RMB70.4 million (US$10.2 million) for 2022 as compared with a gain on derivative instrument of RMB17.4 million for 2021, primarily due to the decrease in quoted price of the equity securities relating to the derivative instruments the Group holds. Income tax expenses.
Gain/(loss) on derivative instrument . The Group’s gain on derivative instrument was RMB153.8 million (US$21.7 million) for 2023, as compared to a loss of RMB70.4 million for 2022, primarily attributable to the realized investment income from derivative instruments we sold. Income tax expenses.
In these periods, the Group’s capital expenditures were mainly used for building construction and purchase of equipment and intangible assets and leasehold improvements. The Group will continue to make capital expenditures to meet the expected growth of its business.
In these periods, the Group’s capital expenditures were mainly used for building construction and purchase of equipment and intangible assets and leasehold improvements. In addition, one of the aircrafts the Group purchased in 2023 was recorded under property and equipment, net, which amounts to RMB175.4 million (US$24.7 million).
The following table sets forth components of the Group’s cost of revenues, both in absolute amount and as a percentage of the Group’s total revenues, for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2020 ​ 2021 ​ 2022 ​ ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Cost of revenues: Cost of goods sold 645,083 17.5 78,533 4.8 326,889 47,394 56.6 Cost of other revenues 217,271 5.9 220,193 13.3 56,202 8,149 9.7 Total 862,354 23.4 298,726 18.1 383,091 55,543 66.3 ​ Interest expenses of borrowings depend on the institutional funding partners which the Group works with to fund the transactions the Group facilitates.
The following table sets forth components of the Group’s cost of revenues, both in absolute amount and as a percentage of the Group’s total revenues, for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Cost of revenues: Cost of goods sold 78,533 4.8 326,889 56.6 27,716 3,904 21.9 Cost of other revenues 220,193 13.3 56,202 9.7 132,398 18,648 104.8 Total 298,726 18.1 383,091 66.3 160,114 22,552 126.7 ​ Sales and Marketing Sales and marketing expenses include expenses for (i) the Group’s historicalonline consumer finance business and consist primarily of expenses related to salaries, benefits and share-based compensation related to the Group’s sales and marketing staff; (ii) the Group’s historical ready-to-cook meals business and consist primarily of expenses related to marketing activities the Group conducted to promote the brand and (iii) the Group’s historical budget auto financing business and consist primarily of expenses related to salaries, benefits and share-based compensation related to the Group’s relevant sales and marketing staff.
The Group recorded net income of RMB958.8 million and RMB585.9 million and net loss of RMB362.1 million (US$52.5 million) in 2020, 2021 and 2022, respectively. Key Factors Affecting the Group’s Results of Operations Wind-down of Credit Business The Group historically derived substantially all of its revenue from its credit business.
The Group recorded net income of RMB585.9 million and net loss of RMB362.1 million and net income of RMB39.1 million (US$5.5 million) in 2021, 2022 and 2023, respectively.
The Group’s research and development expenses decreased by 58.7% to RMB58.3 million (US$8.4 million) from RMB141.3 million for 2021. The decrease was primarily due to the decrease in staff head count, which led to a corresponding decrease in staff salaries and a decrease in third-party service fees. ● Changes in guarantee liabilities and risk assurance liabilities.
The Group’s general and administrative expenses decreased by 4.8% to RMB273.6 million (US$38.5 million) from RMB287.5 million for 2022, primarily due to the decrease in staff head count as the Company wound down its loan book business and QD Food business, which led to a corresponding decrease in staff salaries. ● Research and development expenses.
Net cash provided by operating activities was RMB2,471.7 million in 2020, mainly attributable to net income of RMB958.8 million, adjusted for (i) expected credit loss for receivables and other assets of RMB1,621.4 million, (ii) income from the repurchase of convertible senior notes of RMB622.1 million, (iii) share of loss from equity method investment of RMB370.0 million.
Net cash provided by operating activities was RMB260.9 million in 2022, mainly attributable to net loss of RMB362.1 million, adjusted for (i) impairment loss from other assets of RMB268.9 million, (ii) expected credit loss for receivables and other assets was a reversal of RMB221.1 million and (iii) unrealized investment losses of derivative instruments of RMB180.5 million.
General economic factors, including the interest rate environment and unemployment rates, may affect consumers’ willingness to seek the Group’s services or products. The regulatory environment in China is developing and evolving, creating both challenges and opportunities that could affect the Group’s financial performance.
The regulatory environment in the jurisdictions may continue to develop and evolve, creating both challenges and opportunities that could affect the Group’s financial performance.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

35 edited+9 added−4 removed49 unchanged
Our audit committee is responsible for, among other things: ● selecting the independent auditor; ● pre-approving auditing and non-auditing services permitted to be performed by the independent auditor; ● annually reviewing the independent auditor’s report describing the auditing firm’s internal quality control procedures, any material issues raised by the most recent internal quality control review, or peer review, of the independent auditors and all relationships between the independent auditor and our company; 114 Table of Contents ● setting clear hiring policies for employees and former employees of the independent auditors; ● reviewing with the independent auditor any audit problems or difficulties and management’s response; ● reviewing and, if material, approving all related party transactions on an ongoing basis; ● reviewing and discussing the annual audited financial statements with management and the independent auditor; ● reviewing and discussing with management and the independent auditors major issues regarding accounting principles and financial statement presentations; ● reviewing reports prepared by management or the independent auditors relating to significant financial reporting issues and judgments; ● discussing earnings press releases with management, as well as financial information and earnings guidance provided to analysts and rating agencies; ● reviewing with management and the independent auditors the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the Group’s financial statements; ● discussing policies with respect to risk assessment and risk management with management, internal auditors and the independent auditor; ● timely reviewing reports from the independent auditor regarding all critical accounting policies and practices to be used by our company, all alternative treatments of financial information within U.S.
Our audit committee is responsible for, among other things: ● selecting the independent auditor; ● pre-approving auditing and non-auditing services permitted to be performed by the independent auditor; ● annually reviewing the independent auditor’s report describing the auditing firm’s internal quality control procedures, any material issues raised by the most recent internal quality control review, or peer review, of the independent auditors and all relationships between the independent auditor and our company; 103 Table of Contents ● setting clear hiring policies for employees and former employees of the independent auditors; ● reviewing with the independent auditor any audit problems or difficulties and management’s response; ● reviewing and, if material, approving all related party transactions on an ongoing basis; ● reviewing and discussing the annual audited financial statements with management and the independent auditor; ● reviewing and discussing with management and the independent auditors major issues regarding accounting principles and financial statement presentations; ● reviewing reports prepared by management or the independent auditors relating to significant financial reporting issues and judgments; ● discussing earnings press releases with management, as well as financial information and earnings guidance provided to analysts and rating agencies; ● reviewing with management and the independent auditors the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the Group’s financial statements; ● discussing policies with respect to risk assessment and risk management with management, internal auditors and the independent auditor; ● timely reviewing reports from the independent auditor regarding all critical accounting policies and practices to be used by our company, all alternative treatments of financial information within U.S.
The table below summarizes, as of the date of this annual report, the options we have granted to our directors and executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Underlying ​ Option ​ ​ ​ ​ ​ ​ ​ ​ Options ​ Exercise ​ ​ ​ Option Expiration Name ​ Position ​ Awarded ​ Price ​ Grant Date ​ Date Long Xu ​ Director ​ * ​ US$ 0.0 ​ February 23, 2016 ​ February 23, 2026 ​ ​ ​ ​ * ​ US$ 0.0 ​ December 20, 2018 ​ December 20, 2028 ​ ​ ​ ​ * ​ US$ 0.0 ​ September 22, 2019 ​ September 22, 2029 ​ ​ ​ ​ * ​ US$ 0.0 ​ December 25, 2019 ​ December 25, 2029 ​ ​ * ​ US$ 0.0 ​ March 26, 2020 ​ March 26, 2030 Yifan Li Independent director * ​ US$ 0.0 ​ October 17, 2017 ​ December 8, 2026 ​ ​ * ​ US$ 0.0 ​ June 14, 2019 ​ June 14, 2029 Shengwen Rong Independent director * ​ US$ 0.0 ​ November 30, 2018 ​ November 30, 2028 ​ ​ * ​ US$ 0.0 ​ June 14, 2019 ​ June 14, 2029 Yan Gao Vice President of Finance * ​ US$ 0.0 ​ May 3, 2017 ​ May 3, 2027 ​ ​ * ​ US$ 0.0 ​ March 12, 2018 ​ March 12, 2028 ​ ​ * ​ US$ 0.0 ​ December 20, 2018 ​ December 20, 2028 ​ ​ * ​ US$ 0.0 ​ September 22, 2019 ​ September 22, 2029 ​ ​ * ​ US$ 0.0 ​ December 25, 2019 ​ December 25, 2029 ​ ​ * ​ US$ 0.0 ​ March 26, 2020 ​ March 26,2030 * Less than 1% of our outstanding shares, assuming conversion of our preferred shares into ordinary shares. ​ 113 Table of Contents Equity Incentive Trust The Qudian Inc.
The table below summarizes, as of the date of this annual report, the options we have granted to our directors and executive officers. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary ​ ​ ​ ​ ​ ​ ​ Shares ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Underlying ​ Option ​ ​ ​ ​ ​ ​ ​ ​ Options ​ Exercise ​ ​ ​ Option Expiration Name ​ Position ​ Awarded ​ Price ​ Grant Date ​ Date Long Xu ​ Director ​ * ​ US$ 0.0 ​ February 23, 2016 ​ February 23, 2026 ​ ​ ​ ​ * ​ US$ 0.0 ​ December 20, 2018 ​ December 20, 2028 ​ ​ ​ ​ * ​ US$ 0.0 ​ September 22, 2019 ​ September 22, 2029 ​ ​ ​ ​ * ​ US$ 0.0 ​ December 25, 2019 ​ December 25, 2029 ​ ​ * ​ US$ 0.0 ​ March 26, 2020 ​ March 26, 2030 Yifan Li Independent director * ​ US$ 0.0 ​ October 17, 2017 ​ December 8, 2026 ​ ​ * ​ US$ 0.0 ​ June 14, 2019 ​ June 14, 2029 Shengwen Rong Independent director * ​ US$ 0.0 ​ November 30, 2018 ​ November 30, 2028 ​ ​ * ​ US$ 0.0 ​ June 14, 2019 ​ June 14, 2029 Yan Gao Vice President of Finance * ​ US$ 0.0 ​ May 3, 2017 ​ May 3, 2027 ​ ​ * ​ US$ 0.0 ​ March 12, 2018 ​ March 12, 2028 ​ ​ * ​ US$ 0.0 ​ December 20, 2018 ​ December 20, 2028 ​ ​ * ​ US$ 0.0 ​ September 22, 2019 ​ September 22, 2029 ​ ​ * ​ US$ 0.0 ​ December 25, 2019 ​ December 25, 2029 ​ ​ * ​ US$ 0.0 ​ March 26, 2020 ​ March 26,2030 * Less than 1% of our outstanding shares, assuming conversion of our preferred shares into ordinary shares. ​ 102 Table of Contents Equity Incentive Trust The Qudian Inc.
The functions and powers of our board of directors include, among others: ● conducting and managing the business of our company; ● representing our company in contracts and deals; ● appointing attorneys for our company; ● selecting senior management such as managing directors and executive directors; ● providing employee benefits and pension; ● managing our company’s finance and bank accounts; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● exercising any other powers conferred by the shareholders meetings or under our second amended and restated memorandum and articles of association. 116 Table of Contents Terms of Directors and Executive Officers Our directors may be elected by a resolution of our board of directors, or by an ordinary resolution of our shareholders, pursuant to our second amended and restated memorandum and articles of association.
The functions and powers of our board of directors include, among others: ● conducting and managing the business of our company; ● representing our company in contracts and deals; ● appointing attorneys for our company; ● selecting senior management such as managing directors and executive directors; ● providing employee benefits and pension; ● managing our company’s finance and bank accounts; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● exercising any other powers conferred by the shareholders meetings or under our second amended and restated memorandum and articles of association. 105 Table of Contents Terms of Directors and Executive Officers Our directors may be elected by a resolution of our board of directors, or by an ordinary resolution of our shareholders, pursuant to our second amended and restated memorandum and articles of association.
Our compensation committee is responsible for, among other things: ● reviewing, evaluating and, if necessary, revising our overall compensation policies; ● reviewing and evaluating the performance of our directors and senior officers and determining the compensation of our senior officers; ● reviewing and approving our senior officers’ employment agreements with us; 115 Table of Contents ● setting performance targets for our senior officers with respect to our incentive compensation plan and equity-based compensation plans; ● administering our equity-based compensation plans in accordance with the terms thereof; and such other matters that are specifically delegated to the remuneration committee by our board of directors from time to time.
Our compensation committee is responsible for, among other things: ● reviewing, evaluating and, if necessary, revising our overall compensation policies; ● reviewing and evaluating the performance of our directors and senior officers and determining the compensation of our senior officers; ● reviewing and approving our senior officers’ employment agreements with us; 104 Table of Contents ● setting performance targets for our senior officers with respect to our incentive compensation plan and equity-based compensation plans; ● administering our equity-based compensation plans in accordance with the terms thereof; and such other matters that are specifically delegated to the remuneration committee by our board of directors from time to time.
Prior to that, Mr. Rong served as the chief financial officer at Quixey, Inc, from 2015 to 2016, the chief financial officer at UCWeb from 2012 to 2014, and the chief financial officer at Country Style Cooking Restaurant Chain Co., Ltd., an NYSE-listed company, from 2010 to 2012. Currently Mr.
Rong served as the chief financial officer at Quixey, Inc, from 2015 to 2016, the chief financial officer at UCWeb from 2012 to 2014, and the chief financial officer at Country Style Cooking Restaurant Chain Co., Ltd., an NYSE-listed company, from 2010 to 2012. Currently Mr.
Rong received a bachelor’s degree in international finance from Renmin University, a master’s degree in accounting from West Virginia University and an MBA degree from University of Chicago Booth School of Business. Mr. Rong is a Certified Public Accountant in the United States. Mr. Yifan Li has served as our independent director since October 2017.
Rong received a bachelor’s degree in international finance from Renmin University, a master’s degree in accounting from West Virginia University and an MBA degree from University of Chicago Booth School of Business. Mr. Rong is a Certified Public Accountant in the United States. 99 Table of Contents Mr. Yifan Li has served as our independent director since October 2017. Mr.
The business address for all of our executive officers and directors is Tower A, AVIC Zijin Plaza, Siming District, Xiamen, Fujian Province 361000, the People’s Republic of China. B. Compensation In 2022, the Group paid aggregate cash compensation of approximately RMB5.0 million (US$0.7 million) to our directors and executive officers as a group.
The business address for all of our executive officers and directors is Tower A, AVIC Zijin Plaza, Siming District, Xiamen, Fujian Province 361000, the People’s Republic of China. B. Compensation In 2023, the Group paid aggregate cash compensation of approximately RMB5.3 million (US$0.7 million) to our directors and executive officers as a group.
Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. 118 Table of Contents (1) Represents (i) 2,836,200 Class A ordinary shares held by the spouse of Mr. Min Luo and (ii) 63,491,172 Class B ordinary shares held by Qufenqi Holding Limited, a limited liability company established in the British Virgin Islands.
Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. (1) Represents (i) 2,836,200 Class A ordinary shares held by the spouse of Mr. Min Luo and (ii) 63,491,172 Class B ordinary shares held by Qufenqi Holding Limited, a limited liability company established in the British Virgin Islands.
Luo was a founder and chief executive officer of Jiyiri.com, an online birthday-related service provider, from 2007 to 2009, and a co-founder of dipian.com, an online social platform for college students, from 2006 to 2007. Mr. Luo received a bachelor’s degree in telecommunication engineering from Jiangxi Normal University in 2004. 110 Table of Contents Mr.
Luo was a founder and chief executive officer of Jiyiri.com, an online birthday-related service provider, from 2007 to 2009, and a co-founder of dipian.com, an online social platform for college students, from 2006 to 2007. Mr. Luo received a bachelor’s degree in telecommunication engineering from Jiangxi Normal University in 2004. Mr.
The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors and the executive officers. For information regarding share awards granted to our directors and executive officers, see “⸺2016 Equity Incentive Plan.” 111 Table of Contents Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors and the executive officers. For information regarding share awards granted to our directors and executive officers, see “⸺2016 Equity Incentive Plan.” Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
The non-compete restricted period typically expires two years after the termination of employment, and the Group agrees to compensate the employee with a certain percentage of his or her pre-departure salary during the restricted period. We believe that the Group maintains a good working relationship with its employees, and the Group has not experienced any major labor disputes. E.
The non-compete restricted period typically expires two years after the termination of employment, and the Group agrees to compensate the employee with a certain percentage of his or her pre-departure salary during the restricted period. 106 Table of Contents We believe that the Group maintains a good working relationship with its employees, and the Group has not experienced any major labor disputes.
Share Ownership The following table sets forth information as of March 31, 2023 with respect to the beneficial ownership of our ordinary shares by: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5.0% or more of our ordinary shares.
E. Share Ownership The following table sets forth information as of March 31, 2024 with respect to the beneficial ownership of our ordinary shares by: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5.0% or more of our ordinary shares.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management Directors and Executive Officers The following table sets forth information regarding our directors and executive officers as of March 31, 2023.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management Directors and Executive Officers The following table sets forth information regarding our directors and executive officers as of March 31, 2024.
Yingming Li was designated by Guosheng HK pursuant to the deed and remains a director of our company as of the date of this annual report. Guosheng HK is further described under “Item 6. Directors, Senior Management and Employees E. Share Ownership.” D. Employees As of December 31, 2022, the Group had a total of 215 employees.
Yingming Li was designated by Guosheng HK pursuant to the deed and remains a director of our company as of the date of this annual report. Guosheng HK is further described under “Item 6. Directors, Senior Management and Employees E. Share Ownership.” D. Employees As of December 31, 2023, the Group had a total of 305 employees.
After servicing as chief financial officer since April 2021, Mr. Li is currently chief finance and investment advisor of Human Horizons Holdings Co. Ltd., a premium luxury electric vehicle manufacturer. Prior to that, he had served as a board director and a vice president of Geely Holding Group Co., Ltd., an automotive manufacturing company, since October 2014.
Li was the chief finance and investment advisor of Human Horizons Holdings Co. Ltd., a premium luxury electric vehicle manufacturer until December 2023, after servicing as chief financial officer since April 2021. Prior to that, he had served as a board director and a vice president of Geely Holding Group Co., Ltd., an automotive manufacturing company, since October 2014.
In April 2017, we directly issued 13,865,219 ordinary shares pursuant to our 2016 Equity Incentive Plan to Ark Trust in its capacity as trustee of the Equity Incentive Trust. As of March 31, 2023, the Equity Incentive Trust held 4,058,108 Class A ordinary shares.
In April 2017, we directly issued 13,865,219 ordinary shares pursuant to our 2016 Equity Incentive Plan to Ark Trust in its capacity as trustee of the Equity Incentive Trust. As of March 31, 2024, the Equity Incentive Trust held 3,998,108 Class A ordinary shares.
Guosheng HK is a limited liability company incorporated under the laws of Hong Kong and a subsidiary of Guosheng Financial Holding Inc., or Guosheng, a public company listed on the Shenzhen Stock Exchange. Based on Guosheng’s public filings, Mr. Li Du has control over Guosheng as of the date of this annual report.
Guosheng HK is a limited liability company incorporated under the laws of Hong Kong and a subsidiary of Guosheng Financial Holding Inc., or Guosheng, a public company listed on the Shenzhen Stock Exchange. Based on Guosheng’s public filings, Jiangxi Provincial Department of Transportation has control over Guosheng as of the date of this annual report.
Qufenqi Holding Limited is indirectly wholly owned by a trust of which Mr. Min Luo and his wife are the beneficiaries. Mr. Min Luo is our founder, chairman of the board and chief executive officer. The registered address of Qufenqi Holding Limited is Geneva Place, Waterfront Drive, P.O. Box 3469, Road Town, Tortola, British Virgin Islands.
Qufenqi Holding Limited, or Qufenqi, is indirectly wholly owned by a trust of which Mr. Min Luo and his wife are the beneficiaries. Mr. Min Luo is our founder, chairman of the board and chief executive officer. The registered address of Qufenqi Holding Limited is Geneva Place, Waterfront Drive, P.O.
The Group is required under PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of the Group’s employees, up to a maximum amount specified by the local government from time to time.
The Group is required under PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of the Group’s employees, up to a maximum amount specified by the local government from time to time. The Group enters into standard labor, confidentiality and non-compete agreements with its employees.
The total number of ordinary shares outstanding as of March 31, 2023 was 224,898,926, comprising 161,407,754 Class A ordinary shares and 63,491,172 Class B ordinary shares, excluding (i) ordinary shares represented by the ADSs repurchased by the Company, (ii) ordinary shares issuable upon the exercise of outstanding share options and (iii) ordinary shares reserved for future issuance under our share incentive plans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned ​ ​ ​ ​ ​ ​ ​ ​ Percentage of ​ ​ ​ ​ ​ ​ Percentage of ​ aggregate ​ ​ Class A ​ Class B ​ total ordinary ​ voting ​ ​ ordinary shares ​ ordinary shares ​ shares ​ power** Directors and Executive Officers: ​ ​ ​ ​ ​ ​ ​ ​ Min Luo (1) ​ 2,836,200 ​ 63,491,172 ​ 29.5 ​ 80.1 Long Xu ​ * ​ — ​ * ​ * Yingming Li — — — — Shengwen Rong * — * * Yifan Li * — * * Yan Gao * — * * Directors and Executive Officers as a Group 4,595,950 63,491,172 30.3 80.3 Principal Shareholders Qufenqi Holding Limited — 63,491,172 28.2 79.7 Guosheng HK (2) 12,670,000 4,125,698 7.5 6.8 * Beneficially owns less than 1% of our outstanding shares. ** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
The total number of ordinary shares outstanding as of March 31, 2024 was 189,403,851, comprising 125,912,679 Class A ordinary shares and 63,491,172 Class B ordinary shares, excluding (i) ordinary shares represented by the ADSs repurchased by the Company, (ii) ordinary shares issuable upon the exercise of outstanding share options and (iii) ordinary shares reserved for future issuance under our share incentive plans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Beneficially Owned ​ ​ ​ ​ ​ Percentage of ​ ​ ​ ​ ​ ​ Percentage of ​ aggregate ​ ​ Class A ​ Class B ​ total ordinary ​ voting ​ ​ ordinary shares ​ ordinary shares ​ shares ​ power** Directors and Executive Officers: ​ ​ ​ ​ ​ ​ ​ ​ Min Luo (1) ​ 2,836,200 ​ 63,491,172 ​ 35.0 ​ 83.8 Long Xu ​ * ​ — ​ * ​ * Yingming Li — — — — Shengwen Rong * — * * Yifan Li * — * * Yan Gao * — * * Directors and Executive Officers as a Group 4,859,700 63,491,172 36.1 84.1 Principal Shareholders ​ ​ ​ ​ Qufenqi Holding Limited — 63,491,172 33.5 83.5 Guosheng HK (2) 12,670,000 — 6.7 1.7 * Beneficially owns less than 1% of our outstanding shares. ** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
Name Age Position/Title Min Luo 40 Chairman and Chief Executive Officer Long Xu 40 Director and Senior Vice President Yingming Li 45 Director Shengwen Rong 54 Independent Director Yifan Li 56 Independent Director Yan Gao 42 Vice President of Finance ​ Mr.
Name Age Position/Title Min Luo 41 Chairman and Chief Executive Officer Long Xu 41 Director and Senior Vice President Yingming Li 46 Director Shengwen Rong 55 Independent Director Yifan Li 57 Independent Director Yan Gao 43 Vice President of Finance ​ Mr.
Rong serves as an independent director and audit committee chair of Tarena International, Inc. (NASDAQ: TEDU), China Online Education (NYSE: COE), X Financial (NYSE: XYF), Mogu Inc. (NYSE: MOGU) and Vision Deal HK Acquisition Corp. (SEHK: 7827). Mr.
Rong serves as an independent director and audit committee chair of several companies, including TCTM Kids IT Education Inc. (NASDAQ: TCTM), 51Talk Online Education (NYSE: COE), X Financial (NYSE: XYF), Mogu Inc. (NYSE: MOGU) and Vision Deal HK Acquisition Corp. (SEHK: 7827). Mr.
The following table sets forth the breakdown of the Group’s employees as of December 31, 2022 by function: ​ ​ ​ ​ ​ ​ Number of Function Employees % of Total Risk management 12 5.6 Technology and product development 50 23.3 Finance 68 31.6 Operation management 33 15.3 General administrative and others 31 14.4 Others (1) ​ 21 ​ 9.8 Total 215 100.0 (1) Including employees in the Group’s new businesses, sales and marketing, Dabai Auto and Wanlimu Kids project teams. ​ As of December 31, 2022, a majority of the Group’s employees were based in Xiamen in Fujian Province and Fuzhou in Jiangxi Province.
The following table sets forth the breakdown of the Group’s employees as of December 31, 2023 by function: ​ ​ ​ ​ ​ ​ Number of Function Employees % of Total Risk management 13 4.3 Technology and product development 128 42.0 Finance 44 14.4 Operation management 46 15.1 General administrative and others 22 7.2 Others (1) ​ 52 ​ 17.0 Total 305 100.0 (1) Including employees in the Group’s new businesses, sales and marketing, Dabai Auto and Wanlimu Kids project teams. ​ As of December 31, 2023, a majority of the Group’s employees were based in Xiamen in Fujian Province and Shenzhen in Guangdong Province.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.
The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets. 100 Table of Contents In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment.
As a result, the Group has generally been able to attract and retain qualified personnel and maintain a stable core management team. 117 Table of Contents As required by PRC regulations, the Group participates in various statutory employee benefit plans, including social insurance funds, namely a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund.
As required by PRC regulations, the Group participates in various statutory employee benefit plans, including social insurance funds, namely a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund.
Change in Control In the event of a change in control, the administrator may provide for acceleration of equity awards, purchase of equity awards from holders or replacement of equity awards. 112 Table of Contents Term Unless terminated earlier, the 2016 Equity Incentive Plan will continue in effect for a term of ten years from the date of its adoption.
Term Unless terminated earlier, the 2016 Equity Incentive Plan will continue in effect for a term of ten years from the date of its adoption.
Vesting Schedule The administrator determines the vesting schedule of each equity award granted under the 2016 Equity Incentive Plan, which vesting schedule will be set forth in the award agreement for such equity award. Amendment and Termination The board of directors may at any time amend or terminate the 2016 Equity Incentive Plan, subject to certain exceptions.
Vesting Schedule The administrator determines the vesting schedule of each equity award granted under the 2016 Equity Incentive Plan, which vesting schedule will be set forth in the award agreement for such equity award.
We believe the Group offers its employees competitive compensation packages and a dynamic work environment that encourages initiative and is based on merit.
We believe the Group offers its employees competitive compensation packages and a dynamic work environment that encourages initiative and is based on merit. As a result, the Group has generally been able to attract and retain qualified personnel and maintain a stable core management team.
Xu received his bachelor’s degree in resource environment and urban and rural planning from Peking University in 2005. Mr. Yingming Li has served as our director since December 2019. Mr. Li served as director and deputy general manager of Guosheng Financial Holding in charge of investments prior to the end of March 2023. Mr.
Xu received his bachelor’s degree in resource environment and urban and rural planning from Peking University in 2005. Mr. Yingming Li has served as our director since December 2019. Mr. Li has rich experience in enterprise consultancy, valuation, investment banking and equity investments. Mr.
Li has rich experience in enterprise consultancy, valuation, investment banking and equity investments. Mr. Li graduated from Fudan University with a master degree in economics. Mr. Shengwen Rong has served as our independent director since August 2018. From February 2017 to September 2018, Mr. Rong served as senior vice president and then chief financial officer of Yixia Technology Co., Ltd.
Li served as director and deputy general manager of Guosheng Financial Holding in charge of investments prior to the end of March 2023. Mr. Li graduated from Fudan University with a master degree in economics. Mr. Shengwen Rong has served as our independent director since August 2018. From February 2017 to September 2018, Mr.
Granted Options We have granted options to purchase our Class A ordinary shares to certain of our officers, directors, employees and a third-party consultant pursuant to the 2016 Equity Incentive Plan. Certain options previously granted were subsequently canceled. As of March 31, 2023, options to purchase 792,032 Class A ordinary shares remained outstanding.
Amendment and Termination The board of directors may at any time amend or terminate the 2016 Equity Incentive Plan, subject to certain exceptions. 101 Table of Contents Granted Options We have granted options to purchase our Class A ordinary shares to certain of our officers, directors, employees and a third-party consultant pursuant to the 2016 Equity Incentive Plan.
The remainders of the Group’s employees were based in various other locations across China. The number of the Group’s employees decreased from 940 as of December 31, 2021 to 215 as of December 31, 2022, primarily due to the winding down of certain businesses of the Group.
The remainders of the Group’s employees were based in various other locations across China and overseas. The number of the Group’s employees increased from 215 as of December 31, 2022 to 305 as of December 31, 2023, as the Group expands its last-mile delivery business and continues to explore new business opportunities.
The administrator will determine the provisions and terms and conditions of each equity award.
The administrator will determine the provisions and terms and conditions of each equity award. Change in Control In the event of a change in control, the administrator may provide for acceleration of equity awards, purchase of equity awards from holders or replacement of equity awards.
(2) Represents (i) 12,670,000 Class A ordinary shares held by Guosheng (Hong Kong) Investment Limited, or Guosheng HK, and (ii) 4,125,698 Class B ordinary shares subject to a proxy and power of attorney, or the Guosheng proxy.
Box 3469, Road Town, Tortola, British Virgin Islands. 107 Table of Contents (2) Represents 12,670,000 Class A ordinary shares held by Guosheng (Hong Kong) Investment Limited, or Guosheng HK.
Pursuant to the Guosheng proxy, Qufenqi Holding Limited appointed Guosheng HK as its proxy and attorney-in-fact with respect to 4,125,698 Class B ordinary shares held by Qufenqi Holding Limited. The Guosheng proxy provides Guosheng HK with the power to exercise the voting rights relating to the 4,125,698 Class B ordinary shares.
According to the Schedule 13G/A filed by Guosheng HK and its affiliates on March 10, 2021, or the Guosheng 13G/A, Qufenqi granted voting power over 4,125,698 Class B ordinary shares held by Qufenqi to Guosheng HK, while retaining its economic rights over such 4,125,698 Class B ordinary shares pursuant to a proxy and power of attorney, or the Guosheng proxy, existing at the time.
Removed
In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for one year following the last date of employment.
Added
Rong served as senior vice president and then chief financial officer of Yixia Technology Co., Ltd. Prior to that, Mr.
Removed
In addition, the Group purchased employer’s liability insurance and additional commercial health insurance to increase insurance coverage of the Group’s employees. The Group enters into standard labor, confidentiality and non-compete agreements with its employees.
Added
Certain options previously granted were subsequently canceled. As of March 31, 2024, options to purchase 7,500 Class A ordinary shares remained outstanding.
Removed
Qufenqi Holding Limited is further described in footnote 1 above. Information regarding Guosheng HK’s beneficial ownership is reported as of December 31, 2020, based on the information contained in the Schedule 13G/A filed by Guosheng HK and its affiliates on March 10, 2021, or the Guosheng 13G/A.
Added
Pursuant to Article 81 of the articles of association of our company, the chairman of any general meeting of our company may refuse to recognize the appointment of proxy under the Guosheng proxy because the Guosheng proxy as an instrument of proxy has expired as being more than 12 months from the date of its execution.
Removed
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not Applicable. ​
Added
Qufenqi informed us that it did not take any action to renew the Guosheng proxy, did not execute any other proxy granting Guosheng HK the right to vote on any of our shares, and does not plan to take any action to revive the effectiveness of the Guosheng proxy.
Added
As such, we concluded that Guosheng HK no longer has any voting power over the 4,125,698 Class B ordinary shares held by Qufenqi and should not be viewed as a beneficial owner thereof.
Added
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation On November 30, 2023, our board of directors adopted an Incentive Compensation Clawback Policy, or the Clawback Policy, providing for the recoupment of certain incentive-based compensation from current and former executive officers of our company in the event we are required to restate any of our financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
Added
Adoption of the Clawback Policy was mandated by new NYSE continued listing standards introduced pursuant to Exchange Act Rule 10D-1.
Added
The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer.
Added
A copy of the Clawback Policy has been filed herewith as Exhibit 97.1. ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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As a result, we operate our relevant business through contractual arrangements among Ganzhou Qufenqi, our wholly-owned PRC subsidiary, Beijing Happy Time, a Group VIE, and the shareholders of Beijing Happy Time. We established two new Group VIEs, Ganzhou Qudian and Xiamen Qudian in 2017.
As a result, we operate our relevant business through contractual arrangements among Ganzhou Qufenqi, our wholly-owned PRC subsidiary, Beijing Happy Time, a Group VIE, and the shareholders of Beijing Happy Time. We established a new Group VIE, Ganzhou Qudian in 2017.
Ganzhou Qufenqi has also entered into a series of contractual arrangements with the aforementioned four Group VIEs and its shareholders. For a description of these contractual arrangements, see “Item 4. Information on the Company⸺B. Business Overview⸺Overview⸺Our Contractual Arrangements with the Group VIEs and Their Shareholders.” Equity Incentive Plan See “Item 6. Directors, Senior Management and Employees⸺B.
Ganzhou Qufenqi has also entered into a series of contractual arrangements with the aforementioned two Group VIEs and its shareholders. For a description of these contractual arrangements, see “Item 4. Information on the Company⸺B. Business Overview⸺Overview⸺Our Contractual Arrangements with the Group VIEs and Their Shareholders.” 108 Table of Contents Equity Incentive Plan See “Item 6. Directors, Senior Management and Employees⸺B.
Compensation⸺2016 Equity Incentive Plan.” C. Interests of Experts and Counsel Not Applicable. ​ 119 Table of Contents
Compensation⸺2016 Equity Incentive Plan.” C. Interests of Experts and Counsel Not Applicable. ​

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