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What changed in 9F Inc.'s 20-F — 2023 vs 2024

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Paragraph-level year-over-year comparison of 9F Inc.'s 2023 and 2024 20-F annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+651 added−648 removedSource: 20-F (2025-08-08) vs 20-F (2024-05-15)

Top changes in 9F Inc.'s 2024 20-F

651 paragraphs added · 648 removed · 503 edited across 4 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

158 edited+42 added−41 removed678 unchanged
Biggest changeIn addition, the security review rules issued by the PRC government authorities that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the PRC government authorities, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement.
Biggest changeComplying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce, the State Administration for Market Regulation or other PRC government authorities may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share. 41 In addition, the Provisions of Ministry of Commerce on Implementation of Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors issued by the Ministry of Commerce that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the PRC government authorities, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement.
According to the Review Measures, if a “network platform operator” that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review prior to the submission of its listing application with non-PRC securities regulators.
According to the Cybersecurity Review Measures, if a “network platform operator” that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review prior to the submission of its listing application with non-PRC securities regulators.
These risks and challenges include our ability to, among other things: ● navigate an evolving regulatory environment; ● expand the base of our users and partners we collaborate with; ● improve our operational efficiency; ● continue to scale our technology infrastructure to support the expected growth of our business; ● broaden our product and service offerings; 8 ● operate without being adversely affected by the negative publicity about the industries in general and our company in particular, if any; ● maintain the security of our platform and the confidentiality of the information provided and utilized across our platforms; ● attract, retain and motivate talented employees to support our expected business growth; ● navigate economic conditions and fluctuations; ● seek new business opportunities for future growth; and ● defend ourselves in litigation, and against regulatory, intellectual property, privacy, product quality or other claims.
These risks and challenges include our ability to, among other things: ● navigate an evolving regulatory environment; ● expand the base of our users and partners we collaborate with; ● improve our operational efficiency; ● continue to scale our technology infrastructure to support the expected growth of our business; ● broaden our product and service offerings; ● operate without being adversely affected by the negative publicity about the industries in general and our company in particular, if any; ● maintain the security of our platform and the confidentiality of the information provided and utilized across our platforms; ● attract, retain and motivate talented employees to support our expected business growth; 8 ● navigate economic conditions and fluctuations; ● seek new business opportunities for future growth; and ● defend ourselves in litigation, and against regulatory, intellectual property, privacy, product quality or other claims.
Factors that may cause fluctuations in our interim financial results include but are not limited to the following: ● our ability to attract new users and partners and maintain relationships with existing ones; ● the amount and timing of operating expenses related to acquiring users and the maintenance and expansion of our business, operations and infrastructure; 24 ● network outages or security breaches; ● general economic, regulatory, industry and market conditions; ● our emphasis on user experience instead of near-term growth; ● natural disasters, health epidemics and other calamities, and any measures taken in response thereto which are beyond our control; and ● the timing and expenses related to the development or acquisition of technologies or businesses.
Factors that may cause fluctuations in our interim financial results include but are not limited to the following: ● our ability to attract new users and partners and maintain relationships with existing ones; ● the amount and timing of operating expenses related to acquiring users and the maintenance and expansion of our business, operations and infrastructure; ● network outages or security breaches; ● general economic, regulatory, industry and market conditions; 24 ● our emphasis on user experience instead of near-term growth; ● natural disasters, health epidemics and other calamities, and any measures taken in response thereto which are beyond our control; and ● the timing and expenses related to the development or acquisition of technologies or businesses.
Pursuant to the Trial Measures and supporting guidelines, in connection with any offering or listing of shares, depository receipts, convertible corporate bonds, or other equity-like securities by a PRC company in an overseas stock market, whether directly or indirectly through an offshore holding company, a filing should be made with the CSRC.
Pursuant to the Trial Measures and supporting guidelines, in connection with any offering or listing of shares, depository receipts, convertible corporate bonds, or other equity-like securities by a PRC company in an overseas stock market, whether directly or indirectly through an offshore holding company, a filing should be made with the CSRC.
According to the Review Measures, if a “network platform operator” that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review.
According to the Cybersecurity Review Measures, if a “network platform operator” that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review.
In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such funds reaches 50% of its registered capital.
In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such funds reaches 50% of its registered capital.
At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to discretionary funds. These reserve funds and discretionary funds are not distributable as cash dividends.
At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to discretionary funds. These reserve funds and discretionary funds are not distributable as cash dividends.
Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the SAFE by complying with certain procedural requirements.
Under existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from the SAFE by complying with certain procedural requirements.
Lei Sun, the chairman of our board of directors, beneficially owns an aggregate of 6,085,465 Class A ordinary shares and 58,348,000 Class B ordinary shares, representing in aggregate 62.0% of our total voting power as of the date of this annual report. Consequently, Mr.
Mr. Lei Sun, the chairman of our board of directors, beneficially owns an aggregate of 6,085,465 Class A ordinary shares and 58,348,000 Class B ordinary shares, representing in aggregate 62.0% of our total voting power as of the date of this annual report. Consequently, Mr.
Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: ● difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, rights, platform, 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; ● difficulties in retaining, training, motivating and integrating key personnel; ● diversion of management’s time and resources from our daily operations; ● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; ● difficulties in retaining relationships with customers, employees and suppliers of the acquired business; ● risks of entering markets in which we have limited or no prior experience; ● regulatory risks, including remaining in good standing with existing regulatory authorities or receiving any necessary pre-closing or post-closing approvals, as well as being subject to the oversight of new regulators which regulate an acquired business both domestically and internationally; ● assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; ● failure to successfully further develop the acquired technology; ● liability for activities of the acquired business undertaken before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; ● lack of sufficient power or influence over the business we invest in; ● potential disruptions to our ongoing businesses; 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, rights, platform, 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; ● difficulties in retaining, training, motivating and integrating key personnel; ● diversion of management’s time and resources from our daily operations; ● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; ● difficulties in retaining relationships with customers, employees and suppliers of the acquired business; ● risks of entering markets in which we have limited or no prior experience; ● regulatory risks, including remaining in good standing with existing regulatory authorities or receiving any necessary pre-closing or post-closing approvals, as well as being subject to the oversight of new regulators which regulate an acquired business both domestically and internationally; ● assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk for liability; ● failure to successfully further develop the acquired technology; ● liability for activities of the acquired business undertaken before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; 22 ● lack of sufficient power or influence over the business we invest in; ● potential disruptions to our ongoing businesses; and ● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
See also “—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” 38 PRC regulation on loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
See also “—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” PRC regulation on loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
See “—Risks Related to Our Corporate Structure—Contractual arrangements in relation to our VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or our VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment.” Under PRC laws and regulations, our PRC subsidiaries, as wholly foreign-owned enterprises in China, may pay dividends only out of their respective accumulated after-tax profits as determined in accordance with PRC accounting standards and regulations.
See “—Risks Related to Our Corporate Structure—Contractual arrangements in relation to our VIEs may be subject to scrutiny by the PRC tax authorities and they may determine that we or our VIEs owe additional taxes, which could negatively affect our financial condition and the value of your investment.” 38 Under PRC laws and regulations, our PRC subsidiaries, as wholly foreign-owned enterprises in China, may pay dividends only out of their respective accumulated after-tax profits as determined in accordance with PRC accounting standards and regulations.
Any failure to or delay in obtaining such approval or complying with such filing requirements, or a rescission of such approval, could subject us to sanctions imposed by the CSRC or other PRC government authorities.” More generally, as a major part of our operations in China is conducted by our PRC subsidiaries, our VIEs and subsidiaries of our VIEs, the PRC government has significant authority to regulate our PRC operations at any time.
Any failure to or delay in obtaining such approval or complying with such filing requirements, or a rescission of such approval, could subject us to sanctions imposed by the CSRC or other PRC government authorities.” 6 More generally, as a major part of our operations in China is conducted by our PRC subsidiaries, our VIEs and subsidiaries of our VIEs, the PRC government has significant authority to regulate our PRC operations at any time.
Any disciplinary actions taken against us or penalties imposed on us, our directors, responsible officers, licensed representatives or relevant staff could have an adverse impact on our business operations and financial results. In addition, our operations in Southeast Asian countries are subject to licensing and other regulatory requirements, the compliance of which will incur additional costs.
Any disciplinary actions taken against us or penalties imposed on us, our directors, responsible officers, licensed representatives or relevant staff could have an adverse impact on our business operations and financial results. 23 In addition, our operations in Southeast Asian countries are subject to licensing and other regulatory requirements, the compliance of which will incur additional costs.
Business Overview—Regulation—Regulations Related to Our Business Operation in China—Regulations Related to Employee Stock Incentive Plans.” The State Administration of Taxation has issued certain circulars concerning employee stock options and restricted shares. Under these circulars, our employees working in China who exercise stock options or are granted restricted shares will be subject to PRC individual income tax.
Business Overview—Regulation—Regulations Related to Our Business Operation in China—Regulations Related to Employee Stock Incentive Plans.” 43 The State Administration of Taxation has issued certain circulars concerning employee stock options and restricted shares. Under these circulars, our employees working in China who exercise stock options or are granted restricted shares will be subject to PRC individual income tax.
We could also be perceived to have facilitated or participated in the illegal misappropriation of funds, documents or data, or the failure to follow protocol, and therefore be subject to civil or criminal liability. We are subject to consumer protection laws that could require us to modify our current business practices and incur increased costs.
We could also be perceived to have facilitated or participated in the illegal misappropriation of funds, documents or data, or the failure to follow protocol, and therefore be subject to civil or criminal liability. 15 We are subject to consumer protection laws that could require us to modify our current business practices and incur increased costs.
However, Han Kun Law Offices has also advised us that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations and there can be no assurance that the PRC government will ultimately take a view that is consistent with the opinion of our PRC counsel.
However, Han Kun Law Offices has also advised us that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations and there can be no assurance that the PRC government will ultimately take a view that is consistent with the opinion of our PRC legal counsel.
On February 24, 2023, the CSRC published the Confidentiality and Archives Rules, pursuant to which, the working papers and other files produced in the PRC by sponsors, underwriters and securities service institutions that provide PRC domestic companies with relevant securities services during the overseas securities offering and listing by such domestic companies shall be stored in PRC.
On February 24, 2023, the CSRC further published the Confidentiality and Archives Rules, pursuant to which, the working papers and other files produced in the PRC by sponsors, underwriters and securities service institutions that provide PRC domestic companies with relevant securities services during the overseas securities offering and listing by such domestic companies shall be stored in PRC.
Some of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. 25 In addition, we invest significant time and expenses in training our employees, which increases their value to competitors who may seek to recruit them.
Some of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment. In addition, we invest significant time and expenses in training our employees, which increases their value to competitors who may seek to recruit them.
In order to address the uncertainty with respect to the compliance matter discussed above, we have removed our MetaStock app from app stores for the PRC region. In addition, our employees or business partners may engage in certain activities in relation to which the authorities would require permits or licenses.
In order to address the uncertainty with respect to the compliance matter discussed above, we have removed our MetaStock app from app stores for the PRC region. 10 In addition, our employees or business partners may engage in certain activities in relation to which the authorities would require permits or licenses.
If any of such events occurs, our business, financial condition, results of operations and prospects may be materially and adversely affected. Any future change in the regulatory and legal regime for the securities brokerage and wealth management industries may have a significant impact on our business model.
If any of such events occurs, our business, financial condition, results of operations and prospects may be materially and adversely affected. 11 Any future change in the regulatory and legal regime for the securities brokerage and wealth management industries may have a significant impact on our business model.
Risk Factors Risks Related to Our Business and Industry We operate in emerging and evolving industries, and our operations and products have been and may need to be modified in responding to the latest market trends, which makes it difficult to evaluate our future prospects.
Risk Factors 7 Risks Related to Our Business and Industry We operate in emerging and evolving industries, and our operations and products have been and may need to be modified in responding to the latest market trends, which makes it difficult to evaluate our future prospects.
The delisting of our securities, or the threat of their being delisted, may materially and adversely affect the value of your investment.” A. [Reserved] B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. 7 D.
The delisting of our securities, or the threat of their being delisted, may materially and adversely affect the value of your investment.” A. [Reserved] B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D.
As a result, our business and results of operations may be materially and adversely affected. We may be held liable for information or content displayed on, retrieved from or linked to our websites and mobile apps, which may materially and adversely affect our business and operating results.
As a result, our business and results of operations may be materially and adversely affected. 21 We may be held liable for information or content displayed on, retrieved from or linked to our websites and mobile apps, which may materially and adversely affect our business and operating results.
Some of our VIEs and their subsidiaries are additionally required to obtain, and have obtained, an array of operating licenses and permits in connection with their operations, including but not limited to (i) value-added telecommunication business operation licenses for the provision of “internet information services” held by Jiufu Shuke, Beijing Jiufu Puhui Information Technology Co., Ltd., or Jiufu Puhui, Shenzhen Best Quality Mall Science and Trading Co., Ltd., or Best Quality Mall, Beijing Muyu Technology Development Co., Ltd., and Beijing Juhuixuan Technology Co., Ltd., or Beijing Juhuixuan, (ii) value-added telecommunication business operation licenses for the provision of “online data processing and transaction processing services” held by Best Quality Mall and Beijing Juhuixuan, (iii) food operation licenses held by Yi Qi Mai, Beijing Lirongxing Trading Co., Ltd., or Beijing Lirongxing, Best Quality Mall, Beijing Juhuixuan, and Guizhou Diaogong Liquor Co., Ltd., (iv) insurance brokerage license held by Jiuhang Insurance Brokers Co., Ltd., (v) financing guarantee organization business permit held by Xiamen Fucheng Financing Guarantee Co., Ltd., (vi) permit for the production and operation of radio and TV programs held by Beijing Juhuixuan, (vii) qualification certificate for Internet drug information service held by Beijing Juhuixuan, and (viii) publication business operating license held by Beijing Juhuixuan.
Some of our VIEs and their subsidiaries are additionally required to obtain, and have obtained, an array of operating licenses and permits in connection with their operations, including but not limited to (i) value-added telecommunication business operation licenses for the provision of “internet information services” held by Jiufu Shuke, Beijing Jiufu Puhui Information Technology Co., Ltd., or Jiufu Puhui, Shenzhen Best Quality Mall Science and Trading Co., Ltd., or Best Quality Mall, Beijing Muyu Technology Development Co., Ltd., Xiamen Fucheng Financing Guarantee Co., Ltd., and Beijing Juhuixuan Technology Co., Ltd., or Beijing Juhuixuan, (ii) value-added telecommunication business operation licenses for the provision of “online data processing and transaction processing services” held by Best Quality Mall and Beijing Juhuixuan, (iii) food operation licenses held by Yi Qi Mai, Beijing Lirongxing Trading Co., Ltd., or Beijing Lirongxing, Best Quality Mall, Beijing Juhuixuan, and Guizhou Diaogong Liquor Co., Ltd., (iv) permit of professional insurance intermediaries held by Jiuhang Insurance Brokers Co., Ltd., (v) financing guarantee organization business permit held by Xiamen Fucheng Financing Guarantee Co., Ltd., (vi) permit for the production and operation of radio and TV programs held by Beijing Juhuixuan, (vii) qualification certificate for Internet drug information service held by Beijing Juhuixuan, and (viii) publication business operating license held by Beijing Juhuixuan.
If any of the foregoing occurs, our business and results of operations could be materially and adversely affected. 16 Our failure to compete effectively could adversely affect our results of operations and market share. The industries we are operating in and we are expanding into are competitive and evolving.
If any of the foregoing occurs, our business and results of operations could be materially and adversely affected. Our failure to compete effectively could adversely affect our results of operations and market share. The industries we are operating in and we are expanding into are competitive and evolving.
This means that you may not be able to exercise your right to direct the voting of the underlying Class A ordinary shares which are represented by your ADSs, and you may have no legal remedy if the underlying Class A ordinary shares are not voted as you requested. 48 Except in limited circumstances, the depositary for our ADSs will give us a discretionary proxy to vote our Class A ordinary shares underlying your ADSs if you do not instruct the depositary how to vote such shares, which could adversely affect your interests.
This means that you may not be able to exercise your right to direct the voting of the underlying Class A ordinary shares which are represented by your ADSs, and you may have no legal remedy if the underlying Class A ordinary shares are not voted as you requested. 49 Except in limited circumstances, the depositary for our ADSs will give us a discretionary proxy to vote our Class A ordinary shares underlying your ADSs if you do not instruct the depositary how to vote such shares, which could adversely affect your interests.
For example, foreign investors are generally not allowed to own more than 50% of the equity interests in a value-added telecommunication service provider except for those engaged in e-commerce businesses, domestic multi-party communications services businesses, store-and-forward businesses and call center businesses, which may be 100% owned by foreign investors in accordance with the Negative List and other applicable laws and regulations.
Pursuant to the Negative List, foreign investors are generally not allowed to own more than 50% of the equity interests in a value-added telecommunication service provider except for those engaged in e-commerce businesses, domestic multi-party communications services businesses, store-and-forward businesses and call center businesses, which may be 100% owned by foreign investors in accordance with the Negative List and other applicable laws and regulations.
In addition, on December 28, 2021, the CAC and several other governmental agencies jointly issued the Review Measures, which became effective on February 15, 2022.
In addition, on December 28, 2021, the CAC and several other governmental agencies jointly issued the Cybersecurity Review Measures, which became effective on February 15, 2022.
This means that you may not receive distributions we make on our Class A ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs. 49 You may be subject to limitations on transfer of your ADSs.
This means that you may not receive distributions we make on our Class A ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs. 50 You may be subject to limitations on transfer of your ADSs.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. It may be difficult for overseas regulators to conduct investigation or collect evidence within China.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. It may be difficult for overseas regulators to conduct investigations or collect evidence within China.
GAAP and the financial reporting requirements set forth by the SEC; (2) a lack of proper documentation in support of certain accounting transactions and for the facilitation of the audit process and a lack of proper documentation in support of our investment values and impairment analysis; and (3) a lack of sufficient policies and procedures to monitor the accounting treatment of complex financial instruments.
GAAP and the financial reporting requirements set forth by the SEC; (2) a lack of proper documentation in support of certain accounting transactions and for the facilitation of the audit process and a lack of proper documentation in support of our investment values, credit losses and impairment analysis; and (3) a lack of sufficient policies and procedures to monitor the accounting treatment of complex financial instruments.
Upon any sale, transfer, assignment or disposition of any Class B ordinary shares by a holder thereof to any non-affiliate to such holder, or upon a change of control of any Class B ordinary shares to any person who is not an affiliate of the registered holder of such Class B ordinary shares, each of such Class B ordinary shares will be automatically and immediately be converted into one Class A ordinary share. 47 Mr.
Upon any sale, transfer, assignment or disposition of any Class B ordinary shares by a holder thereof to any non-affiliate to such holder, or upon a change of control of any Class B ordinary shares to any person who is not an affiliate of the registered holder of such Class B ordinary shares, each of such Class B ordinary shares will be automatically and immediately be converted into one Class A ordinary share.
We may not have enough business insurance coverage. Insurance companies in China and in certain other regions that we operate currently do not offer as extensive an array of insurance products as insurance companies in more developed economies. Currently, we do not have any business liability or disruption insurance to cover our operations.
We do not have business insurance coverage. Insurance companies in China and in certain other regions that we operate currently do not offer as extensive an array of insurance products as insurance companies in more developed economies. Currently, we do not have any business liability or disruption insurance to cover our operations.
However, in connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2023, we and our independent registered public accounting firm identified three material weaknesses in our internal control over financial reporting.
However, in connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2024, we and our independent registered public accounting firm identified three material weaknesses in our internal control over financial reporting.
As of March 31, 2024, we have five responsible officers to supervise Type 1 (dealing in securities) activities, four responsible officers to supervise Type 2 (dealing in future contracts) activities, five responsible officers for Type 4 (advising on securities), four responsible officers to supervise Type 5 (advising on futures contracts) activities, and five responsible officers for Type 9 (asset management) activities under the SFO, and are in compliance with the laws and regulations in Hong Kong.
As of March 31, 2025, we have five responsible officers to supervise Type 1 (dealing in securities) activities, two responsible officers to supervise Type 2 (dealing in future contracts) activities, five responsible officers for Type 4 (advising on securities), four responsible officers to supervise Type 5 (advising on futures contracts) activities, and four responsible officers for Type 9 (asset management) activities under the SFO, and are in compliance with the laws and regulations in Hong Kong.
Controls and Procedures—Management’s Plan for Remediation of Material Weaknesses.” However, we cannot assure you that the implementation of these measures will be sufficient to eliminate such material weaknesses, or that material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future.
See “Item 15. Controls and Procedures—Management’s Plan for Remediation of Material Weaknesses.” However, we cannot assure you that the implementation of these measures will be sufficient to eliminate such material weaknesses, or that material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future.
Our e-commerce business is currently offered through third-party e-commerce platforms and covers seven major categories of merchandise. We are subject to numerous PRC laws and regulations that regulate retailers generally or govern online retailers specifically, such as the Consumer Protection Law.
Our e-commerce business is currently offered through third-party e-commerce platforms and covers seven major categories of merchandise. We are subject to numerous PRC laws and regulations that regulate retailers generally or govern online retailers specifically, such as the Consumers’ Rights Protection Law.
Pursuant to the PRC Consumer Protection Law, except for certain types of products, such as custom-made goods, fresh and perishable goods, consumers are generally entitled to return goods purchased within seven days upon receipt without giving any reasons if they purchased the goods over the internet.
Pursuant to the PRC Consumers’ Rights Protection Law, except for certain types of products, such as custom-made goods, fresh and perishable goods, consumers are generally entitled to return goods purchased within seven days upon receipt without giving any reasons if they purchased the goods over the internet.
Any such penalties may disrupt our business operations or materially and adversely affect our business, financial condition and results of operations. 37 In addition, we offer a suite of wealth management products to investors. In 2017, we expanded our product suite to include domestic and international investment options including stock, insurance and mutual funds.
Any such penalties may disrupt our business operations or materially and adversely affect our business, financial condition and results of operations. In addition, we offer a suite of wealth management products to investors. In 2017, we expanded our product suite to international investment options including stock, insurance and mutual funds.
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 us, our users, or our industries or listed companies in general; ● conditions in our industries; ● announcements of studies and reports relating to the quality of our products and service offerings or those of our competitors; ● actual or anticipated fluctuations in our interim results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● announcements by us or our competitors of new products and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments; ● additions to or departures of our senior management; ● detrimental negative publicity about us, our management or our industry; ● trends in the global economy in general or the Chinese economy in particular; ● rising international geopolitical tensions; ● fluctuations of exchange rates between the Renminbi and the U.S. dollar; and ● sales or perceived potential sales of additional Class A ordinary shares or ADSs. 46 Substantial future sales or perceived potential sales of our ADSs or Class A ordinary shares in the public market could cause the price of our ADSs to decline.
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 us, our users, or our industries or listed companies in general; ● conditions in our industries; ● announcements of studies and reports relating to the quality of our products and service offerings or those of our competitors; ● actual or anticipated fluctuations in our interim results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; 47 ● announcements by us or our competitors of new products and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments; ● additions to or departures of our senior management; ● detrimental negative publicity about us, our management or our industry; ● trends in the global economy in general or the Chinese economy in particular; ● rising international geopolitical tensions; ● fluctuations of exchange rates between the Renminbi and the U.S. dollar; and ● sales or perceived potential sales of additional Class A ordinary shares or ADSs.
Because we control the VIEs through contractual arrangements, neither us nor our subsidiaries are able to make direct capital contribution to the VIEs or their respective subsidiaries. 2 The following table describes transfers among us, our subsidiaries and the VIEs made during the periods presented: Year Ended December 31, 2023 (2) (RMB in millions) Capital contributions from us to our offshore subsidiaries (1) nil Loans from us to our offshore subsidiaries nil Capital contributions from us or our offshore subsidiaries to PRC subsidiaries nil Loans from us or our offshore subsidiaries to PRC subsidiaries nil Loans from our subsidiaries to the VIEs, net nil Other amounts paid by our subsidiaries to the VIEs nil Other amounts paid by the VIEs and their subsidiaries to our subsidiaries 7.5 Notes: (1) “Offshore subsidiaries” refer to all of our subsidiaries except our PRC subsidiaries.
Because we control the VIEs through contractual arrangements, neither us nor our subsidiaries are able to make direct capital contribution to the VIEs or their respective subsidiaries. 2 The following table describes transfers among us, our subsidiaries and the VIEs made during the periods presented: Year Ended December 31, 2024 (RMB in millions) Capital contributions from us to our offshore subsidiaries (1) nil Loans from us to our offshore subsidiaries nil Capital contributions from us or our offshore subsidiaries to PRC subsidiaries nil Loans from us or our offshore subsidiaries to PRC subsidiaries nil Loans from our subsidiaries to the VIEs, net nil Other amounts paid by our subsidiaries to the VIEs 6.0 Other amounts paid by the VIEs and their subsidiaries to our subsidiaries 6.0 Notes: (1) “Offshore subsidiaries” refer to all of our subsidiaries except our PRC subsidiaries.
For example, the amended PRC Consumer Protection Law, which became effective in March 2014, strengthens the protection of consumers and imposes more stringent requirements and obligations on business operators, especially on businesses that operate on the internet.
For example, the amended PRC Consumers’ rights Protection Law, which became effective in March 2014, strengthens the protection of consumers and imposes more stringent requirements and obligations on business operators, especially on businesses that operate on the internet.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. 43 We believe none of our entities outside of China is a PRC resident enterprise for PRC tax purposes.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.
We are a Cayman Islands exempted company and our WFOEs are considered foreign invested enterprises. Our WFOEs (being our wholly foreign-owned PRC subsidiaries) are currently not eligible to apply for the required licenses for providing value-added telecommunication services that foreign ownership and investment is restricted in China.
We are a Cayman Islands exempted company and our WFOEs are considered foreign invested enterprises. Our WFOEs (being our wholly foreign-owned PRC subsidiaries) are currently not eligible to apply for the required licenses for providing value-added telecommunication services that foreign ownership and investment is restricted under the Negative List.
We believe that we were a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our taxable year ended December 31, 2023, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ADSs or ordinary shares.
We believe that we are likely a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for our taxable year ended December 31, 2024, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ADSs or ordinary shares.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect our business and financial condition.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. 36 A severe or prolonged downturn in jurisdictions in which we conduct our business or global economy could materially and adversely affect our business and financial condition.
Pursuant to the Circular on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, issued by the State Administration of Taxation in 2009 with retroactive effect from January 1, 2008, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (a) has an effective tax rate less than 12.5% or (b) does not tax foreign income of its residents, the non-resident enterprise, being the transferor, shall report to the competent tax authority of the PRC resident enterprise this Indirect Transfer.
Pursuant to the Circular on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, issued by the State Administration of Taxation in 2009 with retroactive effect from January 1, 2008, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (a) has an effective tax rate less than 12.5% or (b) does not tax foreign income of its residents, the non-resident enterprise, being the transferor, shall report to the competent tax authority of the PRC resident enterprise this Indirect Transfer. 45 On February 3, 2015, the State Administration of Taxation issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Resident Enterprises, or SAT Public Notice 7.
If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.
If our entities outside of China are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.
Furthermore, if we are a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ADSs or ordinary shares, unless we were to cease to be a PFIC and such U.S.
Furthermore, if we are a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary shares, we generally would continue to be treated as a PFIC with respect to such U.S. Holder for all succeeding years during which such U.S.
Historically, our efforts to build our brand have incurred significant expense, and it is likely that our future marketing efforts will require us to incur significant additional marketing expenses. In 2021, 2022 and 2023, our sales and marketing expenses were RMB165.5 million, RMB62.2 million and RMB27.8 million (US$3.9 million), respectively.
Historically, our efforts to build our brand have incurred significant expense, and it is likely that our future marketing efforts will require us to incur significant additional marketing expenses. In 2022, 2023 and 2024, our sales and marketing expenses were RMB62.2 million, RMB27.8 million and RMB14.1 million (US$1.9 million), respectively.
Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands.
Our corporate affairs are governed by our memorandum and articles of association, as amended from time to time, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands.
In addition, on December 28, 2021, the Cyberspace Administration of China, or the CAC, the NDRC, and several other administrations jointly issued the revised Measures for Cybersecurity Review, or the Review Measures, which became effective on February 15, 2022.
On December 28, 2021, the Cyberspace Administration of China, or the CAC, the National Development and Reform Commission, or the NDRC, and several other administrations jointly issued the revised Measures for Cybersecurity Review, or the Cybersecurity Review Measures, which became effective on February 15, 2022.
See “Item 4. Information on the Company—B. Business Overview—Regulation —Regulations Related to Our Business Operation in China—Regulations Related to Cybersecurity, Data Security and Privacy Protection.” We have implemented internal control procedures to screen the information and content on our websites and mobile apps to ensure their compliance with the APP Provisions and CAC Order No. 5.
Business Overview—Regulation —Regulations Related to Our Business Operation in China—Regulations Related to Cybersecurity, Data Security and Privacy Protection.” We have implemented internal control procedures to screen the information and content on our websites and mobile apps to ensure their compliance with the APP Provisions, CAC Order No. 5 and other applicable PRC laws and regulations.
Our dual-class share structure with different voting rights and the restriction on transfer of Class B ordinary shares will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.
You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs. 48 Our dual-class share structure with different voting rights and the restriction on transfer of Class B ordinary shares will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.
During the extended transition period to realign into a digital technology service provider, our transition efforts may consume a large proportion of our resources.
During the extended transition period to realign into a digital technology and wealth management services provider, our transition efforts may consume a large proportion of our resources.
On December 29, 2023, the Standing Committee of the National People’s Congress issued the amended PRC Company Law, which will come into effect on July 1, 2024 and supersede the existing PRC Company Law. The amended PRC Company Law provides more stringent requirements on capital contribution of a company established in the PRC.
On December 29, 2023, the Standing Committee of the National People’s Congress, or the SCNPC, issued the amended PRC Company Law, which came into effect on July 1, 2024. The amended PRC Company Law provides more stringent requirements on capital contribution of a company established in the PRC.
In light of the flood of capital outflows of China in 2016 due to the weakening RMB, the PRC government has imposed more restrictive foreign exchange policies and stepped up scrutiny of major outbound capital movement. More restrictions and a substantial vetting process were put in place by the SAFE to regulate cross-border transactions falling under the capital account.
In recent years, the PRC government has imposed more restrictive foreign exchange policies and stepped up scrutiny of major outbound capital movement. More restrictions and a substantial vetting process were put in place by the SAFE to regulate cross-border transactions falling under the capital account.
Failure by such shareholders or beneficial owners to comply with SAFE Circular 37 and other outbound investment related regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries, could subject us or our shareholders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries’ ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and prospects. 42 Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.
Failure by such shareholders or beneficial owners to comply with SAFE Circular 37 and other outbound investment related regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries, could subject us or our shareholders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries’ ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and prospects.
Rising political tensions could reduce levels of trades, investments, technological exchanges, and other economic activities between the two major economies, which would materially and adversely affect global economic conditions and the stability of global financial markets.
Our businesses are materially affected by the financial markets and economic conditions in Hong Kong. Rising political tensions could reduce levels of trades, investments, technological exchanges, and other economic activities between the two major economies, which would materially and adversely affect global economic conditions and the stability of global financial markets.
Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. 35 In addition, if CSRC or other governmental authorities subsequently promulgate new rules or issue explanations mandating that we complete filings or obtain approvals, registrations or other kinds of authorizations for our previous listing and offerings, we cannot assure you that we will be able to obtain such approvals or authorizations, or to complete the required procedures (including filing procedures) or other requirements in a timely manner, or at all, or to obtain any waiver of the aforesaid regulatory requirements if and when procedures are established to obtain such a waiver.
In addition, if CSRC or other governmental authorities subsequently promulgate new rules or issue explanations mandating that we complete filings or obtain approvals, registrations or other kinds of authorizations for our previous listing and offerings, we cannot assure you that we will be able to obtain such approvals or authorizations, or to complete the required procedures (including filing procedures) or other requirements in a timely manner, or at all, or to obtain any waiver of the aforesaid regulatory requirements if and when procedures are established to obtain such a waiver.
These provisions could have the effect of depriving our shareholders and ADS holders of the opportunity to sell their shares or ADSs at a premium over the prevailing market price by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transactions.
These provisions could have the effect of depriving our shareholders and ADS holders of the opportunity to sell their shares or ADSs at a premium over the prevailing market price by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transactions. 52 Our directors and officers have substantial influence over our company and their interests may not be aligned with the interests of our other shareholders.
Therefore, investors in our ADSs are not acquiring any equity interest in our VIEs and their subsidiaries in China but instead are acquiring interest in our Cayman Islands holding company. 29 In the opinion of our PRC counsel, Han Kun Law Offices, subject to the risks disclosed in “—Risks Related to Our Corporate Structure,” our current ownership structure, the ownership structure of our VIEs and their subsidiaries, and the contractual arrangements among certain of our PRC subsidiaries, our VIEs and the shareholders of our VIEs are not in violation of any expressed and mandatory provisions of existing PRC laws, regulations and rules; and these contractual arrangements are valid, binding and enforceable in accordance with their terms and applicable PRC laws and regulations currently in effect.
In the opinion of our PRC legal counsel, Han Kun Law Offices, subject to the risks disclosed in “—Risks Related to Our Corporate Structure,” our current ownership structure, the ownership structure of our VIEs and their subsidiaries, and the contractual arrangements among certain of our PRC subsidiaries, our VIEs and the shareholders of our VIEs are not in violation of any expressed and mandatory provisions of existing PRC laws, regulations and rules; and these contractual arrangements are valid, binding and enforceable in accordance with their terms and applicable PRC laws and regulations currently in effect.
In this respect, we have to ensure continuous compliance with all applicable laws, regulations and guidelines, and satisfy the SFC, the Hong Kong Stock Exchange and/or other regulatory authorities that we remain fit and proper to be licensed.
Furthermore, we are required to be licensed with the regulatory authorities, including without limitation as licensed corporations under the SFO. In this respect, we have to ensure continuous compliance with all applicable laws, regulations and guidelines, and satisfy the SFC, the Hong Kong Stock Exchange and/or other regulatory authorities that we remain fit and proper to be licensed.
Given the novelty of some of the applicable PRC rules and regulations and the fact that others remain in draft forms, there are and will continue to be substantial uncertainties with respect to their interpretation and implementation.
Given the novelty of some of the applicable PRC rules and regulations, there are and will continue to be substantial uncertainties with respect to their interpretation and implementation.
Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.
Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our consolidated financial statements for prior periods.
Any inability to adequately address privacy concerns, even if unfounded, or failure to comply with such standards, could result in inquiries and other proceedings or actions against us by governmental authorities, users, consumers or others, such as warnings, fines, penalties, required rectifications, service suspension or removal of our apps from app stores and/or other sanctions, as well as negative publicity and damage to our reputation, which could cause us to lose customers and business partners and have an adverse effect on our business and results of operations.
Any inability to adequately address privacy concerns, even if unfounded, or failure to comply with such standards, could result in inquiries and other proceedings or actions against us by governmental authorities, users, consumers or others, such as warnings, fines, penalties, required rectifications, service suspension or removal of our apps from app stores and/or other sanctions, as well as negative publicity and damage to our reputation, which could cause us to lose customers and business partners and have an adverse effect on our business and results of operations. 18 Our ability to protect the confidential information of our users and our ability to conduct our business may be adversely affected by cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions.
They may seek to recover their damages from us or bring lawsuits against us which would harm our reputation and adversely affect our business, financial condition and results of operations.
They may seek to recover their damages from us or bring lawsuits against us which would harm our reputation and adversely affect our business, financial condition and results of operations. At the same time, our business also includes financing guarantee services.
In the event that it is more difficult for our users to access and utilize our products and services on their mobile devices, or if our users choose not to access or use our products and services on their mobile devices or to use mobile operating systems that do not offer access to our products and services, we may lose our users and experience a reduction in user retention, and our business and financial condition and operating results may be adversely affected. 19 Our operations depend on the performance of the internet infrastructure and telecommunications networks in China, Hong Kong and in other regions that we operate.
In the event that it is more difficult for our users to access and utilize our products and services on their mobile devices, or if our users choose not to access or use our products and services on their mobile devices or to use mobile operating systems that do not offer access to our products and services, we may lose our users and experience a reduction in user retention, and our business and financial condition and operating results may be adversely affected.
It is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in the ADSs or Class A ordinary shares.
It is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise.
Any adverse social, political or economic conditions, material social unrest, strike, riot, civil disturbance or disobedience, as well as significant natural disasters, may adversely affect our business operations in Hong Kong. 36 Hong Kong is a special administrative region of China and the basic policies of the PRC with respect to Hong Kong are reflected in the Basic Law, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems.” Nevertheless, there is no assurance that there will not be any changes in the economic, political and legal environment in Hong Kong or the political, legal or policy framework governing Hong Kong in the future.
Hong Kong is a special administrative region of China and the basic policies of the PRC with respect to Hong Kong are reflected in the Basic Law, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems.” Nevertheless, there is no assurance that there will not be any changes in the economic, political and legal environment in Hong Kong or the political, legal or policy framework governing Hong Kong in the future.
Our system’s infrastructure is currently deployed through and our data is currently and mainly maintained on third-party cloud computing services platform. Our cloud computing service provider may rely on a limited number of telecommunication service providers to provide it with data communications capacity through local telecommunication lines and internet data centers to host its servers.
Our cloud computing service provider may rely on a limited number of telecommunication service providers to provide it with data communications capacity through local telecommunication lines and internet data centers to host its servers.
Our future growth and results of operations could suffer if we experience difficulties in offering our products and services through our apps on mobile devices, if problems arise with respect to our relationships with providers of mobile operating systems or mobile app stores, or if we have to incur increased costs to distribute or to have users access our apps on mobile devices.
As such, the promotion, distribution and operation of our mobile apps are subject to these app stores’ standard terms and policies for app developers. 19 Our future growth and results of operations could suffer if we experience difficulties in offering our products and services through our apps on mobile devices, if problems arise with respect to our relationships with providers of mobile operating systems or mobile app stores, or if we have to incur increased costs to distribute or to have users access our apps on mobile devices.
If our websites or mobile apps were found to be violating PRC laws and regulations, we may be subject to administrative penalties, including warning, service suspension or removal of our mobile apps from the relevant mobile app store, which may materially and adversely affect our business and operating results. 21 From time to time, we may evaluate and potentially consummate strategic investments or acquisitions, which could require significant management attention, disrupt our business and adversely affect our financial results.
If our websites or mobile apps were found to be violating PRC laws and regulations, we may be subject to administrative penalties, including warning, service suspension or removal of our mobile apps from the relevant mobile app store, which may materially and adversely affect our business and operating results.
If we fail to complete the necessary filing or registration or obtain the necessary approval, our ability to fund our VIEs and their subsidiaries and our PRC subsidiaries may be negatively affected, which could in turn adversely affect their liquidity and ability to fund their working capital and expansion projects and meet their obligations and commitments. 39 Fluctuations in exchange rates could have a material adverse effect on our results of operations and the price of our ADSs.
If we fail to complete the necessary filing or registration or obtain the necessary approval, our ability to fund our VIEs and their subsidiaries and our PRC subsidiaries may be negatively affected, which could in turn adversely affect their liquidity and ability to fund their working capital and expansion projects and meet their obligations and commitments.
If any non-compliance is determined against us, we may be subject to fines and other penalties. 45 In November 2021, the National Anti-monopoly Bureau was inaugurated by the State Council, with the aim to further implement fair competition policies, and strengthen anti-monopoly supervision, particularly the oversight and law enforcement in areas involving platform economy, innovation, science and technology, information security and people’s livelihood, in China.
In November 2021, the National Anti-monopoly Bureau was inaugurated by the State Council, with the aim to further implement fair competition policies, and strengthen anti-monopoly supervision, particularly the oversight and law enforcement in areas involving platform economy, innovation, science and technology, information security and people’s livelihood, in China.
Any failure to obtain or any delay in obtaining CSRC approval for our listing may subject us to sanctions imposed by the CSRC and other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations. 34 Furthermore, the PRC government has indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers.
Any failure to obtain or any delay in obtaining CSRC approval for our listing may subject us to sanctions imposed by the CSRC and other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations.
Taxation—People’s Republic of China Taxation.” We cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the PRC tax authority or we will be able to complete the necessary filings with the PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our PRC subsidiaries to Moore Digital Technology Information Service Limited, our Hong Kong subsidiary. 44 We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
Taxation—People’s Republic of China Taxation.” We cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the PRC tax authority or we will be able to complete the necessary filings with the PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our PRC subsidiaries to our Hong Kong subsidiary.
We could be adversely affected if legislation or regulations in China, Hong Kong and elsewhere in the world where we have business operations or are expanding into, require changes in business practices or privacy policies, or if the governmental authorities in China, Hong Kong and elsewhere in the world where we have business operations or are expanding into, interpret or implement their legislation or regulations in ways that negatively affect our business, financial condition and results of operations. 17 For comprehensive discussions on the PRC laws and regulations with respect to cybersecurity, data security and privacy protection issues, see “Item 4.
We could be adversely affected if legislation or regulations in China, Hong Kong and elsewhere in the world where we have business operations or are expanding into, require changes in business practices or privacy policies, or if the governmental authorities in China, Hong Kong and elsewhere in the world where we have business operations or are expanding into, interpret or implement their legislation or regulations in ways that negatively affect our business, financial condition and results of operations.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeIn accordance with the Measures, data processors will be subject to security assessment conducted by the CAC prior to any cross-border transfer of data if the transfer involves (i) important data; (ii) personal information transferred overseas by operators of critical information infrastructure or a data processor that has processed personal data of more than one million persons; (iii) personal information transferred overseas by a data processor who has already provided personal data of 100,000 persons or sensitive personal data of 10,000 persons overseas since January 1 of last year; or (iv) other circumstances as requested by the CAC.
Biggest changeIn accordance with such regulations to provide data abroad under any of the following circumstances, a data processor must apply to the national cyberspace authority for data security assessment through the provincial-level cyberspace administration authority: (i) outbound transfer of important data by a data processor, (ii) outbound transfer of personal information by a critical information infrastructure operator; (iii) outbound transfer of personal information by a personal information processor who has made outbound transfers of the personal information (excluding sensitive personal information) of 1,000,000 people cumulatively or the sensitive personal information of 10,000 people cumulatively since January 1 of the current year, and (iv) other circumstances where an application for the security assessment for an outbound data transfer is required as prescribed by the national cyberspace administration authority.
Currently, we are offering the following services to our users through Metaverse Securities Limited, a licensed entity: ● real time trading information and professional news push notification services in relation to Hong Kong and U.S.-listed securities; ● online whole-process account opening services that satisfies Hong Kong SFC requirements using facial recognition and e-signatures; 56 ● convenient transfer, FPS and EDDA deposit and withdrawal services; ● multi-category trading services that help investors’ seize market opportunities; and ● comprehensive account design services that offer affordable investment opportunities in a wide array of securities and securities markets.
Currently, we are offering the following services to our users through Metaverse Securities Limited, a licensed entity: ● real time trading information and professional news push notification services in relation to Hong Kong and U.S.-listed securities; ● online whole-process account opening services that satisfies Hong Kong SFC requirements using facial recognition and e-signatures; ● convenient transfer, FPS and EDDA deposit and withdrawal services; ● multi-category trading services that help investors’ seize market opportunities; and ● comprehensive account design services that offer affordable investment opportunities in a wide array of securities and securities markets.
If our offshore entities are deemed PRC resident enterprises, these entities may be subject to the enterprise income tax at the rate of 25% on their global incomes, except that the dividends distributed by our PRC subsidiaries may be exempt from the enterprise income tax to the extent such dividends are deemed “dividends among qualified resident enterprises.” Regulations related to value-added tax and business tax The Provisional Regulations of the PRC on Value-added Tax were issued by the State Council on December 13, 1993 and came into effect on January 1, 1994, which was subsequently amended in 2008, 2016 and 2017.
If our offshore entities are deemed PRC resident enterprises, these entities may be subject to the enterprise income tax at the rate of 25% on their global incomes, except that the dividends distributed by our PRC subsidiaries may be exempt from the enterprise income tax to the extent such dividends are deemed “dividends among qualified resident enterprises.” 80 Regulations related to value-added tax and business tax The Provisional Regulations of the PRC on Value-added Tax were issued by the State Council on December 13, 1993 and came into effect on January 1, 1994, which was subsequently amended in 2008, 2016 and 2017.
Beijing Juhuixuan holds a publication business operating license for the wholesale and online sales of books, which will remain valid until April 2028. Regulations Related to Product Quality and Consumer Protection The Product Quality Law applies to all production and sale activities in China. Pursuant to this law, products offered for sale must satisfy relevant quality and safety standards.
Beijing Juhuixuan holds a publication business operating license for the wholesale and online sales of books, which will remain valid until April 2028. 69 Regulations Related to Product Quality and Consumer Protection The Product Quality Law applies to all production and sale activities in China. Pursuant to this law, products offered for sale must satisfy relevant quality and safety standards.
On July 3, 2017, the Ministry of Industry and Information Technology issued the Administration Measures for the Licensing of Telecommunication Business, which became effective on September 1, 2017. Pursuant to the Measures, a commercial operator of value-added telecommunication services must first obtain an operating license for value-added telecommunication businesses, or the VATS License.
On July 3, 2017, the Ministry of Industry and Information Technology, or the MIIT, issued the Administration Measures for the Licensing of Telecommunication Business, which became effective on September 1, 2017. Pursuant to the Measures, a commercial operator of value-added telecommunication services must first obtain an operating license for value-added telecommunication businesses, or the VATS License.
We have also deployed an intelligent operating system that is capable of providing optimized risk management and highly customized information pushing service to millions of our users. For our technology empowerment service, we have deployed technologies to support the offerings of both intelligent risk management service as well as targeted marketing services.
We have also deployed an intelligent operating system that is capable of providing optimized risk management and highly customized information pushing service to millions of our users. 57 For our technology empowerment service, we have deployed technologies to support the offerings of both intelligent risk management service as well as targeted marketing services.
A telecommunication services operator engaged in online data processing and transaction processing services shall obtain a VATS License for “online data processing and transaction processing services.” The “information services” refer to the information services provided for users via the public communication network or the internet and by the information collection, development, processing and construction of information platforms.
A telecommunication services operator engaged in online data processing and transaction processing services shall obtain a VATS License for “online data processing and transaction processing services.” 65 The “information services” refer to the information services provided for users via the public communication network or the internet and by the information collection, development, processing and construction of information platforms.
(formerly known as Shanghai Jiufu Network Co., Ltd.) in August 2014 in China as wholly-owned subsidiaries of Moore Digital Technology Information Service Limited. In August 2014, Shuzhi Lianyin obtained effective control over Jiufu Shuke and Beijing Puhui through a series of contractual arrangements.
(formerly known as Shanghai Jiufu Network Co., Ltd.) in August 2014 in China as wholly-owned subsidiaries of Moore Digital Technology Information Service Limited. 54 In August 2014, Shuzhi Lianyin obtained effective control over Jiufu Shuke and Beijing Puhui through a series of contractual arrangements.
Furthermore, we are in the process of applying for trademark registrations in other regions we operate in. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology.
Furthermore, we are in the process of applying for trademark registrations in other regions we operate in. 58 Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology.
This ordinance also requires a person to report his knowledge or suspicion of terrorist property to an authorized officer and failure to make such disclosure constitutes an offence under this ordinance. C.
This ordinance also requires a person to report his knowledge or suspicion of terrorist property to an authorized officer and failure to make such disclosure constitutes an offence under this ordinance. 89 C.
Cybersecurity reviews focus on assessing the national security risks associated with relevant subjects or circumstances, mainly taking the following factors into account: (i) the risk of illegal control, interference or destruction of critical information infrastructure arising from the purchase and utilization of network products and services; (ii) the potential harm on the business continuity of critical information infrastructure incurring from a disruption of network products and services supply; (iii) the safety, openness, transparency, diversity of sources of Network Products and Services; the reliability of suppliers; and the risk of supply disruption due to political, diplomatic, trade and other reasons; (iv) the level of compliance with PRC laws, administrative regulations and ministry rules of the suppliers of Network Products and Services; (v) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or illegally transferred abroad; (vi) in connection with the listing of a company, the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or used with malicious intent by foreign governments, as well as the risk relating to network information security; and (vii) other factors that may harm critical information infrastructure security, cyber security and/or data security. 70 Furthermore, on August 17, 2021, the State Council issued the Provisions on Protection of Critical Information Infrastructure Security, which took effect on September 1, 2021 and provides that “critical information infrastructures” refers to important network facilities and information systems involved in important industries and fields such as public communication and information services, energy, transportation, water conservancy, finance, public services, e-government, national defense related science and technology industry, as well as those which may seriously endanger national security, national economy and citizen’s livelihood and public interests if damaged, malfunctioned, or if leakage of data relating thereto occurs.
Cybersecurity reviews focus on assessing the national security risks associated with relevant subjects or circumstances, mainly taking the following factors into account: (i) the risk of illegal control, interference or destruction of critical information infrastructure arising from the purchase and utilization of network products and services; (ii) the potential harm on the business continuity of critical information infrastructure incurring from a disruption of network products and services supply; (iii) the safety, openness, transparency, diversity of sources of Network Products and Services; the reliability of suppliers; and the risk of supply disruption due to political, diplomatic, trade and other reasons; (iv) the level of compliance with PRC laws, administrative regulations and ministry rules of the suppliers of Network Products and Services; (v) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or illegally transferred abroad; (vi) in connection with the listing of a company, the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or used with malicious intent by foreign governments, as well as the risk relating to network information security; and (vii) other factors that may harm critical information infrastructure security, cyber security and/or data security. 71 Furthermore, on July 30, 2021, the State Council issued the Provisions on Protection of Critical Information Infrastructure Security, which took effect on September 1, 2021 and provides that “critical information infrastructures” refers to important network facilities and information systems involved in important industries and fields such as public communication and information services, energy, transportation, water conservancy, finance, public services, e-government, national defense related science and technology industry, as well as those which may seriously endanger national security, national economy and citizen’s livelihood and public interests if damaged, malfunctioned, or if leakage of data relating thereto occurs.
As of March 31, 2024, through Metaverse Securities Limited, we have registered and maintained the following licenses from the SFC: (i) Type 1 License, effective since December 17, 2010, for conducting regulated activities related to dealing in securities; (ii) Type 4 License, effective since June 24, 2003, for conducting regulated activities related to advising on securities; (iii) Type 5 License, effective since June 24, 2003, for conducting regulated activities related to advising on futures contracts; and (iv) Type 9 License, effective since June 24, 2003, for conducting regulated activities related to asset management.
As of March 31, 2025, through Metaverse Securities Limited, we have registered and maintained the following licenses from the SFC: (i) Type 1 License, effective since December 17, 2010, for conducting regulated activities related to dealing in securities; (ii) Type 4 License, effective since June 24, 2003, for conducting regulated activities related to advising on securities; (iii) Type 5 License, effective since June 24, 2003, for conducting regulated activities related to advising on futures contracts; and (iv) Type 9 License, effective since June 24, 2003, for conducting regulated activities related to asset management.
On December 8, 2022, the Ministry of Industry and Information Technology issued the Administrative Measures for Data Security in the Field of Industry and Information Technology (Trial), which stipulates that all businesses which handle data in the field of industry and informatization in China are required to categorize such information as “ordinary,” “important” or “core” and businesses processing “important” or “core” data shall comply with certain filing and reporting obligations.
On December 8, 2022, the MIIT issued the Administrative Measures for Data Security in the Field of Industry and Information Technology (Trial), which stipulates that all businesses which handle data in the field of industry and informatization in China are required to categorize such information as “ordinary,” “important” or “core” and businesses processing “important” or “core” data shall comply with certain filing and reporting obligations.
Business Overview We are a digital technology service provider aiming to empower institutional partners with advanced financial technologies as well as attract investors with investment opportunities that come with the vast potential of China’s new consumer economy and the appreciation of global assets and access to quality products at competitive price.
Business Overview We are a digital technology and wealth management service provider aiming to empower institutional partners with advanced financial technologies as well as attract investors with investment opportunities that come with the vast potential of China’s new consumer economy and the appreciation of global assets and access to quality products at competitive price.
As of March 31, 2024, through Meta Futures Limited, we have registered and maintained the following licenses from the SFC: (i) Type 2 License, effective since November 9, 2022, for conducting regulated activities related to dealing in future contracts; and (ii) Type 5 License, effective since November 9, 2022, for conducting regulated activities related to advising on futures contracts.
As of March 31, 2025, through Meta Futures Limited, we have registered and maintained the following licenses from the SFC: (i) Type 2 License, effective since November 9, 2022, for conducting regulated activities related to dealing in future contracts; and (ii) Type 5 License, effective since November 9, 2022, for conducting regulated activities related to advising on futures contracts.
The People’s Bank of China and other governmental authorities issued a series of administrative rules and regulations to specify the anti-money laundering obligations of financial institutions and certain non-financial institutions, such as insurance brokerage companies, insurance agencies and payment institutions. However, the State Council has not promulgated a list of the non-financial institutions subject to anti-money laundering obligations.
However, the State Council has not promulgated a list of such other institutions subject to anti-money laundering obligations. In addition, the People’s Bank of China and other governmental authorities issued a series of administrative rules and regulations to specify the anti-money laundering obligations of financial institutions and certain non-financial institutions, such as insurance brokerage companies, insurance agencies and payment institutions.
(formerly known as Xinjiang Jiufu Onecard Information Technology Co., Ltd.), a wholly-owned subsidiary of Yi Qi Mai through Beijing Lirongxing, and Zhuhai Onecard Xiaojin Technology Co., Ltd. (formerly known as Zhuhai Jiufu Xiaojin Technology Co., Ltd.), a wholly-owned subsidiary of Zhuhai Lianyin. Shuzhi Lianyin provides technical support to our operations.
(formerly known as Xinjiang Jiufu Onecard Information Technology Co., Ltd.), a wholly-owned subsidiary of Yi Qi Mai through Beijing Lirongxing, and Guangxi Onecard AI Technology Co., Ltd. (formerly known as Zhuhai Onecard Xiaojin Technology Co., Ltd. and Zhuhai Jiufu Xiaojin Technology Co., Ltd.), a wholly-owned subsidiary of Zhuhai Lianyin. Shuzhi Lianyin provides technical support to our operations.
Accordingly, we treat our VIEs as our consolidated entities under U.S. GAAP and we consolidate the financial results of our VIEs. 54 We currently conduct substantially all of our operations through our subsidiaries in China, Hong Kong and elsewhere, and our VIEs and their subsidiaries.
Accordingly, we treat our VIEs as our consolidated entities under U.S. GAAP and we consolidate the financial results of our VIEs. We currently conduct substantially all of our operations through our subsidiaries in China, Hong Kong and elsewhere in Asia, and our VIEs and their subsidiaries.
In order to ensure that security vulnerabilities in network products are fixed on a timely basis and reasonably reported, network product providers should perform certain obligations on the management of security vulnerabilities in their network products, including, among others, reporting the relevant vulnerability information to the Cybersecurity Threat and Vulnerability Information Sharing Platform of the Ministry of Industry and Information Technology within two days, which shall include the name, model, and version of the product affected by such security vulnerability, as well as the technical characteristics, degree of harm and scope of impact of such vulnerability.
In order to ensure that security vulnerabilities in network products are fixed on a timely basis and reasonably reported, network product providers should perform certain obligations on the management of security vulnerabilities in their network products, including, among others, reporting the relevant vulnerability information to the Cybersecurity Threat and Vulnerability Information Sharing Platform of the MIIT within two days, which shall include the name, model, and version of the product affected by such security vulnerability, as well as the technical characteristics, degree of harm and scope of impact of such vulnerability.
Failure to comply with the Consumer Protection Law may subject business operators to civil liabilities such as refunding purchase prices, replacement of commodities, repairing, ceasing damages, compensation, and restoring reputation, and even subject the business operators or the responsible individuals to criminal penalties when personal damages are involved or if the circumstances are severe.
Failure to comply with the Consumers’ Rights Protection Law may subject business operators to civil liabilities such as refunding purchase prices, replacement of commodities, repairing, ceasing damages, compensation, and restoring reputation, and even subject the business operators or the responsible individuals to criminal penalties when personal damages are involved or if the circumstances are severe.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds the commercial arrangements that establish the variable interest entity structure for a certain part of our operations in China non-compliant with the PRC laws, regulations, and rules, or if these laws, regulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties or be forced to relinquish our interests in our VIEs and may lose the ability to consolidate their financial information.” 67 Pursuant to the Provisions on Administration of Foreign Invested Telecommunications Enterprises, promulgated by the State Council on December 11, 2001 and amended on February 6, 2016, and the Special Administrative Measures for Entry of Foreign Investment (Negative List) (2021 Version), or the Negative List, the ultimate foreign equity ownership in a value-added telecommunications services provider shall not exceed 50%, except for e-commerce business, domestic multi-party communications services business, store-and-forward business and call center business which may be 100% owned by foreign investors.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds the commercial arrangements that establish the variable interest entity structure for a certain part of our operations in China non-compliant with the PRC laws, regulations, and rules, or if these laws, regulations, and rules or the interpretation thereof change in the future, we could be subject to severe penalties or be forced to relinquish our interests in our VIEs and may lose the ability to consolidate their financial information.” Pursuant to the Provisions on Administration of Foreign Invested Telecommunications Enterprises, promulgated by the State Council on December 11, 2001 and amended on February 6, 2016, and the Negative List, the ultimate foreign equity ownership in a value-added telecommunications services provider shall not exceed 50%, except for e-commerce business, domestic multi-party communications services business, store-and-forward business and call center business which may be 100% owned by foreign investors.
In addition, pursuant to the Notice on Promulgation of the Rules on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications jointly issued by the CAC, the Ministry of Industry and Information Technology and certain other government authorities on March 12, 2021, and which took effect on May 1, 2021, “necessary personal information” refers to the personal information necessary for ensuring the normal operation of a mobile app’s basic function services, without which the mobile app cannot achieve its function services.
In addition, pursuant to the Notice on Promulgation of the Rules on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications jointly issued by the CAC, the MIIT and certain other government authorities on March 12, 2021, and which took effect on May 1, 2021, “necessary personal information” refers to the personal information necessary for ensuring the normal operation of a mobile app’s basic function services, without which the mobile app cannot achieve its function services.
Risk Factors—Risks Related to Our Business and Industry—We collect, store, process and use certain personal information and other sensitive data from our users and partners and our business is subject to complex and evolving laws and regulations regarding cybersecurity, information security, privacy and data protection in China and other jurisdictions.” Regulations related to cybersecurity and data security The Standing Committee of the National People’s Congress enacted the Decisions on the Maintenance of Internet Security on December 28, 2000 and further amended such Decisions on August 27, 2009, which may subject persons to criminal liabilities in China for any attempt to use the internet to (i) gain improper entry to a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe upon intellectual property rights.
Risk Factors—Risks Related to Our Business and Industry—We collect, store, process and use certain personal information and other sensitive data from our users and partners and our business is subject to complex and evolving laws and regulations regarding cybersecurity, information security, privacy and data protection in China and other jurisdictions.” 70 Regulations related to cybersecurity and data security The SCNPC enacted the Decisions on the Maintenance of Internet Security on December 28, 2000 and further amended such Decisions on August 27, 2009, which may subject persons to criminal liabilities in China for any attempt to use the internet to (i) gain improper entry to a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe upon intellectual property rights.
Regulations Related to Internet Drug Information Services According to the Provisions on the Administration of Internet Drug Information Services, which was promulgated by China Food and Drug Administration and most recently amended in November 2017, an enterprise publishing drug-related information must obtain a qualification certificate from the provincial-level food and drug administration before it applies for the ICP license or files with the Ministry of Industry and Information Technology or its local provincial-level counterpart.
Regulations Related to Internet Drug Information Services According to the Provisions on the Administration of Internet Drug Information Services, which was promulgated by China Food and Drug Administration and most recently amended in November 2017, an enterprise publishing drug-related information must obtain a qualification certificate from the provincial-level food and drug administration before it applies for the ICP license or files with the MIIT or its local provincial-level counterpart.
Regulations related to social insurance and housing funds Enterprises in China are required by the Social Insurance Law of the PRC promulgated by the Standing Committee of the National People’s Congress in October 2010, effective from July 2011 and amended in December 2018, the Regulations on Management of Housing Provident Fund issued by the State Council in March 2002 which was amended in March 2019, and other related rules and regulations, to participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, an occupational injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government.
Regulations related to social insurance and housing funds Enterprises in China are required by the Social Insurance Law of the PRC promulgated by the SCNPC in October 2010, effective from July 2011 and amended in December 2018, the Regulations on Management of Housing Provident Fund issued by the State Council in March 2002 which was amended in March 2019, and other related rules and regulations, to participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, an occupational injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government.
Pursuant to the Ninth Amendment to the Criminal Law issued by the Standing Committee of the National People’s Congress on August 29, 2015 and becoming effective on November 1, 2015, any ICP License holder that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders, will be subject to criminal liability for (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious loss of evidence of criminal activities; or (iv) other severe situations.
Pursuant to the Ninth Amendment to the Criminal Law issued by the SCNPC on August 29, 2015 and becoming effective on November 1, 2015, any ICP License holder that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders, will be subject to criminal liability for (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious loss of evidence of criminal activities; or (iv) other severe situations.
Risk Factors—Risks Related to Doing Business in China and Hong Kong—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related or finance-related businesses and companies, and any lack of requisite approvals, licenses, permits or filings applicable to our business may have a material adverse effect on our business and results of operations.” Regulations Related to the Engagement of Securities Business within the Territory of the PRC by Foreign-Invested Securities Companies On December 29, 1998, the Standing Committee of the National People’s Congress issued the PRC Securities Law, which was most recently amended on December 28, 2019 and became effective on March 1, 2020.
Risk Factors—Risks Related to Doing Business in China and Hong Kong—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related or finance-related businesses and companies, and any lack of requisite approvals, licenses, permits or filings applicable to our business may have a material adverse effect on our business and results of operations.” 62 Regulations Related to the Engagement of Securities Business within the Territory of the PRC by Foreign-Invested Securities Companies On December 29, 1998, the SCNPC issued the PRC Securities Law, which was most recently amended on December 28, 2019 and became effective on March 1, 2020.
On December 31, 2021, the CAC, the Ministry of Industry and Information Technology, the Ministry of Public Security and the State Administration for Market Regulation jointly issued the Administration Provisions on Algorithmic Recommendation of Internet Information Services, which became effective on March 1, 2022.
On December 31, 2021, the CAC, the MIIT, the Ministry of Public Security and the State Administration for Market Regulation jointly issued the Administration Provisions on Algorithmic Recommendation of Internet Information Services, which became effective on March 1, 2022.
Risk Factors—Risks Related to Our Corporate Structure.” D. Property, Plant and Equipment As of December 31, 2023, our headquarters are located in Hong Kong, consisting of approximately 643 square meters of leased office space, which serves as the center of our product offering and compliance functions.
Risk Factors—Risks Related to Our Corporate Structure.” D. Property, Plant and Equipment As of December 31, 2024, our headquarters are located in Hong Kong, consisting of approximately 767 square meters of leased office space, which serves as the center of our product offering and compliance functions.
The Consumer Protection Law was further amended in October 2013 and became effective in March 2014. The amended Consumer Protection Law further strengthen the protection of consumers and impose more stringent requirements and obligations on business operators, especially on the business operators through the internet.
The Consumers’ Rights Protection Law was further amended in October 2013 and became effective in March 2014. The amended Consumers’ Rights Protection Law further strengthen the protection of consumers and impose more stringent requirements and obligations on business operators, especially on the business operators through the internet.
On November 28, 2019, the CAC, the Ministry of Industry and Information Technology, the Ministry of Public Security and the State Administration for Market Regulation jointly issued the Methods of Identifying Illegal Acts of Apps to Collect and Use Personal Information.
On November 28, 2019, the CAC, the MIIT, the Ministry of Public Security and the State Administration for Market Regulation jointly issued the Methods of Identifying Illegal Acts of Apps to Collect and Use Personal Information.
Also we have 26 representatives employed with both Metaverse Securities Limited and Meta Futures Limited and licensed with the SFC that are eligible to carry out different types of regulated activities for our Hong Kong business under the supervision of our responsible officers.
Also we have 26 professionals employed with both Metaverse Securities Limited and Meta Futures Limited, certain of which are licensed with the SFC that are eligible to carry out different types of regulated activities for our Hong Kong business under the supervision of our responsible officers.
We, through Ether Wealth Management Limited and Lion Global Financial Limited, which were previously each approved as an insurance broker by the Professional Insurance Brokers Association, have been granted Insurance Broker Company by the IA on January 6, 2022 and June 30, 2022, respectively, to carry out both long-term (include linked long-term) and general business.
We, through Ether Wealth Management Limited, which was previously each approved as an insurance broker by the Professional Insurance Brokers Association, have been granted Insurance Broker Company by the IA on January 6, 2022 and June 30, 2022, respectively, to carry out both long-term (include linked long-term) and general business.
The Consumer Protection Law sets out the obligations of business operators and the rights and interests of the consumers in China.
The Consumers’ Rights Protection Law sets out the obligations of business operators and the rights and interests of the consumers in China.
A Notice on Intensifying the Administration of Foreign Investment in Value-Added Telecommunications Services, issued by the Ministry of Industry and Information Technology in July 2006, prohibits domestic telecommunication service providers from leasing, transferring or selling VATS Licenses to any foreign investor in any form, or providing any resources, sites or facilities to any foreign investor for their illegal operation of telecommunication businesses in China.
A Notice on Intensifying the Administration of Foreign Investment in Value-Added Telecommunications Services, issued by the MIIT in July 2006, prohibits domestic telecommunication service providers from leasing, transferring or selling VATS Licenses to any foreign investor in any form, or providing any resources, sites or facilities to any foreign investor for their illegal operation of telecommunication businesses in China.
A licensed insurance broker company is required to comply with the Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules (Cap. 41L), which set out, inter alia, some of the key requirements in relation to the maintenance of minimum share capital and net assets, professional indemnity insurance, client accounts and record keeping.
A licensed insurance broker company is required to comply with the Insurance (Financial and Other Requirements for Licensed Insurance Broker Companies) Rules (Cap. 41L), which set out, inter alia, some of the key requirements in relation to the maintenance of minimum share capital and net assets, professional indemnity insurance, client accounts and record keeping. 86 Licensed insurance brokers are required to comply with the statutory conduct requirements set out in the IO.
On December 29, 2011, the Ministry of Industry and Information Technology issued the Several Provisions on Regulating the Market Order of Internet Information Services, pursuant to which an internet information service provider may not collect any user personal information or provide any such information to third parties without the consent of the user.
On December 29, 2011, the MIIT issued the Several Provisions on Regulating the Market Order of Internet Information Services, pursuant to which an internet information service provider may not collect any user personal information or provide any such information to third parties without the consent of the user.
On October 23, 2019, the SAFE issued SAFE Circular 28, which expressly allows foreign-invested enterprises that do not have equity investments in their approved business scope to use their capital obtained from foreign exchange settlement to make domestic equity investments as long as the investments are real and in compliance with the foreign investment-related laws and regulations.
SAFE Circular 28 expressly allows foreign-invested enterprises that do not have equity investments in their approved business scope to use their capital obtained from foreign exchange settlement to make domestic equity investments as long as the investments are real and in compliance with the foreign investment-related laws and regulations.
Regulations Related to Publication Under the latest Administrative Provisions for the Publication Market, which were jointly promulgated by the National Radio and Television Administration and the Ministry of Commerce on May 31, 2016 and became effective on June 1, 2016, and the Administrative Regulations on Publication, which were promulgated by the State Council on November 29, 2020, an online trading platform that provides services for the distribution and retail of publications shall be approved by the competent publication administrative authority and obtain a publication business operating license.
Regulations Related to Publication Under the latest Administrative Provisions for the Publication Market, which were jointly promulgated by the National Radio and Television Administration and the Ministry of Commerce on May 31, 2016 and amended on December 6, 2024, and the Administrative Regulations on Publication, which were promulgated by the State Council on November 29, 2020, an online trading platform that provides services for the distribution and retail of publications shall be approved by the competent publication administrative authority and obtain a publication business operating license.
See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.” Regulations Related to Food Operation The PRC Food Safety Law, which became effective in June 2009 and was most recently amended by the Standing Committee of the National People’s Congress in April 2021, has adopted a licensing system for food sales or catering services.
See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.” Regulations Related to Food Operation The PRC Food Safety Law, which became effective in June 2009 and was most recently amended by the SCNPC in April 2021, has adopted a licensing system for food sales or catering services.
On July 12, 2021, the CAC, the Ministry of Industry and Information Technology and the Ministry of Public Security jointly issued the Circular of Issuing the Administrative Provisions on Security Vulnerabilities of Network Products, which took effect on September 1, 2021.
On July 12, 2021, the CAC, the MIIT and the Ministry of Public Security jointly issued the Circular of Issuing the Administrative Provisions on Security Vulnerabilities of Network Products, which took effect on September 1, 2021.
In addition, domestic companies are allowed to provide cross-border loans not only to their offshore subsidiaries, but also to their offshore parents. In May 2013, SAFE issued the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Document, which was amended on October 10, 2018.
In addition, domestic companies are allowed to provide cross-border loans not only to their offshore subsidiaries, but also to their offshore parents. In May 2013, SAFE issued the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Document, which was recently amended on December 30, 2019.
Foreign investments and domestic investments in industries outside the scope of the prohibited industries and restricted industries stipulated in the negative list will be treated equally. The most recent version of the negative list was issued in December 2021.
Foreign investments and domestic investments in industries outside the scope of the prohibited industries and restricted industries stipulated in the negative list will be treated equally. The most recent version of the negative list was issued in September 2024.
The Measures requires that a provider of commercial internet information services shall obtain a VATS License for internet information services, or the ICP License. It further requires that a provider of non-commercial internet information services shall carry out record-filing procedures with the provincial level counterparts of the Ministry of Industry and Information Technology.
The Measures requires that a provider of commercial internet information services shall obtain a VATS License for internet information services, or the ICP License. It further requires that a provider of non-commercial internet information services shall carry out record-filing procedures with the provincial level counterparts of the MIIT.
The Cyber Security Law of the PRC, promulgated on November 7, 2016 by the Standing Committee of the National People’s Congress and effective on June 1, 2017, provides that network operators shall perform their cyber security obligations and shall take technical measures and other necessary measures to protect the safety and stability of their networks.
The Cyber Security Law of the PRC, promulgated on November 7, 2016 by the SCNPC and effective on June 1, 2017, provides that network operators shall perform their cyber security obligations and shall take technical measures and other necessary measures to protect the safety and stability of their networks.
The Administrative Measures on Internet Information Services, which was promulgated by the State Council on September 25, 2000 and amended on January 8, 2011, sets out guidelines on the provision of internet information services. Such Measures classifies internet information services into commercial internet information services and non-commercial internet information services.
The Administrative Measures on Internet Information Services, which was promulgated by the State Council on September 25, 2000 and last amended on January 20, 2025, sets out guidelines on the provision of internet information services. Such Measures classifies internet information services into commercial internet information services and non-commercial internet information services.
The providers of algorithmic recommendation services involving public opinion or having the capacity to effect social mobilization shall complete a filing with the CAC’s filing system within ten business days after the launch of such services. On July 21, 2023, the Ministry of Industry and Information Technology issued the Notice of the Record-filing of Mobile Internet Apps.
The providers of algorithmic recommendation services involving public opinion or having the capacity to effect social mobilization shall complete a filing with the CAC’s filing system within ten business days after the launch of such services. 67 On July 21, 2023, the MIIT issued the Notice of the Record-filing of Mobile Internet Apps.
Regulations Related to Online Sales of Securities Investment Funds The Securities Investment Fund Law of the PRC, which was promulgated by the Standing Committee of the National People’s Congress on December 28, 2012 and amended with immediate effect on April 24, 2015, provides the legal framework for regulating securities investment funds.
Regulations Related to Online Sales of Securities Investment Funds The Securities Investment Fund Law of the PRC, which was promulgated by the SCNPC on December 28, 2012 and amended with immediate effect on April 24, 2015, provides the legal framework for regulating securities investment funds.
We collaborate with over 30 suppliers in China and have cumulatively offered over 8,000 products. We also provide 24x7 customer service to assist our customers.
We collaborate with over 50 suppliers in China and have cumulatively offered over 10,000 products. We also provide 24x7 customer service to assist our customers.
Our offices occupy an aggregate leased area of 10,188 square meters in China and 394 square meters in Thailand and Singapore. The lessors of our branch offices are independent third parties, and we plan to renew these leases from time to time as needed.
Our offices occupy an aggregate leased area of 7,864 square meters in China and 549 square meters in Thailand and Singapore. The lessors of our branch offices are independent third parties, and we plan to renew these leases from time to time as needed.
The Regulation further illustrates certain commonly-seen illegal behaviors of apps operators in terms of collection and use of personal information, including “failure to publicize rules for collecting and using personal information,” “failure to expressly state the purpose, manner and scope of collecting and using personal information,” “collection and use of personal information without consent of users of such app,” “collecting personal information irrelevant to the services provided by such app in violation of the principle of necessity,” “providing users’ personal information to others without users’ consent,” “failure to provide the function of deleting or correcting personal information as required by laws” and “failure to publish information such as methods for complaints and reporting.” Among others, any of the following acts of an app operator will constitute “collection and use of personal information without consent of users”: (i) collecting an user’s personal information or activating the permission for collecting any user’s personal information without obtaining such user’s consent; (ii) collecting personal information or activating the permission for collecting personal information of any user who explicitly refuses such collection, or repeatedly seeking for user’s consent such that the user’s normal use of such app is disturbed; (iii) any user’s personal information which has been actually collected by the app operator or the permission for collecting any user’s personal information activated by the app operator is beyond the scope of personal information which such user authorizes the app operator to collect; (iv) seeking for any user’s consent in a non-explicit manner; (v) modifying any user’s settings for activating the permission for collecting any personal information without such user’s consent; (vi) using users’ personal information and any algorithms to directionally push any information, without providing the option of non-directed pushing such information; (vii) misleading users to permit collecting their personal information or activating the permission for collecting such users’ personal information by improper methods such as fraud and deception; (viii) failing to provide users with the means and methods to withdraw their permission of collecting personal information; and (ix) collecting and using personal information in violation of the rules for collecting and using personal information promulgated by such app operator. 73 Furthermore, in order to improve the protection of personal information, the National Information Security Standardization Technical Committee also issued the Guide to Self-evaluation of Collection and Use of Personal Information by Mobile Internet Applications (Apps) on July 22, 2020 regarding the security of information collected and used by operators of mobile apps.
The Regulation further illustrates certain commonly-seen illegal behaviors of apps operators in terms of collection and use of personal information, including “failure to publicize rules for collecting and using personal information,” “failure to expressly state the purpose, manner and scope of collecting and using personal information,” “collection and use of personal information without consent of users of such app,” “collecting personal information irrelevant to the services provided by such app in violation of the principle of necessity,” “providing users’ personal information to others without users’ consent,” “failure to provide the function of deleting or correcting personal information as required by laws” and “failure to publish information such as methods for complaints and reporting.” Among others, any of the following acts of an app operator will constitute “collection and use of personal information without consent of users”: (i) collecting an user’s personal information or activating the permission for collecting any user’s personal information without obtaining such user’s consent; (ii) collecting personal information or activating the permission for collecting personal information of any user who explicitly refuses such collection, or repeatedly seeking for user’s consent such that the user’s normal use of such app is disturbed; (iii) any user’s personal information which has been actually collected by the app operator or the permission for collecting any user’s personal information activated by the app operator is beyond the scope of personal information which such user authorizes the app operator to collect; (iv) seeking for any user’s consent in a non-explicit manner; (v) modifying any user’s settings for activating the permission for collecting any personal information without such user’s consent; (vi) using users’ personal information and any algorithms to directionally push any information, without providing the option of non-directed pushing such information; (vii) misleading users to permit collecting their personal information or activating the permission for collecting such users’ personal information by improper methods such as fraud and deception; (viii) failing to provide users with the means and methods to withdraw their permission of collecting personal information; and (ix) collecting and using personal information in violation of the rules for collecting and using personal information promulgated by such app operator.
Such regulatory requirements were emphasized by the Notice on the Special Rectification of Apps Infringing upon User’s Personal Rights and Interests, which was issued by the Ministry of Industry and Information Technology on October 31, 2019.
Such regulatory requirements were emphasized by the Notice on the Special Rectification of Apps Infringing upon User’s Personal Rights and Interests, which was issued by the MIIT on October 31, 2019.
The specific measures shall be formulated by the securities regulatory agency of the State Council and submitted to the State Council for approval. 62 Pursuant to Article 202 of the PRC Securities Law, any person who establishes a securities company without due authorization, operates securities business illegally or carries out securities business activities as a securities company without approval shall be subject to penalties such as correction orders, confiscation of illegal income and the imposition of a fine ranging from one time to ten times the amount of illegal income (where there is no illegal income or the amount of illegal income is less than RMB1 million, a fine ranging from RMB1 million to RMB10 million shall be imposed).
Pursuant to Article 202 of the PRC Securities Law, any person who establishes a securities company without due authorization, operates securities business illegally or carries out securities business activities as a securities company without approval shall be subject to penalties such as correction orders, confiscation of illegal income and the imposition of a fine ranging from one time to ten times the amount of illegal income (where there is no illegal income or the amount of illegal income is less than RMB1 million, a fine ranging from RMB1 million to RMB10 million shall be imposed).
The Provisions provides certain exemptions for obligations in connection with cross-border data transfer, including the obligations for declaring data security assessment, executing a standard contract for provisions of personal information abroad or being certified for personal information protection.
In addition, the Provisions on Promoting and Regulating Cross-border Data Flow provides certain exemptions for obligations in connection with cross-border data transfer, including the obligations for declaring data security assessment, executing a standard contract for provisions of personal information abroad or being certified for personal information protection. .
Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. 77 Regulations Related to Taxation Regulations related to enterprise income tax On March 16, 2007, the Standing Committee of the National People’s Congress issued the PRC Enterprise Income Tax Law, which was amended on February 24, 2017 and December 29, 2018.
Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. Regulations Related to Taxation Regulations related to enterprise income tax On March 16, 2007, the SCNPC issued the PRC Enterprise Income Tax Law, which was amended on February 24, 2017 and December 29, 2018.
The China Copyright Protection Center shall grant registration certificates to the computer software copyrights applicants which meet the requirements of both the foregoing Measures and the Computer Software Protection Regulations (Revised in 2013). As of December 31, 2023, we had registered 447 software copyrights, 24 work copyrights and 19 patents in the PRC.
The China Copyright Protection Center shall grant registration certificates to the computer software copyrights applicants which meet the requirements of both the foregoing Measures and the Computer Software Protection Regulations (Revised in 2013). As of December 31, 2024, we had registered 411 software copyrights and 31 work copyrights in the PRC.
This ordinance extends the money laundering offence to cover the proceeds of all indictable offences in addition to drug trafficking. 86 United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575) The United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575) provides that it is a criminal offence to (i) provide or collect funds (by any means, directly or indirectly) with the intention or knowledge that the funds will be used to commit, in whole or in part, one or more terrorist acts; or (ii) make any funds or financial (or related) services available, directly or indirectly, to or for the benefit of a person knowing that, or being reckless as to whether, such person is a terrorist or terrorist associate.
United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575) The United Nations (Anti-Terrorism Measures) Ordinance (Cap. 575) provides that it is a criminal offence to (i) provide or collect funds (by any means, directly or indirectly) with the intention or knowledge that the funds will be used to commit, in whole or in part, one or more terrorist acts; or (ii) make any funds or financial (or related) services available, directly or indirectly, to or for the benefit of a person knowing that, or being reckless as to whether, such person is a terrorist or terrorist associate.
The Measures for the Security Review of Foreign Investment further requires that a foreign investor or its domestic affiliate shall apply for clearance of national security review with the working mechanism office before they conduct any investment into any of the following fields: (i) investment in the military industry or military-related industry, and investment in areas in proximity of defense facilities or military establishment; and (ii) investment in any important agricultural product, important energy and resources, critical equipment manufacturing, important infrastructure, important transportation services, important cultural products and services, important information technologies and internet products and services, important financial services, critical technologies and other important fields which concern the national security where actual control over the invested enterprise is obtained. 59 Regulations Related to Insurance Brokerage and Internet Insurance The primary regulation governing the insurance intermediaries is the Insurance Law of the PRC, as amended on April 24, 2015.
The Measures for the Security Review of Foreign Investment further requires that a foreign investor or its domestic affiliate shall apply for clearance of national security review with the working mechanism office before they conduct any investment into any of the following fields: (i) investment in the military industry or military-related industry, and investment in areas in proximity of defense facilities or military establishment; and (ii) investment in any important agricultural product, important energy and resources, critical equipment manufacturing, important infrastructure, important transportation services, important cultural products and services, important information technologies and internet products and services, important financial services, critical technologies and other important fields which concern the national security where actual control over the invested enterprise is obtained.
Pursuant to the Regulation, value-added telecommunication services are defined as telecommunication and information services provided through public networks. 64 The Catalogue of Telecommunication Business, which was issued as an attachment to the foregoing Regulation and updated on February 21, 2003, December 28, 2015 and June 6, 2019, respectively, further categorizes value-added telecommunication services into Class 1 value-added telecommunication services and Class 2 value-added telecommunication services.
The Catalogue of Telecommunication Business, which was issued as an attachment to the foregoing Regulation and updated on February 21, 2003, December 28, 2015 and June 6, 2019, respectively, further categorizes value-added telecommunication services into Class 1 value-added telecommunication services and Class 2 value-added telecommunication services.
Risk Factors—Risks Related to Doing Business in China and Hong Kong—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related or finance-related businesses and companies, and any lack of requisite approvals, licenses, permits or filings applicable to our business may have a material adverse effect on our business and results of operations.” Regulations Related to Anti-money Laundering The PRC Anti-money Laundering Law, promulgated by the Standing Committee of the National People’s Congress on October 31, 2006 and effective since January 1, 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.
Risk Factors—Risks Related to Doing Business in China and Hong Kong—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related or finance-related businesses and companies, and any lack of requisite approvals, licenses, permits or filings applicable to our business may have a material adverse effect on our business and results of operations.” Regulations Related to Anti-money Laundering The PRC Anti-money Laundering Law, promulgated by the SCNPC on October 31, 2006 and last amended on November 8, 2024, 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, retention of clients’ identification information and transactions records, and reports on large transactions and suspicious transactions.
On December 6, 2007, the State Council enacted the Regulations for the Implementation of the Law on Enterprise Income Tax, which was amended on April 23, 2019. Under these law and regulations, both resident enterprises and non-resident enterprises are subject to enterprise income tax in the PRC.
On December 6, 2007, the State Council enacted the Regulations for the Implementation of the Law on Enterprise Income Tax, which was effective in 2008 and was last amended in January 2025. Under these law and regulations, both resident enterprises and non-resident enterprises are subject to enterprise income tax in the PRC.
The conversion of RMB into other currencies and remittance of the converted foreign currency outside the PRC for of capital account items, such as direct equity investments, loans and repatriation of investment, requires the prior approval from SAFE or its local office.
The conversion of RMB into other currencies and remittance of the converted foreign currency outside the PRC for of capital account items, such as direct equity investments, loans and repatriation of investment, requires the prior approval from SAFE or its local office. Payments for transactions that take place within the PRC must be made in RMB.
The shareholders of Jiufu Shuke do not have the right to terminate this agreement or revoke the appointment of the attorney-in-fact without the prior written consent of Shuzhi Lianyin. 88 Exclusive Option Agreements, including Amended and Restated Exclusive Option Agreements Under the exclusive option agreements, or amended and restated exclusive option agreements if applicable, by and among 9F Inc., Shuzhi Lianyin, Jiufu Shuke and each of the shareholders of Jiufu Shuke, each shareholder of Jiufu Shuke irrevocably grants 9F Inc. or its designated person(s) an exclusive option to purchase, at any time and to the extent permitted under PRC law, all or part of his equity interests in Jiufu Shuke at a price equal to the actual capital contribution paid in the registered capital of Jiufu Shuke by such shareholder.
Exclusive Option Agreements, including Amended and Restated Exclusive Option Agreements Under the exclusive option agreements, or amended and restated exclusive option agreements if applicable, by and among 9F Inc., Shuzhi Lianyin, Jiufu Shuke and each of the shareholders of Jiufu Shuke, each shareholder of Jiufu Shuke irrevocably grants 9F Inc. or its designated person(s) an exclusive option to purchase, at any time and to the extent permitted under PRC law, all or part of his equity interests in Jiufu Shuke at a price equal to the actual capital contribution paid in the registered capital of Jiufu Shuke by such shareholder.
On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect in November 2021.
On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect in November 2021.
Also, a licensed corporation is required by the Securities and Futures (Licensing and Registration) (Information) Rules (Cap. 571S) to notify the SFC of certain changes and events, which include, among others, changes in the basic information of the licensed corporation, its controlling persons and responsible officers, or subsidiaries that carry on a business in a regulated activity; changes in the capital and shareholding structure of the licensed corporation; and significant changes in business plan.
There must also be at least one responsible officer available at all times to supervise the licensed corporation’s business of carrying on a regulated activity. 85 Also, a licensed corporation is required by the Securities and Futures (Licensing and Registration) (Information) Rules (Cap. 571S) to notify the SFC of certain changes and events, which include, among others, changes in the basic information of the licensed corporation, its controlling persons and responsible officers, or subsidiaries that carry on a business in a regulated activity; changes in the capital and shareholding structure of the licensed corporation; and significant changes in business plan.
On October 10, 2018, the People’s Bank of China, the China Insurance Regulatory Commission and the CSRC jointly issued the Administrative Measures for Anti-money Laundering and Counter-terrorism Financing by Internet Finance Service Agencies (for Trial Implementation), effective as of January 1, 2019, which specify the anti-money laundering obligations of internet finance service agencies and regulate that the Internet finance service agencies shall (i) adopt continuous customer identification measures; (ii) implement the system for reporting large-value or suspicious transactions; (iii) conduct real-time monitoring of the lists of terrorist organizations and terrorists; and (iv) properly keep the information, data and materials such as customer identification and transaction reports, among other things.
On October 10, 2018, the People’s Bank of China, the China Insurance Regulatory Commission and the CSRC jointly issued the Administrative Measures for Anti-money Laundering and Counter-terrorism Financing by Internet Finance Service Agencies (for Trial Implementation), effective as of January 1, 2019, which specify the anti-money laundering obligations of internet finance service agencies and regulate that the Internet finance service agencies shall (i) adopt continuous customer identification measures; (ii) implement the system for reporting large-value or suspicious transactions; (iii) conduct real-time monitoring of the lists of terrorist organizations and terrorists; and (iv) properly keep the information, data and materials such as customer identification and transaction reports, among other things. 64 On August 12, 2022, the CSRC revised the Measures for the Implementation of Anti-Money Laundering in the Securities and Futures Sector, which reiterates that securities and futures operators shall establish sound anti-money laundering systems in accordance with the laws and report the relevant information to the CSRC and its local branches.
On December 16, 2022, the National Information Security Standardization Technical Committee issued the Practical Guidance on Cybersecurity Standard—the Regulations on Safety Verification in Cross-border Personal Information Processing, which stipulates personal information protection obligations of personal information processor and foreign recipient. On March 22, 2024, the CAC published the Provisions on Promoting and Regulating Cross-border Data Transfer.
On December 16, 2022, the National Information Security Standardization Technical Committee issued the Practical Guidance on Cybersecurity Standard—the Regulations on Safety Verification in Cross-border Personal Information Processing, which stipulates personal information protection obligations of personal information processor and foreign recipient.
The registered shareholders of Yi Qi Mai include Tianjin Yuying Enterprise Management Consulting Partnership (Limited Partnership) and Chengmai Mingjun Management Consulting Partnership (Limited Partnership), who hold 55% and 45% equity interests in Yi Qi Mai, respectively. The registered shareholders of Shenzhen Fuyuan include Dongcheng Zhang and Xiangchun Wu, who hold 60% and 40% equity interests in Shenzhen Fuyuan, respectively.
The registered shareholders of Yi Qi Mai include Tianjin Yuying Enterprise Management Consulting Partnership (Limited Partnership) and Chengmai Mingjun Management Consulting Partnership (Limited Partnership), who hold 55% and 45% equity interests in Yi Qi Mai, respectively.
On March 30, 2015, SAFE issued SAFE Circular 19, which took effective on June 1, 2015. On June 9, 2016, SAFE further issued SAFE Circular 16, which, among other things, amends certain provisions of SAFE Circular 19.
On March 30, 2015, SAFE issued SAFE Circular 19, which took effective on June 1, 2015 and was recently amended on March 23, 2023. On June 9, 2016, SAFE further issued SAFE Circular 16, which, among other things, amends certain provisions of SAFE Circular 19 and was recently amended on December 4, 2023.
Regulations related to income tax for share transfers On February 3, 2015, the State Administration of Taxation issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Resident Enterprises, or SAT Public Notice 7, which partially replaced and supplemented previous rules under the Circular on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698.
A conduit company normally refers to a company that is set up primarily for the purpose of evading or reducing taxes or transferring or accumulating profits. 81 Regulations related to income tax for share transfers On February 3, 2015, the State Administration of Taxation issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Resident Enterprises, or SAT Public Notice 7, which partially replaced and supplemented previous rules under the Circular on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698.
We and our non-resident investors, may be at risk of being required to file a return and being taxed under SAT Public Notice 7 and SAT Bulletin 37, and we may be required to expend valuable resources to comply with SAT Public Notice 7 and SAT Bulletin 37 or to establish that we should not be taxed under these circulars. 79 Regulations Related to Employee Stock Incentive Plans Pursuant to the Notice of Issues Related to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, which was issued by the SAFE on February 15, 2012, employees, directors, supervisors, and other senior management who participate in any stock incentive plan of a publicly-listed overseas company and who are PRC citizens or non-PRC citizens residing in China for a continuous period of no less than one year, subject to a few exceptions, are required to register with the SAFE through a qualified domestic agent, which may be a PRC subsidiary of such overseas listed company, and complete certain other procedures.
Regulations Related to Employee Stock Incentive Plans Pursuant to the Notice of Issues Related to the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, which was issued by the SAFE on February 15, 2012, employees, directors, supervisors, and other senior management who participate in any stock incentive plan of a publicly-listed overseas company and who are PRC citizens or non-PRC citizens residing in China for a continuous period of no less than one year, subject to a few exceptions, are required to register with the SAFE through a qualified domestic agent, which may be a PRC subsidiary of such overseas listed company, and complete certain other procedures.
It also requires that important insurance clauses should be presented on a separate page and be confirmed by policyholders or the insured. 60 According to the Administrative Measures for the Protection of Consumers’ Rights and Interests by Banking and Insurance Institutions issued by the China Banking and Insurance Regulatory Commission on December 26, 2022, banking and insurance institutions shall assume the primary responsibility for the protection of the legitimate rights and interests of consumers, and treat consumers in a fair, equitable and honest manner in the whole process of business operations under appropriate procedures and measures.
According to the Administrative Measures for the Protection of Consumers’ Rights and Interests by Banking and Insurance Institutions issued by the China Banking and Insurance Regulatory Commission on December 26, 2022, banking and insurance institutions shall assume the primary responsibility for the protection of the legitimate rights and interests of consumers, and treat consumers in a fair, equitable and honest manner in the whole process of business operations under appropriate procedures and measures.
Pursuant to the Measures, the insurance institutions shall (i) complete the rectification of the issues on internal protocols, marketing activities, sales management and information disclosure within three months from the effective date thereof; (ii) complete the rectification of other issues on business and operation within six months from the effective date thereof; and (iii) complete the authentication of classified cybersecurity protection of their independently-operated online platforms within twelve months from the effective date thereof.
Pursuant to the Measures, the insurance institutions shall (i) complete the rectification of the issues on internal protocols, marketing activities, sales management and information disclosure within three months from the effective date thereof; (ii) complete the rectification of other issues on business and operation within six months from the effective date thereof; and (iii) complete the authentication of classified cybersecurity protection of their independently-operated online platforms within twelve months from the effective date thereof. 60 On June 22, 2020, the China Banking and Insurance Regulatory Commission published the Notice on Regulating the Backtracking Management of Online Insurance Sales Behavior, with effect from October 1, 2020.
As of December 31, 2023, we have registered 958 trademarks with the Trademark Office of the PRC National Intellectual Property Administration, or the Trademark Office, seven trademarks with overseas authorities, 447 software copyrights and 24 work copyrights with the PRC National Copyright Administration, 68 domain names in the PRC and 16 overseas domain names.
As of December 31, 2024, we have registered 982 trademarks with the Trademark Office of the PRC National Intellectual Property Administration, or the Trademark Office, seven trademarks with overseas authorities, 411 software copyrights and 31 work copyrights with the PRC National Copyright Administration, 59 domain names in the PRC and 17 overseas domain names.
Internet-based information service providers shall perform their responsibilities as the administrators of the account information of internet users, have in place professionals and technical capacity appropriate to the scale of services, and establish, improve and strictly implement the authentication of real identity information, verification of account information, security of information content, ecological governance, emergency responses, protection of personal information and other management systems.
Internet-based information service providers shall perform their responsibilities as the administrators of the account information of internet users, have in place professionals and technical capacity appropriate to the scale of services, and establish, improve and strictly implement the authentication of real identity information, verification of account information, security of information content, ecological governance, emergency responses, protection of personal information and other management systems. 76 On February 12, 2025, the CAC promulgated the Administrative Measures for Personal Information Protection Compliance Audits, which came into effect on May 1, 2025.
However, remedial registration applications made by PRC residents that previously failed to comply with the SAFE Circular 37 continue to fall under the jurisdiction of the local branch of SAFE. 76 In the event that a PRC resident holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from distributing profits to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary.
In the event that a PRC resident holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from distributing profits to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additional capital into its PRC subsidiary.
We have also developed a targeted marketing system, which can integrate data from internal and external sources and, through the operation of our marketing conversion model, deliver marketing information via multiple channels to address the needs of our customers. 57 Sales and Marketing We benefit from a large user base and strong brand recognition, which help to drive our word-of-mouth marketing strategy.
We have also developed a targeted marketing system, which can integrate data from internal and external sources and, through the operation of our marketing conversion model, deliver marketing information via multiple channels to address the needs of our customers.
Once listed overseas, an issuer is further required to report to the CSRC within three business days after the occurrence of any of the following major events: (i) a change of control of the issuer; (ii) the investigation, sanction or other measures undertaken by foreign securities regulatory agencies or relevant competent authorities with respect to the issuer; (iii) change of listing status or transfer of listing segment; and (iv) the voluntary or mandatory delisting of the issuer. 81 Furthermore, on February 24, 2023, the CSRC jointly with other governmental authorities, promulgated the Provisions on Strengthening Confidentiality and Archives Administration in Respect of Overseas Issuance and Listing of Securities by Domestic Enterprises, which came into effect on March 31, 2023.
Once listed overseas, an issuer is further required to report to the CSRC within three business days after the occurrence of any of the following major events: (i) a change of control of the issuer; (ii) the investigation, sanction or other measures undertaken by foreign securities regulatory agencies or relevant competent authorities with respect to the issuer; (iii) change of listing status or transfer of listing segment; and (iv) the voluntary or mandatory delisting of the issuer.
As of December 31, 2023, we have registered 958 trademarks in the PRC. Regulations related to domain names The Ministry of Industry and Information Technology issued the Measures on Administration of Internet Domain Names on August 24, 2017, which became effective on November 1, 2017.
As of December 31, 2024, we have registered 982 trademarks in the PRC. Regulations related to domain names The MIIT issued the Measures on Administration of Internet Domain Names on August 24, 2017, which became effective on November 1, 2017. Pursuant to the Measures, the MIIT is in charge of the administration of PRC internet domain names.
If any prohibited content is found by an internet information service provider, it must immediately stop the transmission thereof, save the relevant records and make a report thereon to the regulatory authorities.
If any prohibited content is found by an internet information service provider, it must immediately stop the transmission thereof, save the relevant records and make a report thereon to the regulatory authorities. Pursuant to the Measures, internet information service providers that violate such prohibition may face criminal charges or administrative sanctions.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

99 edited+36 added−49 removed42 unchanged
Biggest changeYears Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Revenues: Sales income 202,960 26.7 154,906 27.6 142,628 20,089 34.6 Cost of goods sold (59,088 ) (7.8 ) (46,424 ) (8.3 ) (61,654 ) (8,684 ) (14.9 ) Gross Profit 143,872 18.9 108,482 19.3 80,974 11,405 19.6 Post-origination services 39,782 5.2 35,820 6.4 3,629 511 0.9 Technical services 417,566 54.8 327,245 58.3 247,770 34,898 60.1 Others 101,143 13.3 43,696 7.7 18,422 2,595 4.5 Total revenues (excluded cost of goods sold) 761,451 100.0 561,667 100.0 412,449 58,093 100.0 Other operating expenses and fees: Sales and marketing (165,477 ) (21.7 ) (62,243 ) (11.1 ) (27,801 ) (3,916 ) (6.7 ) Origination and servicing (47,094 ) (6.2 ) (69,018 ) (12.3 ) (53,525 ) (7,539 ) (13.0 ) General and administrative (1) (522,820 ) (68.7 ) (374,882 ) (66.7 ) (270,290 ) (38,070 ) (65.5 ) Provision for doubtful contract assets and receivables (22,423 ) (2.9 ) (159,380 ) (28.4 ) (192,756 ) (27,149 ) (46.7 ) Total operating expenses and fees (included cost of goods sold) (816,902 ) (107.3 ) (711,947 ) (126.8 ) (606,026 ) (85,358 ) (146.9 ) Operating Loss (55,451 ) (7.3 ) (150,280 ) (26.8 ) (193,577 ) (27,265 ) (46.9 ) Interest income 47,511 6.2 47,587 8.5 97,669 13,756 23.7 Impairment loss of investments (27,422 ) (3.6 ) (181,820 ) (32.4 ) (27,928 ) (3,934 ) (6.8 ) Impairment loss of goodwill — — (200 ) (0.0 ) (24,809 ) (3,494 ) (6.0 ) Impairment loss of intangible assets and property, equipment and software (2,371 ) (0.3 ) — — — — — Impairment loss of long term prepayment — — (274,996 ) (49.0 ) — — — Gain recognized on remeasurement of previously held equity interest in acquiree 1,874 0.2 — — — — — Unrealized loss of investment in marketable securities (149,071 ) (19.6 ) (47,998 ) (8.5 ) (2,415 ) (340 ) (0.6 ) Dividend income from cost method investments — — 2,230 0.4 875 123 0.2 Loss from disposal of subsidiaries (4,897 ) (0.6 ) (9,265 ) (1.6 ) (75 ) (11 ) (0.0 ) Dividend received from available for sale investment — — — — 2,257 318 0.5 (Loss) gain on held-to-maturity investment (14,096 ) (1.9 ) — — 186 26 0.0 Exchange losses — — (808 ) (0.1 ) (4,289 ) (604 ) (1.0 ) Other income, net 2,355 0.3 12,804 2.3 222 31 0.1 Loss before income tax expense and loss in equity method investments (201,568 ) (26.5 ) (602,746 ) (107.3 ) (151,884 ) (21,394 ) (36.8 ) Income tax expense (26,735 ) (3.5 ) (11,623 ) (2.1 ) (7,745 ) (1,091 ) (1.9 ) Dividend received from equity method investments 1,800 0.2 — — — — — (Loss)/income in equity method investments, net of tax of RMB(10,669), RMB12,019 and RMB18,208 in 2021, 2022 and 2023, respectively (7,167 ) (0.9 ) 19,432 3.5 19,280 2,716 4.7 Net Loss (233,670 ) (30.7 ) (594,937 ) (105.9 ) (140,349 ) (19,769 ) (34.0 ) Note: (1) General and administrative expenses include share-based compensation of RMB52.3 million, RMB5.5 million and RMB72.1 million (US$10.2 million) in 2021, 2022 and 2023, respectively. 98 Revenues Sales income 2023 Compared to 2022.
Biggest changeYears Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Revenues: Sales income 154,906 27.6 142,628 34.6 124,973 17,121 40.3 Cost of goods sold (46,424 ) (8.3 ) (61,654 ) (14.9 ) (29,751 ) (4,076 ) (9.6 ) Gross Profit 108,482 19.3 80,974 19.7 95,222 13,045 30.7 Post-origination services 35,820 6.4 3,629 0.9 5,326 730 1.7 Technical services 327,245 58.3 247,770 60.1 143,648 19,680 46.3 Wealth management 43,696 7.7 18,422 4.4 36,027 4,936 11.7 Total revenues (excluding cost of goods sold) 561,667 100.0 412,449 100.0 309,974 42,467 100.0 Other operating expenses and fees: Sales and marketing (62,243 ) (11.1 ) (27,801 ) (6.7 ) (14,089 ) (1,930 ) (4.6 ) Origination and servicing (69,018 ) (12.3 ) (53,525 ) (13.0 ) (78,097 ) (10,699 ) (25.2 ) General and administrative (1) (374,882 ) (66.7 ) (270,290 ) (65.5 ) (222,928 ) (30,541 ) (71.9 ) Provision for doubtful contract assets and receivables (159,380 ) (28.4 ) (192,756 ) (46.7 ) (10,565 ) (1,447 ) (3.4 ) Total operating expenses and fees (including cost of goods sold) (711,947 ) (126.8 ) (606,026 ) (146.8 ) (355,430 ) (48,693 ) (114.7 ) Operating Loss (150,280 ) (26.8 ) (193,577 ) (46.9 ) (45,456 ) (6,226 ) (14.7 ) Interest income 47,587 8.5 97,669 23.7 84,622 11,593 27.3 Impairment loss of investments (181,820 ) (32.4 ) (27,928 ) (6.8 ) (4,590 ) (629 ) (1.5 ) Impairment loss of goodwill (200 ) (0.0 ) (24,809 ) (6.0 ) — — — Impairment loss of intangible assets and property, equipment and software — — — — (20,488 ) (2,807 ) (6.6 ) Impairment loss of long term prepayment (274,996 ) (49.0 ) — — — — — Unrealized (loss) gain of investment in marketable securities (47,998 ) (8.5 ) (2,415 ) (0.6 ) 5,161 707 1.7 Dividend income from cost method investments 2,230 0.4 875 0.2 1,877 257 0.6 (Loss) income from disposal of subsidiaries (9,265 ) (1.6 ) (75 ) (0.0 ) 754 103 0.2 Dividend received from available for sale investment — — 2,257 0.5 2,294 314 0.7 Gain on held-to-maturity investment — — 186 0.0 179 25 0.1 Exchange (loss) income (808 ) (0.1 ) (4,289 ) (1.0 ) 791 108 0.3 Other income, net 12,804 2.3 222 0.1 1,838 252 0.6 Loss before income tax expense and loss in equity method investments (602,746 ) (107.4 ) (151,884 ) (36.9 ) 26,982 3,697 8.7 Income tax expense (11,623 ) (2.1 ) (7,745 ) (1.9 ) (13,982 ) (1,915 ) (4.5 ) Income from equity method investments, net of tax of, RMB12,019, RMB18,208 and RMB28,337 in 2022, 2023 and 2024, respectively 19,432 3.5 19,280 4.7 37,157 5,090 12.0 Net (loss) income (594,937 ) (106.0 ) (140,349 ) (34.1 ) 50,157 6,872 16.2 Note: (1) General and administrative expenses include share-based compensation (reversal) of RMB5.5 million, RMB(72.1) million and RMB(1.0) million (US$(0.1) million) in 2022, 2023 and 2024, respectively. 100 Revenues Sales income 2024 Compared to 2023 .
For each loan facilitated on our VIE’s platform for our online lending information intermediary services, our VIE charged a service fee to the borrower and the investor each at certain percentage of the loan principal and allocated such fee between loan facilitation services and post-origination services that our VIE provided.
For each loan facilitated on our VIE’s platform for our online lending information intermediary services, our VIE charged a service fee to the borrower and the investor each at a certain percentage of the loan principal and allocated such fee between loan facilitation services and post-origination services that our VIE provided.
Under the Hong Kong Inland Revenue Ordinance, profits derived from sources outside of Hong Kong are generally not subject to Hong Kong profits tax. In addition, payments of dividends from our Hong Kong subsidiaries to our holding company in the Cayman Islands are not subject to any Hong Kong withholding tax.
Under the Hong Kong Inland Revenue Ordinance, profits derived from sources outside of Hong Kong are generally not subject to the Hong Kong profits tax. In addition, payments of dividends from our Hong Kong subsidiaries to our holding company in the Cayman Islands are not subject to any Hong Kong withholding tax.
Risk Factors—Risks Related to Doing Business in China and Hong Kong—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” 93 Critical Accounting Policies Revenue recognition We follow the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent accounting standards updates that modified Topic 606 to account for our revenues.
Risk Factors—Risks Related to Doing Business in China and Hong Kong—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” Critical Accounting Policies Revenue recognition We follow the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) and all subsequent accounting standards updates that modified Topic 606 to account for our revenues.
Risk Factors—Risks Related to Doing Business in China and Hong Kong—We may not be able to obtain certain benefits under the relevant tax treaty on dividends paid by our PRC subsidiaries to us through our Hong Kong subsidiary.” 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 Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
Risk Factors—Risks Related to Doing Business in China and Hong Kong—We may not be able to obtain certain benefits under the relevant tax treaty on dividends paid by our PRC subsidiaries to us through our Hong Kong subsidiary.” 96 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 Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
We incurred expenses in relation to our post-origination services in 2021 and 2022 for loans originated in previous years, which consisted primarily of variable expenses and vendor costs, including costs related to customer and system support, payment processing services and collection associated with facilitating and servicing loans.
We incurred expenses in relation to our post-origination services in 2022 for loans originated in previous years, which consisted primarily of variable expenses and vendor costs, including costs related to customer and system support, payment processing and collection services associated with facilitating and servicing loans.
The platforms provide services to support the operations of the online store including processing sales orders and collecting from end customers. The platforms charge us service fees based on our sales through the online stores. We enter sale contracts directly with the end customers.
The platforms provide services to support the operations of the online store including processing sales orders and collecting from end customers. The platforms charge us service fees based on our sales through the online stores. We enter into sale contracts directly with the end customers.
Sales income Sales income is from sales of products to end customers directly through our online stores run on third-party e-commerce platforms with a platform service agreement. Under the platform service agreement, we set up online stores on such platforms to sell products to end customers.
Sales income Sales income is from sales of products to end customers directly through our online stores run on third-party e-commerce platforms with a platform service agreement. Under the platform service agreements, we set up online stores on such platforms to sell products to end customers.
Due to the nature of our legacy business and the accounting treatment with respect to our revenue therefrom, we continued, and may continue, to record revenue from such legacy business, but we expect that the amount and percentage (as compared with our total revenue) of such revenue will decline, and the contribution of our other businesses to our results of operations will continue to increase. 90 Key Factors Affecting Our Results of Operations Key factors affecting our results of operations include the following: Ability to Maintain and Expand our User Base in a Cost-Effective Manner Our revenues are, to a large extent, dependent on the growth of our user base.
Due to the nature of our legacy business and the accounting treatment with respect to our revenue therefrom, we continued, and may continue, to record revenue from such legacy business, but we expect that the amount and percentage (as compared with our total revenue) of such revenue will decline, and the contribution of our other businesses to our results of operations will continue to increase. 93 Key Factors Affecting Our Results of Operations Key factors affecting our results of operations include the following: Ability to Maintain and Expand our User Base in a Cost-Effective Manner Our revenues are, to a large extent, dependent on the growth of our user base.
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 period since January 1, 2024 that are reasonably likely to have a material effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
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 period since January 1, 2025 that are reasonably likely to have a material effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
The Cayman Islands are not party to any double tax treaties that are applicable to any payments made by or to our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
The Cayman Islands is not party to any double tax treaties that are applicable to any payments made by or to our Company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
In addition, enterprises of encouraged industries are subject to preferential tax treatment or tax exemption for certain period in certain areas of China, such as Xinjiang Kashgar Economic Development Zone.
In addition, enterprises of encouraged industries are subject to preferential tax treatment or tax exemption for a certain period in certain areas of China, such as Xinjiang Kashgar Economic Development Zone.
Key Line Items and Specific Factors Affecting Our Results of Operations Revenues In the reporting period, we generated revenue from the sale of products and provision of technical services.
Key Line Items and Specific Factors Affecting Our Results of Operations Revenues In the reporting period, we generated revenue principally from the sale of products and provision of technical services.
Impairment Loss of Goodwill Impairment loss of goodwill represents an impairment loss equal to the difference between the fair value of the reporting unit and its carrying amount where it is more likely than not that the fair value of a reporting unit is less than its carrying amount and, upon a further quantitative impairment test, if the carrying amount of each reporting unit exceeds its fair value. 2023 Compared to 2022.
Impairment Loss of Goodwill Impairment loss of goodwill represents an impairment loss equal to the difference between the fair value of the reporting unit and its carrying amount where it is more likely than not that the fair value of a reporting unit is less than its carrying amount and, upon a further quantitative impairment test, if the carrying amount of each reporting unit exceeds its fair value. 2024 Compared to 2023.
Cost of goods sold primarily consists of the purchase price of products, packaging material, handling costs and product delivery costs. Sales and marketing . Sales and marketing expenses consist primarily of various marketing expenses, including those related to user acquisition and retention, and general brand and awareness building. Origination and servicing .
Cost of goods sold primarily consists of the purchase price of products, packaging materials, handling costs and product delivery costs. Sales and marketing . Sales and marketing expenses consist primarily of various marketing expenses, including those related to user acquisition and retention, and general brand and awareness building. Origination and servicing .
Deferred Revenue Deferred revenue consists of post origination service fees received from borrowers, investors and financial institution partners for which services have not yet been provided. Deferred revenue is recognized ratably as revenue when the post-origination services are delivered during the loan period.
Deferred Revenue Deferred revenue consisted of post origination service fees received from borrowers, investors and financial institution partners for which services have not yet been provided. Deferred revenue is recognized ratably as revenue when the post-origination services are delivered during the loan period.
E. Critical Accounting Estimates See “Item 5. Operating and Financial Review and Prospects—B. Operating Results—Critical Accounting Policies.”
E. Critical Accounting Estimates See “Item 5. Operating and Financial Review and Prospects—B. Operating Results—Critical Accounting Policies.” 108
For details of our subsidiaries, VIEs and their respective subsidiaries that are subject to such preferential tax treatment or exemptions, please refer to Note 12 to our consolidated financial statements included elsewhere in this annual report.
For details of our subsidiaries, VIEs and their respective subsidiaries that are subject to such preferential tax treatment or exemptions, please refer to Note 11 of our consolidated financial statements included elsewhere in this annual report.
In 2022, the principal items accounting for the difference between our net cash provided by operating activities and our net loss of RMB594.9 million were (i) adjustment for non-cash items, mainly including adding back impairment loss of long term prepayment of RMB275.0 million, provision for allowance for doubtful accounts of RMB159.4 million and impairment loss of equity method investment of RMB123.7 million, and (ii) changes in operating assets and liabilities, mainly including decrease in prepaid expenses and other assets of RMB254.1 million, partially offset by decrease in accrued expenses and other liabilities of RMB216.9 million.
In 2022, the principal items accounting for the difference between our net cash provided by operating activities and our net loss of RMB594.9 million were (i) adjustment for non-cash items, mainly including adding back impairment loss of long term prepayment of RMB275.0 million, provision for allowance for doubtful accounts of RMB159.4 million and impairment loss of equity method investment of RMB3.5 million, and (ii) changes in operating assets and liabilities, mainly including decrease in prepaid expenses and other assets of RMB254.1 million, partially offset by decrease in accrued expenses and other liabilities of RMB216.9 million.
For details of our subsidiaries, VIEs and their respective subsidiaries qualified as “high and new technology enterprises,” please refer to Note 12 to our consolidated financial statements included elsewhere in this annual report.
For details of our subsidiaries, VIEs and their respective subsidiaries qualified as “high and new technology enterprises,” please refer to Note 11 of our consolidated financial statements included elsewhere in this annual report.
Our operating lease obligations relate to our leases of office premises and cloud infrastructure to support our core business systems. We lease certain office premises and cloud infrastructure under non-cancelable operating lease arrangements. 105 Other than those shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2023.
Our operating lease obligations relate to our leases of office premises and cloud infrastructure to support our core business systems. We lease certain office premises and cloud infrastructure under non-cancelable operating lease arrangements. Other than those shown above, we did not have any significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2024.
Due to our transition of business, in 2023, our servicing expenses consisted primarily of expenses and vendor costs for our technical services, including direct channeling, human resources and other costs related to customer and system support, payment processing services and other customer service. 92 General and administrative .
Due to our transition of business, in 2023, our servicing expenses consisted primarily of expenses and vendor costs for our technical services, including direct channeling, human resources and other costs related to customer and system support, payment processing services and other customer services. 95 General and administrative .
Hong Kong has a two-tiered profits tax rate for corporations, where the first HK$2 million of assessable profits will be taxed at 8.25%, and any part of assessable profits over HK$2 million will be taxed at 16.5%. In addition, for two or more connected entities, only one of them may elect the two-tiered profits tax rates.
Hong Kong has a two-tiered profits tax rate for corporations, where the first HK$2 million of assessable profits will be taxed at 8.25%, and the balance over HK$2 million will be taxed at 16.5%. In addition, for two or more connected entities, only one of them may elect the two-tiered profit tax rates.
We recorded an impairment loss of goodwill in connection with our prior acquisition of Beijing Weiban Yinqi Management Consulting Co., Ltd. in full, due to its huge losses for consecutive years and the fact that its net assets are lower than those at the time of the acquisition. 100 2022 Compared to 2021.
We recorded an impairment loss of goodwill in connection with our prior acquisition of Beijing Weiban Yinqi Management Consulting Co., Ltd. in full, due to its huge losses for consecutive years and the fact that its net assets are lower than those at the time of the acquisition.
If customers report defects after receipt but are still within the warranty period (varies from 6 months to 24 months), we will have the defective goods repaired, replaced or take another appropriate action to compensate timely usually within in 48 hours. Based on this experience, we had not estimated any warranty obligation as of December 31, 2023.
If customers report defects after receipt but are still within the warranty period (varies from 6 months to 24 months), we will have the defective goods repaired, replaced or take another appropriate action to compensate timely usually within in 48 hours. Based on this experience, we have not recognized any warranty obligation as of December 31, 2023 and 2024.
Technical services We offer technical services to customers, including technology empowerment services, operation and marketing services, customized software development. Technology empowerment services are with respect to user acquisition, risk management, consumption scenario perception and comprehension and data modeling. Technical services generate revenues primarily from fixed-price short-term contracts.
Technical services We offer technical services to customers, including technology empowerment services, operation and marketing service. Technology empowerment services are with respect to user acquisition, risk management, consumption scenario perception and comprehension and data modeling. Technical services generate revenues primarily from fixed-price short-term contracts.
Compensation expenses for awards with performance conditions is recognized when it is probable that the performance condition will be achieved. We elect to recognize forfeitures when they occur.
Compensation expense for awards with performance conditions are recognized when it is probable that the performance condition will be achieved. We elect to recognize forfeitures when they occur.
Investment in Marketable Securities Our investment in marketable securities mainly consists of our purchase of common stock on the open market through securities companies.
Investment in Marketable Securities Our investment in marketable securities mainly consists of our purchase of common stocks on the open market through securities companies.
Our sales income was RMB142.6 million (US$20.1 million) in 2023, representing a decrease of 7.9% from RMB154.9 million in 2022, primarily due to the decrease in the sales volume of our online stores, which in turn was due to the tepid recovery of the macroeconomic environment after COVID-19 pandemic that fell short of expectations. 2022 Compared to 2021.
Our sales income was RMB142.6 million in 2023, representing a decrease of 7.9% from RMB154.9 million in 2022, primarily due to the decrease in the sales volume of our online stores, which in turn was due to the tepid recovery of the macroeconomic environment after COVID-19 pandemic that fell short of expectations.
Restricted Cash Our restricted cash mainly consists of funds we received from investors for the purpose of buying or selling securities on behalf of its customers.
Restricted Cash Our restricted cash mainly consists of funds we received from investors for the purpose of buying or selling securities on their behalf.
We set up online stores on such platforms pursuant to the platform service agreement we enter into with the platform service providers, while we enter into sales contracts directly with the end customers and are responsible for fulling all obligations under such sales contracts including delivering products to end customers at the purchase price. Online lending platform revenue .
We set up online stores on such platforms pursuant to the platform service agreement we enter into with the platform service providers, while we enter into sales contracts directly with the end customers and are responsible for fulling all obligations under such sales contracts including delivering products to end customers at the purchase price. 94 Post-origination services.
In 2022, we incurred impairment loss of long term prepayment of RMB275.0 million, which primarily consisted of impairment loss of long term prepayment to Shanghai Xinzheng Financial Information Consulting Co., Ltd. as an investment, because of its poor business performance and negative impacts of COVID-19. In 2021, we did not incur impairment loss of long term prepayment.
In 2022, we incurred an impairment loss of a long-term prepayment of RMB275.0 million, which primarily consisted of impairment loss with to Shanghai Xinzheng Financial Information Consulting Co., Ltd. as an investment, because of its poor business performance and negative impacts of COVID-19.
In 2023, the principal items accounting for the difference between our net cash provided by operating activities and our net loss of RMB140.3 million (US$19.8 million) were (i) adjustment for non-cash items, mainly including adding back provision for allowance for doubtful accounts of RMB192.8 million (US$27.1 million), impairment loss of equity securities without readily determinable fair value of RMB29.0 million (US$4.1 million), and impairment of goodwill of RMB24.8 million (US$3.5 million), partially offset by share-based compensation of RMB72.1 million (US$10.2 million), and (ii) changes in operating assets and liabilities, mainly including decrease in prepaid expenses and other assets of RMB56.8 million (US$8.0 million), decrease in other receivables of RMB63.5 million (US$9.0 million) and decrease in accounts receivable of RMB52.8 million (US$7.4 million), partially offset by decrease in accrued expenses and other liabilities of RMB116.3 million (US$16.4 million). 104 Our net cash provided by operating activities was RMB63.3 million in 2022.
In 2023, the principal items accounting for the difference between our net cash provided by operating activities and our net loss of RMB140.3 million were (i) adjustment for non-cash items, mainly including adding back provision for allowance for doubtful accounts of RMB192.8 million, impairment loss of equity securities without readily determinable fair value of RMB29.0 million, and impairment of goodwill of RMB24.8 million, partially offset by share-based compensation of RMB72.1 million, and (ii) changes in operating assets and liabilities, mainly including decrease in prepaid expenses and other assets of RMB56.8 million, decrease in other receivables of RMB63.5 million and decrease in accounts receivable of RMB52.8 million, partially offset by decrease in accrued expenses and other liabilities of RMB116.3 million.
Operating Expenses and Fees Cost of goods sold 2023 Compared to 2022 . Our cost of goods sold were RMB61.7 million (US$8.7 million) in 2023, representing an increase of 32.8% from RMB46.4 million in 2022, primarily due to an increase in fees charged by a third-party e-commerce operator. 2022 Compared to 2021 .
Our cost of goods sold were RMB61.7 million in 2023, representing an increase of 32.8% from RMB46.4 million in 2022, primarily due to an increase in fees charged by a third-party e-commerce operator.
We considered the loan facilitation services and post origination services as two separate services, which represented two separate performance obligations under Topic 606, as these two deliverables were distinct in that customers could benefit from each service on its own and our promises to deliver the services were separately identifiable from each other in the contract.
The Group considered the loan facilitation services and post origination services as two separate services, which represented two separate performance obligations under Topic 606, as these two deliverables were distinct in that customers could benefit from each service on its own and the Group delivered the services were separately identifiable from each other in the contract.
Our technical services revenue was RMB247.8 million (US$34.9 million) in 2023, representing a decrease of 24.3% from RMB327.2 million in 2022, primarily due to the decrease in demand for our technical services from our institutional partners, which was in turn because of the shrinking demand of customers during the economic slump. 2022 Compared to 2021.
Our technical services revenue was RMB247.8 million in 2023, representing a decrease of 24.3% from RMB327.2 million in 2022, primarily due to the decrease in demand for our technical services from our institutional partners, which was in turn because of the shrinking demand of customers during the economic slump. Wealth management 2024 Compared to 2023 .
General and administrative expenses consist primarily of salaries, share-based compensation and other benefits granted primarily to our management, research and development personnel and finance and administrative personnel, rent, professional service fees and other expenses. Provision for doubtful contract assets and receivables .
General and administrative expenses consist primarily of salaries, share-based compensation and other benefits granted primarily to our management, and finance and administrative personnel, rent, professional service fees and other expenses. Provision for doubtful contract assets and receivables . Provision for doubtful contract assets and receivables consist primarily of the allowance for account receivable, loans receivable, other receivables and contract assets.
Some of our investees yielded positive operating results and resulted in gain in our equity method investments, which was partially offset by losses of certain other poorly-operated investees. 2022 Compared to 2021. Our income in equity method investments in 2022 was RMB19.4 million, as compared with a loss of RMB7.2 million in 2021.
Our income in equity method investments in 2023 was RMB19.3 million, as compared with an income of RMB19.4 million in 2022. Some of our investees yielded positive operating results and resulted in gain in our equity method investments, which was partially offset by losses of certain other poorly-operated investees.
After the transfer, the outstanding balance of loans facilitated became nil and revenues from loan facilitation services were nil in 2021, 2022 and 2023, and the asset management companies will provide the existing investors with services in relation to the return of their remaining investment in loans. Direct lending program revenue (under legacy business).
After such transfer, the outstanding balance of loans facilitated became nil and loan facilitation services were nil in 2022, 2023 and 2024, and the asset management company provided the existing investors with services in relation to the return of their remaining investment in loans in direct lending program revenue (under legacy business).
Through our online platform, we provided intermediary services on the personal financing product, One Card, under which the holders of One Card could apply for loans on a revolving basis. We also provided one-time loan facilitation services to meet various consumption needs.
Through its online platform, the Group provided intermediary services for the personal financing products, One Card, under which the holders of One Card could apply for loans on a revolving basis (“revolving loan products”). The Group also provided one-time loan facilitation services to meet various consumption needs (“non-revolving loan products”).
Our impairment loss of goodwill was RMB24.8 million (US$3.5 million) in 2023, as compared to RMB200 thousand in 2022.
Our impairment loss of goodwill was nil in 2024, as compared to RMB24.8 million in 2023. 2023 Compared to 2022. Our impairment loss of goodwill was RMB24.8 million in 2023, as compared to RMB200 thousand in 2022.
The fair value of the investee company is estimated based on comparable quoted prices for similar investments in an active market, if applicable, or a discounted cash flow approach which requires significant judgments. 2023 Compared to 2022. Our impairment loss of investments was RMB27.9 million (US$3.9 million) in 2023, representing a decrease of 84.6% from RMB181.8 million in 2022.
The fair value of the investee company is estimated based on comparable quoted prices for similar investments in an active market, if applicable, or a discounted cash flow approach which requires significant judgments. 2024 Compared to 2023. Our impairment loss of investments was RMB4.6million (US$0.6 million) in 2024, as compared to RMB27.9 million in 2023.
Net Loss As a result of the foregoing, we recorded a net loss of RMB140.3 million (US$19.8 million), RMB594.9 million and RMB233.7 million in 2023, 2022 and 2021, respectively. Changes in Financial Position The following table sets forth selected information from our consolidated balance sheets as of December 31, 2022 and 2023.
Net (Loss) Income As a result of the foregoing, we recorded net income of RMB 50.2 million (US$6.9 million), a net loss of RMB140.3 million and RMB594.9 million in 2024, 2023 and 2022, respectively. Changes in Financial Position The following table sets forth selected information from our consolidated balance sheets as of December 31, 2023 and 2024.
General and administrative expenses 2023 Compared to 2022. Our general and administrative expenses were RMB270.3 million (US$38.1 million) in 2023, representing a decrease of 27.9% from RMB374.9 million in 2022. Given the macroeconomic environment, we have continued our staff structure optimization, including headcount reductions. 2022 Compared to 2021.
Our general and administrative expenses were RMB270.3 million in 2023, representing a decrease of 27.9% from RMB374.9 million in 2022. Given the macroeconomic environment, we have continued our staff structure optimization, including headcount reductions. Provision for doubtful contract assets and receivables 2024 Compared to 2023.
Dividends paid by our WFOEs in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless they qualify for a special exemption.
This Announcement shall remain in force until December 31, 2027. Dividends paid by our WFOEs in China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless they qualify for a special exemption.
Our sales and marketing expenses were RMB27.8 million (US$3.9 million) in 2023, representing a decrease of 55.3% from RMB62.2 million in 2022. Such decrease was resulted from the decrease in our cost of labor and personnel involved in our marketing activities. 2022 Compared to 2021.
Such decrease resulted from our expense control initiatives, especially the reduction in our sales force. 2023 Compared to 2022. Our sales and marketing expenses were RMB27.8 million in 2023, representing a decrease of 55.3% from RMB62.2 million in 2022. Such decrease resulted from the decrease in our cost of labor and personnel involved in our marketing activities.
Since the cessation of business operation of the online lending information intermediary platform, the only deferred revenue to be recognized by us relates to the business operations of such platform prior to its shutdown, which will continue to decline.
Since the cessation of business operations of the online lending information intermediary platform, the only deferred revenue to be recognized by us relates to the business operations of such platform prior to its shutdown, for which we recognized all remaining deferred revenue in 2024.
For the years ended December 31, 2021, 2022 and 2023, RMB89 thousand, RMB874 thousand and RMB262 thousand (US$36.9 thousand) were returned to us, respectively.
For the years ended December 31, 2022, 2023 and 2024, RMB874 thousand, RMB262 thousand and RMB216 thousand (US$30 thousand) were returned to us, respectively.
The platforms do not take control of the goods and do not include sales contracts with end customers. We are responsible for selling and fulfilling all obligations according to our sales contracts with end customers, including delivering products and providing customer support. The quotation of the goods contains the shipping and handling fee, which will be deducted during the settlement.
The platforms do not take control of the goods and do not have sales contracts with end customers. We are responsible for selling and fulfilling all obligations according to our sales contracts with end customers, including delivering products and providing customer support.
Others 2023 Compared to 2022. Our other revenue decreased by 57.8% to RMB18.4 million (US$2.6 million) in 2023 from RMB43.7 million in 2022. The decrease was primarily due to the decrease in our revenue of insurance business generated by Jiuxing Insurance Brokerage Co., Ltd. against the sluggish macroeconomic background after COVID-19 pandemic. 2022 Compared to 2021.
Our wealth management revenue decreased by 57.8% to RMB18.4 million in 2023 from RMB43.7 million in 2022. The decrease was primarily due to the decrease in our revenue of insurance business generated by Jiuxing Insurance Brokerage Co., Ltd. against the sluggish macroeconomic background after COVID-19 pandemic. Operating Expenses and Fees Cost of goods sold 2024 Compared to 2023 .
In December 2020, as part of the effort to redirect our business focus, we ceased publishing information relating to new offerings of investment opportunities in legacy products for investors on our online lending information intermediary platform.
In December 2020, the Group ceased publishing information relating to new offerings of investment opportunities in legacy products for investors on its online lending information intermediary platform.
Pursuant to certain collaboration arrangements entered into by us and certain licensed asset management companies, the rights of investors in then existing loans underlying the legacy products have been transferred to such companies.
Pursuant to certain collaboration arrangements entered into by the Group and a licensed asset management company, the rights of investors in existing loans underlying the legacy products were transferred to the asset management company.
Our income tax expense was RMB7.7 million (US$1.1 million) in 2023, as compared with RMB11.6 million in 2022, primarily due to the decrease in revenues generated from our operations. 2022 Compared to 2021. Our income tax expense was RMB11.6 million in 2022, as compared with RMB26.7 million in 2021, primarily due to the decrease in revenues generated from our operations.
Our income tax expense was RMB14.0 million (US$1.9 million) in 2024, as compared with RMB7.7 million in 2023, primarily due to the increase in our taxable income. 2023 Compared to 2022. Our income tax expense was RMB7.7 million in 2023, as compared with RMB11.6 million in 2022, primarily due to the decrease in our taxable income.
Other revenues mainly includes revenues from wealth management services and customer referral. See “—Critical Accounting Policies—Revenue recognition” for details. Operating Expenses and Fees The table below sets forth the breakdown of our operating expenses and fees, both in absolute amount and as a percentage of our total revenues (excluded cost of goods sold), for the periods indicated.
Operating Expenses and Fees The table below sets forth the breakdown of our operating expenses and fees, both in absolute amount and as a percentage of our total revenues (excluded cost of goods sold), for the periods indicated.
Provision for doubtful contract assets and receivables consist primarily of the allowance for account receivable, loans receivable, other receivables and contract assets. Taxation Cayman Islands We are an exempted company incorporated in the Cayman Islands. The Cayman Islands currently levy no taxes on corporations based upon profits, income, gains or appreciations.
Taxation Cayman Islands We are an exempted company incorporated in the Cayman Islands. The Cayman Islands currently levy no taxes on corporations based upon profits, income, gains or appreciations.
The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that might restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that might restrict our operations.
Years Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Operating expenses and fees: Cost of goods sold 59,088 7.8 46,424 8.3 61,654 8,684 14.9 Sales and marketing 165,477 21.7 62,243 11.1 27,801 3,916 6.7 Origination and servicing 47,094 6.2 69,018 12.3 53,525 7,539 13.0 General and administrative 522,820 68.7 374,882 66.7 270,290 38,070 65.5 Provision for doubtful contract assets and receivables 22,423 2.9 159,380 28.4 192,756 27,149 46.7 Total operating expenses and fees (included cost of goods sold) 816,902 107.3 711,947 126.8 606,026 85,358 146.9 Cost of goods sold.
Years Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Operating expenses and fees: Cost of goods sold 46,424 8.3 61,654 14.9 29,751 4,076 9.6 Sales and marketing 62,243 11.1 27,801 6.7 14,089 1,930 4.5 Origination and servicing 69,018 12.3 53,525 13.0 78,097 10,699 25.2 General and administrative 374,882 66.7 270,290 65.5 222,928 30,541 71.9 Provision for doubtful contract assets and receivables 159,380 28.4 192,756 46.7 10,565 1,447 3.4 Total operating expenses and fees (including cost of goods sold) 711,947 126.8 606,026 146.8 355,430 48,693 114.6 Cost of goods sold.
Our origination and servicing expenses were RMB53.5 million (US$7.5 million) in 2023, representing a decrease of 22.4% from RMB69.0 million in 2022. In 2023, our servicing expenses consisted primarily of expenses and vendor costs for our technical services.
Origination and servicing expenses 2024 Compared to 2023. Our origination and servicing expenses were RMB78.1 million (US$10.7 million) in 2024, representing an increase of 45.9% from RMB53.5 million in 2023. In 2024, our servicing expenses consisted primarily of expenses and vendor costs for our technical services.
Net cash used in investing activities was RMB277.8 million in 2022, which was primarily attributable to our purchase of term deposits of RMB227.4 million and our purchase of marketable securities of RMB78.9 million. Net cash used in investing activities was RMB321.5 million in 2021, which was primarily attributable to our purchase of marketable securities of RMB318.9 million.
Net cash used in investing activities was RMB295.4 million in 2022, which was primarily attributable to our purchase of term deposits of RMB227.4 million and our purchase of marketable securities of RMB245.0 million. Financing activities Net cash provided by financing activities was nil in 2022, 2023 and 2024.
We recognize revenues from sales income upon delivery of the product to end customers in an amount equal to the contract sales prices less estimated sales allowances for sales returns and sales incentives. Estimated sales allowances for sales returns, rebates, incentives and price protection are made based on contract terms and historical patterns.
We identify our performance obligation to transfer the control of the products ordered on the e-commerce platform to the customers. 97 We recognize revenues from sales income upon delivery of the product to end customers in an amount equal to the contract sales prices less estimated sales allowances for sales returns and sales incentives. Estimated sales allowances for sales returns.
Impairment Loss of Investments Impairment loss of investments represents an impairment charge where the carrying amount of the investment exceeds its fair value on a non-temporary basis.
In 2023, we seized opportunities in investments offshore with high interest rates, which earned us satisfactory investment returns. 102 Impairment Loss of Investments Impairment loss of investments represents an impairment charge where the carrying amount of the investment exceeds its fair value on a non-temporary basis.
Years Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Revenues: Sales income 202,960 26.7 154,906 27.6 142,628 20,089 34.6 Post-origination services 39,782 5.2 35,820 6.4 3,629 511 0.9 Technical services 417,566 54.8 327,245 58.3 247,770 34,898 60.1 Other 101,143 13.3 43,696 7.7 18,422 2,595 4.5 Total revenues (excluded cost of goods sold) 761,451 100.0 561,667 100.0 412,449 58,093 100.0 91 Sales income .
Years Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Revenues: Sales income 154,906 27.6 142,628 34.6 124,973 17,121 40.3 Post-origination services 35,820 6.4 3,629 0.9 5,326 730 1.7 Technical services 327,245 58.3 247,770 60.1 143,648 19,680 46.3 Wealth management 43,696 7.7 18,422 4.4 36,027 4,936 11.7 Total revenues (excluded cost of goods sold) 561,667 100.0 412,449 100.0 309,974 42,467 100.0 Sales income .
Prepaid Expenses and Other Assets Our prepaid expenses and other assets include deposits, advance to suppliers, prepaid taxes, prepaid service fee, and others. Our prepaid expenses and other assets decreased by 25.5% to RMB166.0 million (US$23.4 million) as of December 31, 2023 from RMB222.7 million as of December 31, 2022, primarily due to the decrease in input tax deduction.
Prepaid Expenses and Other Assets Our prepaid expenses and other assets include deposits, advance to suppliers, prepaid taxes, prepaid service fees, and others. Our prepaid expenses and other assets decreased by 4.1% to RMB159.1 million (US$21.8 million) as of December 31, 2024 from RMB166.0 million as of December 31, 2023.
(Loss)/Income in Equity Method Investments 2023 Compared to 2022. Our income in equity method investments in 2023 was RMB19.3 million (US$2.7 million), as compared with an income of RMB19.4 million in 2022.
Income from Equity Method Investments 2024 Compared to 2023. Our income in equity method investments in 2024 was RMB37.2 million (US$5.1 million), as compared with an income of RMB19.3 million in 2023. In 2024, we recognized investment income of RMB38.0 million (US$5.2 million) from our investment in Hubei Consumption Financial Company. 2023 Compared to 2022.
Contractual Obligations and Commercial Commitments The following table sets forth our contractual obligations as of December 31, 2023: Payments Due by Period 2024 2025 2026 2027 Thereafter (RMB in thousands) Contractual Obligations: Operating Leases Obligations 7,074 7,365 971 — — Note: With imputed interest of RMB0.7 million.
In these periods, our capital expenditures were mainly used for our efforts to procure new business operations and related licenses by acquisition.” 107 Contractual Obligations and Commercial Commitments The following table sets forth our contractual obligations as of December 31, 2024: Payments Due by Period 2025 2026 2027 2028 Thereafter (RMB in thousands) Contractual Obligations: Operating Leases Obligations 8,618 1,197 — — — Note: With imputed interest of RMB0.2 million.
The impairment primarily reflected the loss of our investments in BitPay Inc. in full due to its operational setbacks. 2022 Compared to 2021. Our impairment loss of investments was RMB181.8 million in 2022, representing an increase of 563.0% from RMB27.4 million in 2021.
The impairment primarily reflected the loss of our investments in BitPay Inc. in full due to its operational setbacks.
We enter into insurance brokerage service contracts with insurance companies with a pre-agreed commission. The commissions are normally calculated as a percentage (which varies depending on the type of insurance products involved) of the premium paid to the insurance companies from sales facilitated by the group in respect of an insurance product.
The commissions are normally calculated as a percentage (which varies depending on the type of insurance products involved) of the premium paid to the insurance companies from sales facilitated by the group. For insurance services, the single performance obligation identified is to provide facilitation services to the insurance companies.
Investing activities Net cash used in investing activities was RMB949.0 million (US$133.7 million) in 2023, which was primarily attributable to our purchase of long-term investments of RMB545.5 million (US$76.8 million) and our purchase of term deposits of RMB341.6 million (US$48.1 million).
Net cash used in investing activities was RMB933.1 million in 2023, which was primarily attributable to our purchase of marketable securities of RMB364.0 million and long-term investments of RMB529.5 million and our purchase of term deposits of RMB341.6 million, partially offset by the disposals of marketable securities of RMB134.3 million and the redemptions of term deposits of RMB227.4 million.
We initiate the recognized sales fee and are paid by the third-party e-commerce platform. Accordingly, we determined the end customers (as opposed to the e-commerce platforms) as our customers. The sales contracts with end customers normally include a customer’s right to return products within 7 days after receipt of goods.
The sales contracts with end customers normally include a customer’s right to return products within 7 days after receipt of goods.
B. Liquidity and Capital Resources Our principal sources of liquidity have been cash generated from operating activities, if any, and proceeds from the issuance and sale of our shares. Our cash consists of cash on hand and cash in bank, which are unrestricted as to withdrawal.
Liquidity and Capital Resources Our principal sources of liquidity have been cash generated from operating activities. Our cash consists of cash on hand and cash in bank, which are unrestricted as to withdrawal. Cash equivalents consist of interest-bearing certificates of deposit with initial term of no more than three months when purchased.
We offer convenient and effective global asset allocation services, especially offshore securities investment services and IPO subscription service charge income, to individual investors to connect them with Hong Kong and U.S. stock markets. Internet Securities Service generated revenue from commissions through customers’ transactions in stocks by providing brokerage service for its customers.
See “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” for details. The Group offers convenient and effective global asset allocation services, especially offshore securities investment services and IPO subscription service charge income, to individual investors to connect them with the Hong Kong and U.S. stock markets.
Through our direct lending program, we provided traffic referral services to financial institution partners, allowing the financial institution partners to gain access to borrowers who passed our risk assessment.
Through its direct lending program, the Group provided traffic referral services to financial institution partners, allowing the financial institution partners to gain access to borrowers who passed the Group’s risk assessment. Please refer to the Company’s earlier annual reports on Form 20-F for detailed information with respect to our legacy business.
The Internet Securities Service is recognized at a point in time on the trade date when the performance obligation is satisfied. The brokerage service commission are earned when each individual service is completed. 96 Share-Based Compensation Share-based payment transactions with employees and management, such as share options, are measured based on the grant date fair value of the equity instrument.
Share-Based Compensation Share-based payment transactions with employees and management, such as share options, are measured based on the grant date fair value of the equity instrument.
The following table sets forth our share-based compensation expenses in 2021, 2022 and 2023: For the Year Ended December 31, 2021 2022 2023 RMB RMB RMB US$ (in thousands) Share-based compensation expenses 52,338 5,459 (72,133 ) (10,160 ) The following table sets forth certain information regarding the share options granted to our employees at different dates in 2021, 2022 and 2023.
The following table sets forth our share-based compensation expenses in 2022, 2023 and 2024: For the Year Ended December 31, 2022 2023 2024 RMB RMB RMB US$ (in thousands) Share-based compensation expenses 5,459 (72,133 ) (959 ) (133 ) During the year ended December 31,2022, 2023 and 2024, the Group did not grant and issue any shares.
We are subject to VAT at a rate of 13% on the sales of products, at a rate of 6% on the services rendered by us, less any deductible VAT we have already paid or borne, except for entities qualified as small-scale taxpayers at a VAT rate of 3% without any deduction.
We are subject to VAT at a rate of 13% or 9% on the sales of products, at a rate of 6% on the services rendered by us, less any deductible VAT we have incurred. During the periods presented, we were not subject to business tax on the services we provided.
Provision for doubtful contract assets and receivables 2023 Compared to 2022. Our provision for doubtful contract assets and receivables was RMB192.8 million (US$27.1 million) in 2023, representing an increase of 20.9% from RMB159.4 million in 2022, primarily due to the impairment of certain loans due to us in the amount of RMB182.7 million (US$25.7 million). 2022 Compared to 2021.
Our provision for doubtful contract assets and receivables was RMB192.8 million in 2023, representing an increase of 20.9% from RMB159.4 million in 2022. The increase primarily resulted from higher expected credit loss allowances recognized under the CECL model, driven by changes in the credit risk profile of certain receivables.
The rate of such service fees varied depending on the type, pricing and term of underlying loans. See “—Critical Accounting Policies—Revenue recognition” for details. Technical services . We charge our financial institution partners for the technical services we render.
The rate of such service fees varied depending on the type, pricing and term of underlying loans. Technical services . We charge our financial institution partners for the technical services we render. Such technical services include technology empowerment services, operation and marketing support services, and customized software development with respect to user acquisition, risk management and data modeling.
In 2021, the principal items accounting for the difference between our net cash used in operating activities and our net loss of RMB233.7 million were (i) adjustment for non-cash items, mainly including adding back unrealized loss of investment in marketable securities of RMB149.1 million, share-based compensation of RMB52.3 million and depreciation of RMB25.1 million, and (ii) changes in operating assets and liabilities, mainly including decrease in accrued expenses and other liabilities of RMB323.0 million and accounts receivable of RMB40.0 million, partially offset by decrease in other receivables of RMB59.2 million and prepaid expenses and other assets of RMB37.2 million.
In 2024, the principal items accounting for the difference between our net cash provided by operating activities and our net income of RMB50.2 million (US$6.9 million), primarily resulted from (i) adjustment for non-cash items, mainly including adding back impairment loss of intangible assets of RMB20.5 million (US$2.8 million), amortization of RMB13.3 million (US$1.8 million) and depreciation of RMB9.1 million (US$1.2 million), partially offset by share of income in equity method investments of RMB37.2 million (US$5.1 million), and (ii) changes in operating assets and liabilities, mainly including increase in accounts receivable of RMB33.8 million (US$4.6 million) and a decrease in operating lease liabilities of RMB6.8 million (US$0.9 million), partially offset by the decrease in prepaid expenses and other assets of RMB6.9 million (US$0.9 million).
Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our total revenue (excluded cost of goods sold) for the periods presented.
Recent Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in Note 2 “Summary of Significant Accounting Policies” — “Recent accounting pronouncements adopted” and “Recently issued accounting pronouncements not yet adopted” in our consolidated financial statements included elsewhere in this annual report. 99 Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our total revenue (excluded cost of goods sold) for the periods presented.
For insurance brokerage service, the single performance obligation identified is to provide facilitation services to the insurance companies. For each type of wealth management services, we recognize revenue when (or as) the entity satisfies the service/performance obligation by transferring the promised service to customers.
For each type of wealth management services, the Group recognizes revenue when (or as) the entity satisfies the service/performance obligation by transferring the promised service to customers. The Internet Securities Service is recognized at a point in time on the trade date when the performance obligation is satisfied. The insurance service commissions are earned when each individual service is completed.

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Item 6. [Reserved]

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

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Biggest changeSeparate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains, there are statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by a majority in number of each class of shareholders or creditors with whom the arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose.
Biggest changeSeparate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains, there are statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement between the company and its creditors (or any class of them) or its members (or any class of them), provided that (i) any such arrangement with creditors is approved by a majority in number of the creditors (or class of creditors) with whom the arrangement is to be made, who must in addition represent 75% in value of such creditors (or class of creditors), and (ii) any such arrangement with members is approved by 75% in value of the members (or class of members) with whom the arrangement is to be made, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Yuping Ouyang and Fangxiong Gong. Fangxiong Gong is the chairperson of our nominating and corporate governance committee. We have determined that Yuping Ouyang and Fangxiong Gong each satisfies the “independence” requirements of Rule 5605(a)(2) of the Nasdaq Stock Market Rules.
Our nominating and corporate governance committee consists of Yuping Ouyang and Fangxiong Gong. Fangxiong Gong is the chairperson of our nominating and corporate governance committee. We have determined that Yuping Ouyang and Fangxiong Gong each satisfies the “independence” requirements of Rule 5605(a)(2) of the Nasdaq Stock Market Rules.
Holders may be subject to tax at the lower capital gains tax rate applicable to “qualified dividend income,” provided that certain conditions are satisfied, including that (1) the ADSs or ordinary shares on which the dividends are paid are readily tradable on an established securities market in the United States, or, in the event that we are deemed to be a PRC resident enterprise under the PRC tax law, we are eligible for the benefit of the United States-PRC income tax treaty, or the Treaty, (2) we are neither a PFIC nor treated as such with respect to a U.S.
Holders may be subject to tax at the lower capital gains tax rate applicable to “qualified dividend income,” provided that certain conditions are satisfied, including that (1) the ADSs or ordinary shares on which the dividends are paid are readily tradable on an established securities market in the United States, or, in the event that we are deemed to be a PRC resident enterprise under the PRC tax law, we are eligible for the benefit of the Treaty, (2) we are neither a PFIC nor treated as such with respect to a U.S.
Charges and Charges Our ADS Holders May Have to Pay An ADS holder will be required to pay the following fees under the terms of the deposit agreement with Citibank, N.A., the depositary bank for the American Depositary Shares: Service Fees (1) Issuance of ADSs ( e.g. , an issuance upon a deposit of Shares, upon a change in the ADS(s)-to-Share(s) ratio, or for any other reason), excluding issuances as a result of distributions described in paragraph (4) below Up to U.S.$5.00 per 100 ADS (or fraction thereof) issued (2) Cancellation of ADSs (e.g., a cancellation of ADSs for delivery of deposited shares, upon a change in the ADS(s)-to share(s) ratio, or for any other reason) Up to U.S.$5.00 per 100 ADS (or fraction thereof) canceled (3) Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other entitlements) Up to U.S.$5.00 per 100 ADS (or fraction thereof) held (4) Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs Up to U.S.$5.00 per 100 ADS (or fraction thereof) held (5) Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., spin-off shares) Up to U.S.$5.00 per 100 ADS (or fraction thereof) held (6) ADS Services Up to U.S.$5.00 per 100 ADS (or fraction thereof) held on the applicable record date(s) established by the depositary bank (7) Registration of ADS Transfers (e.g., upon a registration of the transfer of registered ownership of ADSs, upon a transfer of ADSs into The Depository Trust Company, or the DTC, and vice versa , or for any other reason.) Up to U.S.$5.00 per 100 ADS (or fraction thereof) held (8) Conversion of ADSs of one series for ADSs of another series (e.g., upon conversion of Partial Entitlement ADSs for Full Entitlement ADSs, or upon conversion of Restricted ADSs into freely transferable ADSs, and vice versa).
Charges Our ADS Holders May Have to Pay An ADS holder will be required to pay the following fees under the terms of the deposit agreement with Citibank, N.A., the depositary bank for the American Depositary Shares: Service Fees (1) Issuance of ADSs ( e.g. , an issuance upon a deposit of Shares, upon a change in the ADS(s)-to-Share(s) ratio, or for any other reason), excluding issuances as a result of distributions described in paragraph (4) below Up to U.S.$5.00 per 100 ADS (or fraction thereof) issued (2) Cancellation of ADSs (e.g., a cancellation of ADSs for delivery of deposited shares, upon a change in the ADS(s)-to share(s) ratio, or for any other reason) Up to U.S.$5.00 per 100 ADS (or fraction thereof) canceled (3) Distribution of cash dividends or other cash distributions (e.g., upon a sale of rights and other entitlements) Up to U.S.$5.00 per 100 ADS (or fraction thereof) held (4) Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs Up to U.S.$5.00 per 100 ADS (or fraction thereof) held (5) Distribution of securities other than ADSs or rights to purchase additional ADSs (e.g., spin-off shares) Up to U.S.$5.00 per 100 ADS (or fraction thereof) held (6) ADS Services Up to U.S.$5.00 per 100 ADS (or fraction thereof) held on the applicable record date(s) established by the depositary bank (7) Registration of ADS Transfers (e.g., upon a registration of the transfer of registered ownership of ADSs, upon a transfer of ADSs into The Depository Trust Company, or the DTC, and vice versa , or for any other reason.) Up to U.S.$5.00 per 100 ADS (or fraction thereof) held (8) Conversion of ADSs of one series for ADSs of another series (e.g., upon conversion of Partial Entitlement ADSs for Full Entitlement ADSs, or upon conversion of Restricted ADSs into freely transferable ADSs, and vice versa).
The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as: ● banks and other financial institutions; ● insurance companies; ● pension plans; ● cooperatives; ● regulated investment companies; ● real estate investment trusts; ● broker-dealers; ● traders that elect to use a mark-to-market method of accounting; ● certain former U.S. citizens or long-term residents; ● tax-exempt entities (including private foundations); ● persons who acquire their ADSs or ordinary shares pursuant to any employee share option or otherwise as compensation; ● investors that will hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; ● persons holding their ADSs or ordinary shares in connection with a trade or business outside the United States; ● persons that actually or constructively own ADSs or ordinary shares representing 10% or more of our stock (by vote or value); ● investors that have a functional currency other than the U.S. dollar; ● partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ADSs or ordinary shares through such entities, all of whom may be subject to tax rules that differ significantly from those discussed below.
The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as: ● banks and other financial institutions; ● insurance companies; ● pension plans; ● cooperatives; ● regulated investment companies; ● real estate investment trusts; ● broker-dealers; 131 ● traders that elect to use a mark-to-market method of accounting; ● certain former U.S. citizens or long-term residents; ● tax-exempt entities (including private foundations); ● persons who acquire their ADSs or ordinary shares pursuant to any employee share option or otherwise as compensation; ● investors that will hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; ● persons holding their ADSs or ordinary shares in connection with a trade or business outside the United States; ● persons that actually or constructively own ADSs or ordinary shares representing 10% or more of our stock (by vote or value); ● investors that have a functional currency other than the U.S. dollar; ● partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding ADSs or ordinary shares through such entities, all of whom may be subject to tax rules that differ significantly from those discussed below.
The nominating and corporate governance committee is responsible for, among other things: ● selecting and recommending to the board nominees for election by the shareholders or appointment by the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; 110 ● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and ● advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.
The nominating and corporate governance committee is responsible for, among other things: ● selecting and recommending to the board nominees for election by the shareholders or appointment by the board; ● reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; ● making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and ● advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken.
However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” If the PRC tax authorities determine that 9F Inc. is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our ADSs.
However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” 130 If the PRC tax authorities determine that 9F Inc. is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our ADSs.
Risk Factors—Risks Related to Doing Business in China and Hong Kong—We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.” 128 United States Federal Income Tax Considerations The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our ADSs or ordinary shares by a U.S.
Risk Factors—Risks Related to Doing Business in China and Hong Kong—We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.” United States Federal Income Tax Considerations The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our ADSs or ordinary shares by a U.S.
Holders to make qualified electing fund elections, which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above. If a U.S. Holder owns our ADSs or ordinary shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621.
Holders to make qualified electing fund elections, which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above. 135 If a U.S. Holder owns our ADSs or ordinary shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F. Disclosure of a registrant’s action to recover erroneously awarded compensation Not applicable. Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F. Disclosure of a registrant’s action to recover erroneously awarded compensation Not applicable. 116 Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS A. Major Shareholders Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.” B.
Up to U.S.$5.00 per 100 ADS (or fraction thereof) converted An ADS holder will also be responsible to pay certain charges such as: ● taxes (including applicable interest and penalties) and other governmental charges; ● the registration fees as may from time to time be in effect for the registration of Class A ordinary shares on the share register and applicable to transfers of Class A ordinary shares to or from the name of the custodian, the depositary bank or any nominees upon the making of deposits and withdrawals, respectively; ● certain cable, telex and facsimile transmission and delivery expenses; ● in connection with the conversion of foreign currency, the fees, expenses, spreads, taxes and other charges of the depositary and/or conversion service providers (which may be a division, branch or affiliate of the depositary); 135 ● any reasonable and customary out-of-pocket expenses incurred in such conversion and/or on behalf of the holders and beneficial owners in complying with currency exchange control or other governmental requirements; and ● the fees, charges, costs and expenses incurred by the depositary, the custodian, or any nominee in connection with the ADR program.
Up to U.S.$5.00 per 100 ADS (or fraction thereof) converted 137 An ADS holder will also be responsible to pay certain charges such as: ● taxes (including applicable interest and penalties) and other governmental charges; ● the registration fees as may from time to time be in effect for the registration of Class A ordinary shares on the share register and applicable to transfers of Class A ordinary shares to or from the name of the custodian, the depositary bank or any nominees upon the making of deposits and withdrawals, respectively; ● certain cable, telex and facsimile transmission and delivery expenses; ● in connection with the conversion of foreign currency, the fees, expenses, spreads, taxes and other charges of the depositary and/or conversion service providers (which may be a division, branch or affiliate of the depositary); ● any reasonable and customary out-of-pocket expenses incurred in such conversion and/or on behalf of the holders and beneficial owners in complying with currency exchange control or other governmental requirements; and ● the fees, charges, costs and expenses incurred by the depositary, the custodian, or any nominee in connection with the ADR program.
We are required under PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time. We typically enter into standard employment, confidentiality and non-compete agreements with our senior management and core personnel.
We are required under PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time. 114 We typically enter into standard employment, confidentiality and non-compete agreements with our senior management and core personnel.
There can be no assurances that the Internal Revenue Service or a court will not take a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, Medicare, and minimum tax considerations, or any state, local and non-U.S. tax considerations, relating to the ownership or disposition of our ADSs or ordinary shares.
There can be no assurances that the Internal Revenue Service will not take, or that a court will not sustain, a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, Medicare, and any minimum tax considerations, or any state, local and non-U.S. tax considerations, relating to the ownership or disposition of our ADSs or ordinary shares.
Our board of directors may also decline to register any transfer of any ordinary share unless: ● the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; ● the instrument of transfer is in respect of only one class of shares; ● the instrument of transfer is properly stamped, if required; ● in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and ● a fee of such maximum sum as the Nasdaq Stock Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. 119 If our directors refuse to register a transfer they shall, within three calendar months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
Our board of directors may also decline to register any transfer of any ordinary share unless: ● the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; ● the instrument of transfer is in respect of only one class of shares; ● the instrument of transfer is properly stamped, if required; ● in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and ● a fee of such maximum sum as the Nasdaq Stock Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. 121 If our directors refuse to register a transfer they shall, within three calendar months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
Under the Companies Act and our sixth amended and restated articles of association, our company may be dissolved, liquidated or wound up by a special resolution of our shareholders, or by an ordinary resolution on the basis that our company is unable to pay its debts as they fall due. 126 Variation of Rights of Shares .
Under the Companies Act and our sixth amended and restated articles of association, our company may be dissolved, liquidated or wound up by a special resolution of our shareholders, or by an ordinary resolution on the basis that our company is unable to pay its debts as they fall due. Variation of Rights of Shares .
No stamp duty is payable in respect of the issue of the shares or on an instrument of transfer in respect of a share. 127 People’s Republic of China Taxation Under the Enterprise Income Tax Law and its Implementation Rules, an enterprise established outside of the PRC with “de facto management body” within the PRC is considered a resident enterprise.
No stamp duty is payable in respect of the issue of the shares or on an instrument of transfer in respect of a share. People’s Republic of China Taxation Under the Enterprise Income Tax Law and its Implementation Rules, an enterprise established outside of the PRC with “de facto management body” within the PRC is considered a resident enterprise.
The depositary will make such notices, reports and communications available to holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary from us. I. Subsidiary Information Not applicable. J. Annual Report to Security Holders Not applicable. 133 Item 11.
The depositary will make such notices, reports and communications available to holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary from us. I. Subsidiary Information Not applicable. J. Annual Report to Security Holders Not applicable. Item 11.
There are no provisions relating to retirement of directors upon reaching any age limit. The directors have the power to appoint any person as a director either to fill a casual vacancy on the board or as an addition to the existing board. Our shareholders may also appoint any person to be a director by way of ordinary resolution.
There are no provisions relating to retirement of directors upon reaching any age limit. 123 The directors have the power to appoint any person as a director either to fill a casual vacancy on the board or as an addition to the existing board. Our shareholders may also appoint any person to be a director by way of ordinary resolution.
For this purpose, cash and assets readily convertible into cash are categorized as passive assets and our goodwill and other unbooked intangibles will generally be taken into account in determining our asset value. Passive income generally includes, among other things, dividends, interest and income equivalent to interest, rents, royalties, and gains from the disposition of passive assets.
For this purpose, cash and assets readily convertible into cash are categorized as passive assets and goodwill and other unbooked intangibles will generally be taken into account in determining asset value. Passive income generally includes, among other things, dividends, interest and income equivalent to interest, rents, royalties, and gains from the disposition of passive assets.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company. D.
Ordinary Shares Beneficially Owned Class A ordinary shares Class B ordinary shares Total ordinary shares Percentage of total ordinary shares Percentage of aggregate voting power† Directors and Executive Officers:* Lei Sun (l) 6,085,465 58,348,000 64,433,465 27.4 % 62.0 % Yifan Ren (2) 43,583,400 — 43,583,400 18.5 % 9.1 % Changxing Xiao (3) 13,920,300 — 13,920,300 5.9 % 2.9 % Fangxiong Gong — — — — — Yuping Ouyang — — — — — Lei Liu (4) 4,500,000 1,347,600 5,847,600 2.5 % 2.3 % Li Zhang — — — — — All Directors and Executive Officers as a Group 68,089,165 59,695,600 127,784,765 53.9 % 76.1 % Principal Shareholders: Nine F Capital Limited (1) 6,085,465 58,348,000 64,433,465 27.4 % 62.0 % Nine Fortune Limited (2) 43,583,400 — 43,583,400 18.5 % 9.1 % DFM Capital Ltd.
Ordinary Shares Beneficially Owned Class A ordinary shares Class B ordinary shares Total ordinary shares Percentage of total ordinary shares Percentage of aggregate voting power† Directors and Executive Officers:* Lei Sun (l) 6,085,465 58,348,000 64,433,465 27.4 % 62.0 % Yifan Ren (2) 43,583,400 — 43,583,400 18.5 % 9.1 % Changxing Xiao (3) 13,920,300 — 13,920,300 5.9 % 2.9 % Fangxiong Gong — — — — — Yuping Ouyang — — — — — Lei Liu (4) 4,500,000 1,347,600 5,847,600 2.5 % 2.3 % Li Zhang — — — — — All Directors and Executive Officers as a Group 68,089,165 59,695,600 127,784,765 54.3 % 76.3 % Principal Shareholders: Nine F Capital Limited (1) 6,085,465 58,348,000 64,433,465 27.4 % 62.0 % Nine Fortune Limited (2) 43,583,400 — 43,583,400 18.5 % 9.1 % DFM Capital Ltd.
Ouyang is also a licensed member of the Certified Public Accountants of Washington State and a member of the Association of Chartered Certified Accountants. 107 Lei Liu is our co-founder and has served as our director since August 2019, our chief risk officer since June 2020, and our chief executive officer since August 2020. Previously, Mr.
Ouyang is also a licensed member of the Certified Public Accountants of Washington State and a member of the Association of Chartered Certified Accountants. Lei Liu is our co-founder and has served as our director since August 2019, our chief risk officer since June 2020, and our chief executive officer since August 2020. Previously, Mr.
We may grant awards to our employees, directors and consultants of our company, and other individuals, as determined, authorized and approved by the committee. Vesting schedule. In general, the committee determines the vesting schedule, which is specified in the relevant award agreement. 108 Exercise of options.
We may grant awards to our employees, directors and consultants of our company, and other individuals, as determined, authorized and approved by the committee. Vesting schedule. In general, the committee determines the vesting schedule, which is specified in the relevant award agreement. Exercise of options.
Harbottle and the exceptions thereto) so that a minority shareholder may be permitted to commence a class action against, or derivative actions in the name of, our company to challenge: (a) a company acts or proposes to act illegally or ultra vires; 124 (b) the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and (c) those who control the company are perpetrating a “fraud on the minority.” Indemnification of Directors and Executive Officers and Limitation of Liability.
Harbottle and the exceptions thereto) so that a minority shareholder may be permitted to commence a class action against, or derivative actions in the name of, our company to challenge: (a) a company acts or proposes to act illegally or ultra vires; (b) the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and (c) those who control the company are perpetrating a “fraud on the minority.” 126 Indemnification of Directors and Executive Officers and Limitation of Liability.
Our officers are elected by and serve at the discretion of our board of directors. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period.
Our officers are elected by and serve at the discretion of our board of directors. 113 Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period.
Under the PFIC rules: ● the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares; ● the amount allocated to the current taxable year and any taxable years in the U.S.
Under the PFIC rules: ● the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares; 134 ● the amount allocated to the current taxable year and any taxable years in the U.S.
Our sixth amended and restated memorandum and articles of association also authorizes our board of directors to establish from time to time one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including: ● the designation of the series; ● the number of preferred shares to constitute the series and the subscription price thereof if different from the par value thereof; ● the dividend rights, dividend rates, conversion rights, voting rights; and ● the rights and terms of redemption and liquidation preferences. 120 Our board of directors may issue preferred shares without action by our shareholders to the extent authorized but unissued.
Our sixth amended and restated memorandum and articles of association also authorizes our board of directors to establish from time to time one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including: ● the designation of the series; ● the number of preferred shares to constitute the series and the subscription price thereof if different from the par value thereof; ● the dividend rights, dividend rates, conversion rights, voting rights; and ● the rights and terms of redemption and liquidation preferences. 122 Our board of directors may issue preferred shares without action by our shareholders to the extent authorized but unissued.
Dividends received on our ADSs or ordinary shares will not be eligible for the dividends received deduction allowed to corporations in respect of dividends received from U.S. corporations. Individuals and other non-corporate U.S.
Dividends received on our ADSs or ordinary shares will generally not be eligible for the dividends received deduction allowed to corporations in respect of dividends received from U.S. corporations. Individuals and other non-corporate U.S.
Changxing Xiao’s business address is 2/F, Building B, B36 BOE Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing, People’s Republic of China. 113 † For each person or group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares held by such person or group with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class.
Changxing Xiao’s business address is 2/F, Building B, B36 BOE Universal Business Park, No. 10 Jiuxianqiao Road, Chaoyang District, Beijing, People’s Republic of China. 115 † For each person or group included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares held by such person or group with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class.
Based on the market price of our ADSs and the nature and composition of our assets (in particular the retention of a substantial amount of cash, deposits and investments), we believe that we were a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2023, and we will likely be a PFIC for our current taxable year ending December 31, 2024 unless the market price of our ADSs significantly increases and/or we invest a substantial amount of cash and other passive assets we hold in assets that produce or are held for the production of non-passive income.
Based on the market price of our ADSs and the nature and composition of our assets (in particular the retention of a substantial amount of cash, deposits and investments), we believe that we were likely a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2024, and we will likely be a PFIC for our current taxable year ending December 31, 2025 unless the market price of our ADSs significantly increases and/or we invest a substantial amount of cash and other passive assets we hold in assets that produce or are held for the production of non-passive income.
If we do not prevail in these lawsuits completely or in part, or fail to reach a favorable settlement with PICC, our results of operations, financial condition, liquidity and prospects would be materially and adversely affected. 116 Beginning in September 2020, we and certain of our current and former officers, directors and others were named as defendants in various putative securities class actions captioned In re 9F Inc.
If we do not prevail in these lawsuits completely or in part, or fail to reach a favorable settlement with PICC, our results of operations, financial condition, liquidity and prospects would be materially and adversely affected. 118 Beginning in September 2020, we and certain of our current and former officers, directors and others were named as defendants in various putative securities class actions captioned In re 9F Inc.
Any grant or amendment of awards to any committee member shall then require an affirmative vote of a majority of the members of the board of directors who are not on the committee. Award agreement.
Any grant or amendment of awards to any committee member shall then require an affirmative vote of a majority of the members of the board of directors who are not on the committee. 110 Award agreement.
The registered address of Rich Way Global Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, British Virgin Islands. To our knowledge, as of March 31, 2024, a total of 71,688,437 Class A ordinary shares were held by one record holder in the United States, which is the depositary of our ADS program.
The registered address of Rich Way Global Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, British Virgin Islands. To our knowledge, as of March 31, 2025, a total of 71,688,437 Class A ordinary shares were held by one record holder in the United States, which is the depositary of our ADS program.
Holder” is a beneficial owner of our ADSs or ordinary shares that is, for U.S. federal income tax purposes: ● an individual who is a citizen or resident of the United States; ● a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the laws of the United States or any state thereof or the District of Columbia; ● an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or ● a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the U.S.
Holder” is a beneficial owner of our ADSs or ordinary shares that is, for U.S. federal income tax purposes: ● an individual who is a citizen or resident of the United States; ● a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the laws of the United States or any state thereof or the District of Columbia; ● an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or ● a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who has or have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the Code or applicable Regulations.
A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings. 125 Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting.
A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings. 127 Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting.
Compensation of Directors and Executive Officers—Share Incentive Plans.” Other Transactions with Other Related Parties In 2019, Nanjing Lefang Intelligent Lite Technology Development Co., Ltd., or Nanjing Lefang, an investee over which we have significant influence, provided us with borrower acquisition and referral services. We provided consulting services to Nanjing Lefang in 2019.
Compensation of Directors and Executive Officers—Share Incentive Plans.” Other Transactions with Other Related Parties In 2019, Nanjing Lefang Intelligent Lite Technology Development Co., Ltd., or Nanjing Lefang, an investee over which we have significant influence, provided us with borrower acquisition and referral services. We provided consulting services to Nanjing Lefang in 2019 and related party loan to Nanjing Lefang.
Business Overview—Regulation—Regulations Related to Our Business Operation in China—Regulations Related to Foreign Exchange,” “—Regulations Related to Dividend Distribution,” and “—Regulations Related to Employee Stock Incentive Plans.” E.
Business Overview—Regulation—Regulations Related to Our Business Operation in China—Regulations Related to Foreign Exchange,” “—Regulations Related to Dividend Distribution,” and “—Regulations Related to Employee Stock Incentive Plans.” 129 E.
Significant Changes Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report. 117 Item 9. THE OFFER AND LISTING A. Offering and Listing Details See “—C. Markets.” B. Plan of Distribution Not applicable. C.
Significant Changes Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report. 119 Item 9. THE OFFER AND LISTING A. Offering and Listing Details See “—C. Markets.” B. Plan of Distribution Not applicable. C.
Name Class A Ordinary Shares Underlying Options Exercise Price (US$/Share) Date of Grant Date of Expiration Lei Sun 6,227,900 0—2.34 7/10/2015 7/9/2020 9,600,000 0 7/1/2016 12/31/2024 24,958,000 (1) 0—2.12 10/20/2017 12/31/2024 Lei Liu 3,000,000 0—2.34 7/10/2015 7/8/2024 All Directors and Executive Officers as a Group 43,785,900 (1) Options to purchase 7,737,735 Class A ordinary shares of our company have been transferred to other employees of our company.
Name Class A Ordinary Shares Underlying Options Exercise Price (US$/Share) Date of Grant Date of Expiration Lei Sun 6,227,900 0—2.34 7/10/2015 7/9/2020 9,600,000 0 7/1/2016 12/31/2024 24,958,000 (1) 0—2.12 10/20/2017 12/31/2024 Lei Liu 3,000,000 0—2.34 7/10/2015 6/30/2025 All Directors and Executive Officers as a Group 43,785,900 (1) Options to purchase 7,737,735 Class A ordinary shares of our Company have been transferred to other employees of our Company.
Upon any sale, transfer, assignment or disposition of any Class B ordinary share by a holder thereof to any non-affiliate of such holder, or upon a change of control of any Class B ordinary share to any person who is not an affiliate of the registered holder of such Class B ordinary share, each of such Class B ordinary shares will be automatically and immediately converted into one Class A ordinary share. 118 Dividends.
Upon any sale, transfer, assignment or disposition of any Class B ordinary share by a holder thereof to any non-affiliate of such holder, or upon a change of control of any Class B ordinary share to any person who is not an affiliate of the registered holder of such Class B ordinary share, each of such Class B ordinary shares will be automatically and immediately converted into one Class A ordinary share. 120 Dividends.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. 109 Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. 111 Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees.
Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records (other than copies of the memorandum and articles of association, the register of mortgages and charges, and any special resolutions passed by the shareholders).
Holders of our ordinary shares will have no general right under Cayman Islands law to inspect or obtain our register of members or our corporate records (other than copies of the memorandum and articles of association, the register of mortgages and charges, and any special resolutions passed by the shareholders).
Payments of dividends and capital in respect of our ordinary shares and ADSs will not be subject to taxation in the Cayman Islands and no withholding tax will be required on the payment of a dividend or capital to any holder of our ordinary shares or the ADSs, nor will gains derived from the disposal of our ordinary shares or the ADSs be subject to Cayman Islands income or corporation tax.
Payments of dividends and capital in respect of our ordinary shares and ADSs will not be subject to taxation in the Cayman Islands and no withholding tax will be required on the payment of a dividend or capital to any holder of our ordinary shares or the ADSs, nor will gains derived from the disposal of our ordinary shares or the ADSs be subject to Cayman Islands income or corporate tax.
In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Companies Act applicable to us and the comparable provisions of the laws applicable to companies incorporated in the United States and their shareholders. 123 Mergers and Similar Arrangements.
In addition, the Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Companies Act applicable to us and the comparable provisions of the laws applicable to companies incorporated in the United States and their shareholders. 125 Mergers and Similar Arrangements.
As of March 31, 2024, none of our Class B ordinary shares are held by U.S. record holders. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States.
As of March 31, 2025, none of our Class B ordinary shares are held by U.S. record holders. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States.
Holder’s holding period prior to the first taxable year in which we are a PFIC, or a pre-PFIC year, will be taxable as ordinary income; ● the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and ● the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.
Holder’s holding period prior to the first taxable year in which we are a PFIC, or a pre-PFIC year, will be taxable as ordinary income; ● the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and ● an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.
As described above, we believe that we were a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2023, and we will likely be a PFIC for our current taxable year ending December 31, 2024. U.S.
As described above, we believe that we were a PFIC for U.S. federal income tax purposes for our taxable year ended December 31, 2024, and we will likely be a PFIC for our current taxable year ending December 31, 2025. U.S.
The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company: ● does not have to file an annual return of its shareholders with the Registrar of Companies; ● is not required to open its register of members for inspection; 122 ● does not have to hold an annual general meeting; ● may issue negotiable or bearer shares or shares with no par value; ● may obtain an undertaking against the imposition of any future taxation (such undertakings are given for a period of up to 30 years); ● may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; ● may register as a limited duration company; and ● may register as a segregated portfolio company.
The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company: ● does not have to file an annual return of its shareholders with the Registrar of Companies; ● is not required to open its register of members for inspection; ● does not have to hold an annual general meeting; 124 ● may issue shares with no par value; ● may obtain an undertaking against the imposition of any future taxation (such undertakings are given for a period of up to 30 years); ● may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; ● may register as a limited duration company; and ● may register as a segregated portfolio company.
The compensation committee is responsible for, among other things: ● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; ● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; ● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.
The compensation committee is responsible for, among other things: ● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; ● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; ● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. 112 Nominating and Corporate Governance Committee.
As of December 31, 2023, we had RMB57.1 million (US$8.0 million) due from Zhongzheng Jinniu, which represented a related party loan we extended to Zhongzheng Jinniu for the for the purpose of supporting its efforts to seize the business opportunities in an expected securities market resurgence after the COVID-19 pandemic.
As of December 31, 2023, we had RMB57.1 million due from Zhongzheng Jinniu, which represented a related party loan we extended to Zhongzheng Jinniu for the for the purpose of supporting its efforts to seize the business opportunities in an expected securities market resurgence after the COVID-19 pandemic.
See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We may from time to time be subject to claims, controversies, lawsuits and legal proceedings, which could have a material adverse effect on our results of operations, financial condition, liquidity, cash flows and reputation.” and “Item 4—Information on the Company—A.
Risk Factors—Risks Related to Our Business and Industry—We may from time to time be subject to claims, controversies, lawsuits and legal proceedings, which could have a material adverse effect on our results of operations, financial condition, liquidity, cash flows and reputation.” and “Item 4—Information on the Company—A.
Holders are urged to consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries, our VIEs or any of the subsidiaries of our VIEs. As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election with respect to such stock.
Holders should consult their tax advisors regarding the application of the PFIC rules to any of our subsidiaries, our VIEs or any of the subsidiaries of our VIEs. As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election with respect to such stock. If a U.S.
Each U.S. Holder is advised to consult its tax advisor regarding our PFIC status and the U.S. federal income tax consequences of owning and disposing of our ADSs or ordinary shares if we are a PFIC. F. Dividends and Paying Agents Not applicable. G. Statement by Experts Not applicable. H.
Each U.S. Holder should consult its tax advisor regarding our PFIC status and the U.S. federal income tax consequences of owning and disposing of our ADSs or ordinary shares if we are a PFIC. F. Dividends and Paying Agents Not applicable. G. Statement by Experts Not applicable. H.
Each U.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal income taxation to its particular circumstances, and the state, local, non-U.S. and other tax considerations of the ownership and disposition of our ADSs or ordinary shares. 129 General For purposes of this discussion, a “U.S.
Each U.S. Holder should consult its tax advisor regarding the application of U.S. federal income taxation to its particular circumstances, and the state, local, non-U.S. and other tax considerations of the ownership and disposition of our ADSs or ordinary shares. General For purposes of this discussion, a “U.S.
Employees We had 740, 331 and 276 employees as of December 31, 2021, 2022 and 2023, respectively. Almost all our employees are located in China and Hong Kong. The following table sets forth the numbers of our employees categorized by function as of December 31, 2023.
Employees We had 331, 276, and 277 employees as of December 31, 2022, 2023 and 2024, respectively. Almost all our employees are located in China and Hong Kong. The following table sets forth the numbers of our employees categorized by function as of December 31, 2024.
In 2023, we received no reimbursement from the depositary. 136 PART II Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES None. Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Not applicable.
In 2024, we received no reimbursement from the depositary. 138 PART II Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES None. Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Not applicable.
U.S. Holders are urged to consult their tax advisors regarding the tax considerations of the sale or other disposition of our ADSs or ordinary shares under their particular circumstances. Passive foreign investment company rules If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares, and unless the U.S.
Holders should consult their tax advisors regarding the tax considerations applicable to the sale or other disposition of our ADSs or ordinary shares in light of their particular circumstances. Passive foreign investment company rules If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares, and unless the U.S.
Passive foreign investment company considerations A non-U.S. corporation, such as our company, will be a PFIC for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income.
Accordingly, deposits or withdrawals of ordinary shares for ADSs will generally not be subject to U.S. federal income tax. 132 Passive foreign investment company considerations A non-U.S. corporation, such as our company, will be a PFIC for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income.
We may also terminate an executive officer’s employment without cause upon 30-day advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as may be agreed between the executive officers and us.
We may also terminate an executive officer’s employment without cause upon 30-day advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as may be agreed between the executive officers and us. The executive officer may resign at any time with a 30-day advance written notice.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2024 by: ● each of our directors and executive officers; and ● each of our principal shareholders who beneficially own 5% or more of our total outstanding shares.
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of May 30, 2025 by: ● each of our directors and executive officers; and ● each of our principal shareholders who beneficially own 5% or more of our total outstanding shares.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days after March 31, 2024, including through the exercise of any option, warrant or other right or the conversion of any other security.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days after May 30, 2025, including through the exercise of any option, warrant or other right or the conversion of any other security.
Internal Revenue Code of 1986, as amended. If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our ADSs or ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership.
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our ADSs or ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership.
The rules governing the foreign tax credit are complex and each U.S. Holder is urged to consult its tax advisor regarding the availability of the foreign tax credit under its particular circumstances.
The rules governing the foreign tax credit are complex and each U.S. Holder should consult its tax advisor regarding the availability of the foreign tax credit under its particular circumstances.
The following table summarizes, as of March 31, 2024, the options granted under the Share Incentive Plans to our current directors, executive officers and other grantees, excluding awards that were forfeited or canceled after the relevant grant dates.
The following table summarizes, as of June 30, 2025, the options granted under the Share Incentive Plans to our current directors, executive officers and other grantees, excluding awards that were forfeited or canceled after the relevant grant dates.
Zhang received her bachelor degree in Computer Application Technology from North University of China in 1999 and holds an MBA from Tsinghua University. B. Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2023, we paid an aggregate of approximately RMB21.1 million (US$3.0 million) in cash to our executive officers and directors.
Zhang received her bachelor degree in Computer Application Technology from North University of China in 1999 and holds an MBA from Tsinghua University. B. Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2024, we paid an aggregate of approximately RMB19.3 million (US$2.6 million) in cash to our executive officers and directors.
Holder is eligible for the benefits of the Treaty, such holder may be able to elect to treat such gain as PRC source income under the Treaty. Pursuant to the United States Treasury regulations, however, if a U.S.
Holder is eligible for the benefits of the Treaty, such holder may be able to elect to treat such gain as PRC source income under the Treaty. However, if a U.S.
Our sixth amended and restated memorandum and articles of association allow our shareholders holding shares representing in aggregate not less than one-third of the votes attaching to the issued and outstanding shares of our company entitled to vote at general meetings, to requisition an extraordinary general meeting of our shareholders, in which case our directors are obliged to call such meeting and to put the resolutions so requisitioned to a vote at such meeting; however, our sixth amended and restated memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders. 121 Election and Removal of Directors Unless otherwise determined by our company in a general meeting, our sixth amended and restated articles of association provides that our board will consist of not less than three directors.
Our sixth amended and restated memorandum and articles of association allow our shareholders holding shares representing in aggregate not less than one-third of the votes attaching to the issued and outstanding shares of our company entitled to vote at general meetings, to requisition an extraordinary general meeting of our shareholders, in which case our directors are obliged to call such meeting and to put the resolutions so requisitioned to a vote at such meeting; however, our sixth amended and restated memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not called by such shareholders.
In 2023, Hainan Chenxi attributed a revenue of RMB229 thousand (US$32.3 thousand) to us. As of December 31, 2021, 2022 and 2023, we have nil, RMB0.5 million and nil, respectively, due to Hainan Chenxi.
In 2023 and 2024, Hainan Chenxi attributed a revenue of RMB229 thousand and RMB4 thousand to us. As of December 31, 2022, 2023 and 2024, we have RMB0.5 million, nil and nil, respectively, due to Hainan Chenxi.
If we are a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ADSs or ordinary shares, unless we were to cease to be a PFIC and such U.S.
If we are a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary shares, we generally would continue to be treated as a PFIC with respect to such U.S. Holder for all succeeding years during which such U.S.
The executive officer may resign at any time with a 30-day advance written notice. 111 Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations.
Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any of our confidential information or trade secrets, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations.
Consolidated Statements and Other Financial Information We have appended consolidated financial statements filed as part of this annual report. Legal Proceedings In 2019, we partnered with PICC under our direct lending program, for which PICC provided credit insurance to the institutional funding partners. Our cooperation with PICC on new loans under direct lending program was terminated in December 2019.
FINANCIAL INFORMATION A. Consolidated Statements and Other Financial Information We have appended consolidated financial statements filed as part of this annual report. Legal Proceedings In 2019, we partnered with PICC under our direct lending program, for which PICC provided credit insurance to the institutional funding partners.
The calculations in the table below are based on 235,466,660 ordinary shares as of March 31, 2024. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
The calculations in the table below are based on 235,466,660 ordinary shares as of May 30, 2025. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
As of March 31, 2024, awards to purchase 8,232,619 Class A ordinary shares under the Share Incentive Plans have been granted to our directors, executive officers and employees and outstanding, excluding awards that were forfeited or canceled after the relevant grant dates. The following paragraphs describe the principal terms of the Share Incentive Plans. Types of awards.
As of June 30, 2025, awards to purchase 8,208,219 Class A ordinary shares under the Share Incentive Plans have been granted to our directors, executive officers and employees and outstanding, excluding awards that were forfeited or canceled after the relevant grant dates. The following paragraphs describe the principal terms of the Share Incentive Plans. Types of awards.
Yuping Ouyang has served as our independent director since August 2021. Ms. Ouyang has served as chief financial officer and Secretary to the board of director of Gowin Semiconductor Corporation since February 2021. Prior to that, Ms.
Ms. Ouyang has served as chief financial officer and Secretary to the board of director of Gowin Semiconductor Corporation since February 2021, and has served as director of the board of Gowin Semiconductor Corporation since November 2024. Prior to that, Ms.
Directors and Executive Officers Age Position/Title Lei Sun 44 Chairman of the Board of Directors Yifan Ren 41 Vice chairman of the Board of Directors Changxing Xiao 51 Director Fangxiong Gong 60 Independent Director Yuping Ouyang 49 Independent Director Lei Liu 42 Chief Executive Officer and Chief Risk Officer and Director Li Zhang 48 Chief Financial Officer 106 Lei Sun has been our director since January 2014, and our chairman of the board of directors since November 2017.
Directors and Executive Officers Age Position/Title Lei Sun 45 Chairman of the Board of Directors Yifan Ren 42 Vice chairman of the Board of Directors Changxing Xiao 52 Director Fangxiong Gong 61 Independent Director Yuping Ouyang 50 Independent Director Lei Liu 43 Chief Executive Officer and Chief Risk Officer and Director Li Zhang 49 Chief Financial Officer Lei Sun has been our director since January 2014, and our chairman of the board of directors since November 2017.
As of March 31, 2024, other employees as a group hold options to purchase 6,732,619 ordinary shares of our company, with exercise prices ranging from nil to US$3.6953 per share. C. Board Practices Board of Directors Our board of directors consists of six directors.
As of May 30, 2025, other employees as a group hold options to purchase 6,708,219 Ordinary Shares of our company, with exercise prices ranging from nil to US$3.6953 per share. C. Board Practices Board of Directors Our board of directors consists of six directors.
Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes. We do not intend to provide information necessary for U.S.
Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes. We do not intend to provide information necessary for U.S.
Briefing on the motion to dismiss the second amended complaint was completed on July 28, 2023. On March 13, 2024, the Court dismissed the State Court Action with prejudice. Plaintiffs filed a notice of appeal on April 11, 2024. On November 29, 2022, the Federal Court Action was dismissed without prejudice and plaintiffs were allowed to replead.
Briefing on the motion to dismiss the second amended complaint was completed on July 28, 2023. On March 14, 2024, the Court dismissed the State Court Action with prejudice. Plaintiffs filed a notice of appeal on April 11, 2024.
Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—C. Board Practices—Employment Agreements and Indemnification Agreements.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share Incentive Plans.” 115 Option Grants See “Item 6. Directors, Senior Management and Employees—B.
Compensation of Directors and Executive Officers—Share Incentive Plans.” Option Grants See “Item 6. Directors, Senior Management and Employees—B.
In November 2019, PICC stopped paying the service fees to us that had been agreed in the cooperation agreement between us and PICC. PICC further disputed with us regarding payments of the service fees under the cooperation agreement.
Our cooperation with PICC on new loans under direct lending program was terminated in December 2019. In November 2019, PICC stopped paying the service fees to us that had been agreed in the cooperation agreement between us and PICC. PICC further disputed with us regarding payments of the service fees under the cooperation agreement.

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