10q10k10q10k.net
uCloudlink Group Inc.

uCloudlink Group Inc.UCLEarnings & Financial Report

Nasdaq

uCloudlink Group Inc. is a global mobile data connectivity solution provider specializing in cloud SIM technology. It delivers cross-border internet access, IoT connectivity solutions, and customized data plans for individual travelers, enterprise clients, and telecom partners, with a presence across Asia, Europe, and North America.

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

Top changes in uCloudlink Group Inc.'s 2023 20-F

966 paragraphs added · 1049 removed · 825 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

366 edited+74 added−123 removed461 unchanged
Our holding company, our mainland China subsidiaries and former VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the historical contractual arrangements with the former VIEs and, consequently, significantly affect the historical financial performance of the former VIEs and our company as a whole.
Our holding company, our mainland China subsidiaries and the former VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the historical contractual arrangements with the former VIEs and, consequently, significantly affect the historical financial performance of the former VIEs and our company as a whole.
Under the laws of mainland China, each of our subsidiaries and former VIEs in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital.
Under the laws of mainland China, each of our subsidiaries and the former VIEs in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital.
In addition, our subsidiaries and former VIEs may allocate a portion of their after-tax profits based on mainland China’s accounting standards to discretionary surplus funds at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends.
In addition, our subsidiaries and the former VIEs may allocate a portion of their after-tax profits based on mainland China’s accounting standards to discretionary surplus funds at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends.
For restrictions and limitations on our ability to distribute earnings from our businesses, including subsidiaries and former VIEs, to uCloudlink and investors as well as the ability to settle amounts owed under historical VIE agreements, see “Item 3. Key Information—D.
For restrictions and limitations on our ability to distribute earnings from our businesses, including subsidiaries and the former VIEs, to uCloudlink and investors as well as the ability to settle amounts owed under historical VIE agreements, see “Item 3. Key Information—D.
Risk Factors—Risks Related to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely our current auditor.
Risk Factors—Risks Related to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely our current auditor.
In the European Union, or EU, the General Data Protection Regulation, or GDPR, which came into effect in 2018, increased our burden of regulatory compliance and required us to change certain of our data privacy and security practices in order to achieve compliance.
In the European Union, or the EU, the General Data Protection Regulation, or GDPR, which came into effect in 2018, increased our burden of regulatory compliance and required us to change certain of our data privacy and security practices in order to achieve compliance.
It is uncertain whether and when the draft Regulations on the Network Data Security will be adopted, and if the adopted version will contain the same provisions as the draft Regulations.
It is uncertain whether and when the draft Regulations on the Network Data Security will be adopted, and if the adopted version will contain the same provisions as the draft Regulations on the Network Data Security.
After the Restructuring, we now carry out the PaaS and SaaS platform services in mainland China, which were the primary business operated by the former VIEs, in cooperation with local business partners, such as Beijing Huaxianglianxin Technology Company, which have the required licenses to provide local data connectivity services in mainland China. See “Item 4. Information on the Company—C.
After the Restructuring, we now carry out the PaaS and SaaS platform services in mainland China, which were the primary business operated by the former VIEs, in cooperation with local business partners, such as Beijing Huaxianglianxin Technology Company, which have the required licenses to provide local data connectivity services in mainland China. See “Item 4. Information on the Company—C.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021.
In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely our current auditor, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely our current auditor, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year.
Mainland China’s regulation of loans to and direct investment in mainland China entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of any financing outside mainland China to make loans to or make additional capital contributions to our mainland China subsidiaries and former VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Mainland China’s regulation of loans to and direct investment in mainland China entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of any financing outside mainland China to make loans to or make additional capital contributions to our mainland China subsidiaries and the former VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Such loans to any of our mainland China subsidiaries and former VIEs cannot exceed a statutory limit and must be filed with SAFE through the online filing system of SAFE pursuant to the applicable regulations of mainland China.
Such loans to any of our mainland China subsidiaries and the former VIEs cannot exceed a statutory limit and must be filed with SAFE through the online filing system of SAFE pursuant to the applicable regulations of mainland China.
Any loan to be provided by us to our mainland China subsidiaries and former VIEs with a term of one year or more must be recorded and registered with the NDRC. See “Item 4. Information on the Company—B.
Any loan to be provided by us to our mainland China subsidiaries and the former VIEs with a term of one year or more must be recorded and registered with the NDRC. See “Item 4. Information on the Company—B.
Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of mainland China.
Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of mainland China.
However, we may not be informed of the identities of all the domestic residents or entities holding direct or indirect interest in our company, nor can we compel our beneficial owners to comply with SAFE registration requirements.
However, we may not be informed of the identities of all the domestic residents or entities holding direct or indirect interest in our company, nor can we compel our beneficial owners to comply with the SAFE registration requirements.
Under the applicable regulations and SAFE rules, domestic citizens of mainland China who participate in an employee stock ownership plan or a stock option plan in an overseas publicly listed company are required to register with SAFE and complete certain other administrative procedures.
Under the applicable regulations and the SAFE rules, domestic citizens of mainland China who participate in an employee stock ownership plan or a stock option plan in an overseas publicly listed company are required to register with SAFE and complete certain other administrative procedures.
Starting from March 31, 2023, enterprises that have been listed overseas or satisfy all of the following conditions shall be deemed as “Grandfathered Issuers” and are not required to complete the overseas listing filing immediately, but shall complete filings as required if they conduct refinancing or are involved in other circumstances that require filing with the CSRC: (i) the application for indirect overseas offering or listing shall have been approved by the relevant overseas regulatory authority or stock exchange prior to March 31, 2023 (as the SEC does not approve or disapprove of an offering, this requirement is interpreted to be the SEC’s declaration of the registration statement to be effective with respect to this offering), (ii) the enterprise is not required to reapply for the approval of the relevant overseas regulatory authority or stock exchange, and (iii) such overseas securities offering or listing shall be completed before September 30, 2023.
Starting from March 31, 2023, enterprises that have been listed overseas or satisfy all of the following conditions shall be deemed as “Grandfathered Issuers” and are not required to complete the overseas listing filing immediately, but shall complete filings as required if they conduct refinancing or are involved in other circumstances that require filing with the CSRC: (i) the application for indirect overseas offering or listing shall have been approved by the overseas regulatory authority or stock exchange prior to March 31, 2023 (as the SEC does not approve or disapprove of an offering, this requirement is interpreted to be the SEC’s declaration of the registration statement to be effective with respect to this offering), (ii) the enterprise is not required to reapply for the approval of the overseas regulatory authority or stock exchange, and (iii) such overseas securities offering or listing shall be completed before September 30, 2023.
Such measures include Executive Order 13873, issued in May 2019, which the Department of Commerce recently proposed to implement through an interim final rule that broadly empowers that agency (in consultation with other executive agencies) to block or condition any “transaction” involving the “acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service” designed, developed, manufactured, or supplied by a Chinese company (i.e. given China’s designation as a “foreign adversary” under Executive Order 13873) that poses “undue risks of sabotage to or subversion of” information and communications technology and services in the United States or that otherwise threatens the resiliency or national security of the United States.
Such measures include Executive Order 13873, issued in May 2019, which the Department of Commerce proposed to implement through an interim final rule that broadly empowers that agency (in consultation with other executive agencies) to block or condition any “transaction” involving the “acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service” designed, developed, manufactured, or supplied by a Chinese company (i.e. given China’s designation as a “foreign adversary” under Executive Order 13873) that poses “undue risks of sabotage to or subversion of” information and communications technology and services in the United States or that otherwise threatens the resiliency or national security of the United States.
If any PRC authority finds that we, our mainland China subsidiaries or the former VIEs are in violation of any existing or future laws or regulations of mainland China or lack the necessary permits or licenses to operate any of our businesses in mainland China, the relevant governmental authorities would have broad discretion in dealing with such violation, including, without limitation: (i) imposing fines on us, (ii) confiscating any of our income that they deem to be obtained through illegal operations, (iii) discontinuing or placing restrictions or onerous conditions on our operations, (iv) placing restrictions on our right to collect revenues, and (v) shutting down our servers or blocking our mobile apps and websites.
If any PRC authority finds that we, our mainland China subsidiaries or the former VIEs are in violation of any existing or future laws or regulations of mainland China or lack the necessary permits or licenses to operate any of our businesses in mainland China, the governmental authorities would have broad discretion in dealing with such violation, including, without limitation: (i) imposing fines on us, (ii) confiscating any of our income that they deem to be obtained through illegal operations, (iii) discontinuing or placing restrictions or onerous conditions on our operations, (iv) placing restrictions on our right to collect revenues, and (v) shutting down our servers or blocking our mobile apps and websites.
The capital of a foreign invested enterprise shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for investment in securities or investments other than banks’ principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).
The capital of a foreign invested enterprise shall not be used for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited by laws and regulations; (ii) directly or indirectly used for investment in securities or investments other than banks’ principal-secured products unless otherwise provided by laws and regulations; (iii) the granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of real estate that is not for self-use (except for the foreign-invested real estate enterprises).
GAAP, the financial statements of the former VIEs are consolidated as part of our financial statements for the years ended December 31, 2020, 2021 and 2022 in this annual report. 1 As we continued to evaluate our business plan, we have decided to adjust our business model in mainland China, which we believe will no longer require specific certificate for offering internet access services that could fall within the scope of prohibited or restricted categories for foreign investment in mainland China.
GAAP, the financial statements of the former VIEs are consolidated as part of our financial statements for the years ended December 31, 2021 and 2022 in this annual report. 1 As we continued to evaluate our business plan, we have decided to adjust our business model in mainland China, which we believe will no longer require specific certificate for offering internet access services that could fall within the scope of prohibited or restricted categories for foreign investment in mainland China.
Any failure to obtain or a delay in obtaining the requisite governmental approval for an offering, or a rescission of such CSRC approval if obtained by us, may subject us to sanctions imposed by the relevant PRC regulatory authority, which could include fines and penalties on our and the former VIEs’ operations in mainland China, restrictions or limitations on our ability to pay dividends outside of mainland China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations.
Any failure to obtain or a delay in obtaining the requisite governmental approval for an offering, or a rescission of such CSRC approval if obtained by us, may subject us to sanctions imposed by the PRC regulatory authority, which could include fines and penalties on our and the former VIEs’ operations in mainland China, restrictions or limitations on our ability to pay dividends outside of mainland China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations.
We have notified all domestic residents or entities of mainland China who directly or indirectly hold shares in our Cayman Islands holding company and who are known to us as being domestic residents of mainland China to complete the foreign exchange registrations, among which, some domestic residents are in the process of updating their registrations required in connection with our recent corporate restructuring, furthermore, the foreign exchange registrations of several domestic residents are yet to be completed, and there is no assurance that they will complete the relevant registrations finally, or at all.
We have notified all domestic residents or entities of mainland China who directly or indirectly hold shares in our Cayman Islands holding company and who are known to us as being domestic residents of mainland China to complete the foreign exchange registrations, among which, some domestic residents are in the process of updating their registrations required in connection with our recent corporate restructuring, furthermore, the foreign exchange registrations of several domestic residents are yet to be completed, and there is no assurance that they will complete the registrations finally, or at all.
If we fail to obtain the relevant approval or complete the filings and other relevant regulatory procedures, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.
If we fail to obtain the approval or complete the filings and other regulatory procedures, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting an offering, and these risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless.
Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, penalties, changes to our business practices, increased cost of operations, damages to our reputation and brand, or otherwise harm our business.” 4 Under the Review Measures and other cybersecurity laws and regulations of mainland China, critical information infrastructure operators that intend to purchase internet products and services that affect or may affect national security must be subject to the cybersecurity review.
Many of these laws and regulations are subject to change and uncertain interpretation, and could result in claims, penalties, changes to our business practices, increased cost of operations, damages to our reputation and brand, or otherwise harm our business.” 4 Under the Measures for Cybersecurity Review and other cybersecurity laws and regulations of mainland China, critical information infrastructure operators that intend to purchase internet products and services that affect or may affect national security must be subject to the cybersecurity review.
In addition to the above factors, the price and trading volume of the ADSs may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting us or our industry, users, suppliers or third-party sellers; ● announcements of studies and reports relating to the quality of our product and service offerings or those of our competitors; ● changes in the economic performance or market valuations of other players in the industry; ● actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● conditions in the mobile data connectivity service market; 59 ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; ● additions to or departures of our senior management; ● fluctuations of exchange rates between the RMB and the U.S. dollar; ● litigation or other legal proceedings involving us; ● detrimental negative publicity about us or our industry; ● release or expiry of lock-up or other transfer restrictions on our issued and outstanding shares or ADSs; and ● sales or perceived potential sales of additional ordinary shares or ADSs.
In addition to the above factors, the price and trading volume of the ADSs may be highly volatile due to multiple factors, including the following: ● regulatory developments affecting us or our industry, users, suppliers or third-party sellers; ● announcements of studies and reports relating to the quality of our product and service offerings or those of our competitors; ● changes in the economic performance or market valuations of other players in the industry; ● actual or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results; ● changes in financial estimates by securities research analysts; ● conditions in the mobile data connectivity service market; ● announcements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; ● additions to or departures of our senior management; ● fluctuations of exchange rates between the RMB and the U.S. dollar; 54 ● litigation or other legal proceedings involving us; ● detrimental negative publicity about us or our industry; ● release or expiry of lock-up or other transfer restrictions on our issued and outstanding shares or ADSs; and ● sales or perceived potential sales of additional ordinary shares or ADSs.
Any failure to obtain or delay in obtaining such approval for this offering, or a rescission of obtained approval, would subject us to sanctions imposed by the CSRC or other PRC government authorities.” 6 Cash and Asset Flows through Our Organization We conduct our operations in mainland China through our mainland China subsidiaries and the former VIEs with which we have maintained contractual arrangements historically.
Any failure to obtain or delay in obtaining such approval for this offering, or a rescission of obtained approval, would subject us to sanctions imposed by the CSRC or other PRC government authorities.” 6 Cash and Asset Flows through Our Organization We conduct our operations in mainland China through our mainland China subsidiaries and the former VIEs with which we maintained contractual arrangements historically.
Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us.
Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the requirements differently from us.
The PRC government has recently published new policies that significantly affected certain industries and we cannot rule out the possibility that it will in the future release regulations or policies that directly or indirectly affect our industry or require us to seek additional permission to continue our operations, which could result in a material adverse change in our operation and/or the value of our ADSs.
The PRC government has published new policies that significantly affected certain industries and we cannot rule out the possibility that it will in the future release regulations or policies that directly or indirectly affect our industry or require us to seek additional permission to continue our operations, which could result in a material adverse change in our operation and/or the value of our ADSs.
Risk Factors—Risks Related to Our Business and Industry—We depend on network operators for their wireless networks, infrastructures and data traffic, and any disruptions of or limitations on our use of such networks, infrastructures and data traffic may adversely affect our business and financial results.” 17 ● Our ability to grow our business and user base for our service may be limited unless we can continue to obtain data traffic at favorable rates.
Risk Factors—Risks Related to Our Business and Industry—We depend on network operators for their wireless networks, infrastructures and data traffic, and any disruptions of or limitations on our use of such networks, infrastructures and data traffic may adversely affect our business and financial results.” ● Our ability to grow our business and user base for our service may be limited unless we can continue to obtain data traffic at favorable rates.
Currently, we have a Radio Dealers License (Unrestricted) and are preparing an application to the Communications Authority in Hong Kong for a Services-Based Operator License. However, there is no assurance that due to the expansion and changes to our product and service offerings from time to time, we possess or will possess all relevant or required licenses. See “Item 4.
Currently, we have a Radio Dealers License (Unrestricted) and are preparing an application to the Communications Authority in Hong Kong for a Services-Based Operator License. However, there is no assurance that due to the expansion and changes to our product and service offerings from time to time, we possess or will possess all required licenses. See “Item 4.
While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within mainland China may further increase difficulties faced by you in protecting your interests. See also “Item 3. Key Information—D.
While detailed interpretation of or implementation rules under the Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within mainland China may increase difficulties faced by you in protecting your interests. See also “Item 3. Key Information—D.
If any of our shareholders regulated by such policies fails to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be subject to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions.
If any of our shareholders regulated by such policies fails to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be subject to penalties from the PRC authorities. The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions.
We started to commercially offer products and services for uCloudlink 2.0 model in 2018, through which we aim to provide mobile data connectivity services for local users across different MNOs or help MNOs improve the service quality to their users, since local mobile data traffic represents a much bigger market than international data roaming.
We started to commercially offer products and services for our uCloudlink 2.0 model in 2018, through which we aim to provide mobile data connectivity services for local users across different MNOs or help MNOs improve the service quality to their users, since local mobile data traffic represents a much bigger market than international data roaming.
If the government authorities find that we fail to complete branch company registrations for any of our service stores or pick-up points in a timely manner or otherwise violate relevant regulations on branch companies, we may be subject to penalties, including fines, confiscation of income, or being ordered to cease business.
If the government authorities find that we fail to complete branch company registrations for any of our service stores or pick-up points in a timely manner or otherwise violate regulations on branch companies, we may be subject to penalties, including fines, confiscation of income, or being ordered to cease business.
If we or any of the former VIEs is found to be in violation of any existing or future laws or regulations of mainland China, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3.
If we or any of the former VIEs is found to be in violation of any existing or future laws or regulations of mainland China, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3.
There is no guarantee that we will be able to find appropriate and sufficient space. The occurrence of any of these events could adversely impact our business, financial condition, results of operations and cash flows. We have limited insurance coverage, which could expose us to significant costs and business disruption.
There is no guarantee that we will be able to find appropriate and sufficient space. The occurrence of any of these events could adversely impact our business, financial condition, results of operations and cash flows. 39 We have limited insurance coverage, which could expose us to significant costs and business disruption.
Though the failure to register leasehold interests may not void the respective lease agreement, it may expose us to potential warnings and penalties up to RMB10,000 per unregistered leased property. 52 Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.
Though the failure to register leasehold interests may not void the respective lease agreement, it may expose us to potential warnings and penalties up to RMB10,000 per unregistered leased property. Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.
Furthermore, as these foreign exchange and outbound investment related regulations are relatively new and their interpretation and implementation have been constantly evolving, it is uncertain how these regulations, and any future regulations concerning offshore or cross-border investments and transactions, will be interpreted, amended and implemented by the relevant government authorities.
Furthermore, as these foreign exchange and outbound investment related regulations are relatively new and their interpretation and implementation have been constantly evolving, it is uncertain how these regulations, and any future regulations concerning offshore or cross-border investments and transactions, will be interpreted, amended and implemented by the government authorities.
Risk Factors—Risks Related to Doing Business in China.” 2 PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors.
Risk Factors—Risks Related to Doing Business in China.” PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. Any failure to comply with mainland China’s regulations regarding the registration requirements for employee stock incentive plans may subject the plan participants or us to fines and other legal or administrative sanctions.
This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects. 50 Any failure to comply with mainland China’s regulations regarding the registration requirements for employee stock incentive plans may subject the plan participants or us to fines and other legal or administrative sanctions.
Business Overview—Regulation—Mainland China—Regulations Related to Internet Information Security and Personal Information Protection.” Pursuant to the Review Measures, critical information infrastructure operators that purchase network products and services and data processing operators engaging in data processing activities that affect or may affect national security must be subject to the cybersecurity review.
Business Overview—Regulation—Mainland China—Regulations Related to Internet Information Security and Personal Information Protection.” Pursuant to the Measures for Cybersecurity Review, critical information infrastructure operators that purchase network products and services and data processing operators engaging in data processing activities that affect or may affect national security must be subject to the cybersecurity review.
Any occurrence of the foregoing could cause material adverse effects on our operations and financial condition, material weaknesses in our internal control over financial reporting, and reputational damage. We may need additional capital, and financing may not be available on terms acceptable to us, or at all.
Any occurrence of the foregoing could cause material adverse effects on our operations and financial condition, material weaknesses in our internal control over financial reporting, and reputational damage. 29 We may need additional capital, and financing may not be available on terms acceptable to us, or at all.
Compensation—Amended and Restated 2018 Stock Option Scheme” and “Item 6. Directors, Senior Management and Employees—B. Compensation—Amended and Restated 2019 Share Incentive Plan.” 39 We are subject to taxation-related risks in multiple jurisdictions. The tax laws applicable to our business activities are subject to change and uncertain interpretation.
Compensation—Amended and Restated 2018 Stock Option Scheme” and “Item 6. Directors, Senior Management and Employees—B. Compensation—Amended and Restated 2019 Share Incentive Plan.” We are subject to taxation-related risks in multiple jurisdictions. The tax laws applicable to our business activities are subject to change and uncertain interpretation.
In addition, any negative publicity about our company, our products and services, our employees, our business practices, or our partners, regardless of its veracity, could harm our brand image and in turn adversely affect our business and results of operations. 45 We are involved in legal proceedings in the ordinary course of our business from time to time.
In addition, any negative publicity about our company, our products and services, our employees, our business practices, or our partners, regardless of its veracity, could harm our brand image and in turn adversely affect our business and results of operations. We are involved in legal proceedings in the ordinary course of our business from time to time.
As a result, our shares and/or ADSs may decline in value or become worthless. Risks Related to Doing Business in China Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations. Certain portion of our operations are located in China.
As a result, our shares and/or ADSs may decline in value or become worthless. 41 Risks Related to Doing Business in China Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations. Certain portion of our operations are located in China.
In addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting. 62 If we asked the depositary to solicit your instructions at least 30 days before the meeting date but the depositary does not receive voting instructions from you by the specified date and we confirm to the depositary that (i) we wish to receive a discretionary proxy; (ii) we reasonably do not know of any substantial shareholder opposition to the proxy item(s); and (iii) the proxy item(s) is not materially adverse to the interests of our shareholders, then the depositary will consider you to have authorized and directed it to give a discretionary proxy to a person designated by us to vote the number of deposited securities represented by the ADSs as to the proxy item(s).
In addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting. 57 If we asked the depositary to solicit your instructions at least 30 days before the meeting date but the depositary does not receive voting instructions from you by the specified date and we confirm to the depositary that (i) we wish to receive a discretionary proxy; (ii) we reasonably do not know of any substantial shareholder opposition to the proxy item(s); and (iii) the proxy item(s) is not materially adverse to the interests of our shareholders, then the depositary will consider you to have authorized and directed it to give a discretionary proxy to a person designated by us to vote the number of deposited securities represented by the ADSs as to the proxy item(s).
The PRC Cybersecurity Law and relevant regulations require network operators, which may include us, to ensure the security and stability of the services provided via network and protect individual privacy and the security of personal data in general by requiring the consent of internet users prior to the collection, use or disclosure of their personal data.
The PRC Cybersecurity Law and regulations require network operators, which may include us, to ensure the security and stability of the services provided via network and protect individual privacy and the security of personal data in general by requiring the consent of internet users prior to the collection, use or disclosure of their personal data.
The relevant regulatory authorities in mainland China continue to monitor the websites and apps in relation to the protection of personal data, privacy and information security, and may impose additional requirements from time to time. The relevant regulatory authorities also publicize, from time to time, their monitoring results and require relevant enterprises listed in such notices to rectify non-compliance.
The regulatory authorities in mainland China continue to monitor the websites and apps in relation to the protection of personal data, privacy and information security, and may impose additional requirements from time to time. The regulatory authorities also publicize, from time to time, their monitoring results and require enterprises listed in such notices to rectify non-compliance.
The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.” Permissions Required from the PRC Authorities for Our Operations We have conducted our business in mainland China primarily through our subsidiaries and former VIEs in mainland China.
The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.” 3 Permissions Required from the PRC Authorities for Our Operations We have conducted our business in mainland China primarily through our subsidiaries and the former VIEs in mainland China.
Business Overview—Regulation—Mainland China—Regulations Related to Internet Information Security and Personal Information Protection—Regulations Related to Personal Information Protection.” In addition, the Review Measures also stipulate that any data processor carrying out data processing activities that affect or may affect national security should also be subject to the cybersecurity review.
Business Overview—Regulation—Mainland China—Regulations Related to Internet Information Security and Personal Information Protection—Regulations Related to Personal Information Protection.” In addition, the Measures for Cybersecurity Review also stipulate that any data processor carrying out data processing activities that affect or may affect national security should also be subject to the cybersecurity review.
As our mainland China and Hong Kong subsidiaries and former VIEs have accumulated losses since their incorporation, none of them has declared or paid any dividends or made any distributions to their respective holding companies, including uCloudlink. In return, uCloudlink has not declared a dividend.
As our mainland China and Hong Kong subsidiaries and the former VIEs have accumulated losses since their incorporation, none of them has declared or paid any dividends or made any distributions to their respective holding companies, including uCloudlink. In return, uCloudlink has not declared a dividend.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government determines that the contractual arrangements with the former VIEs structure did not comply with the regulations of mainland China, or if these regulations change or are interpreted differently in the future, our shares and/or ADSs may decline in value or become worthless if we are deemed to be unable to assert our contractual control rights over the assets of the former VIEs.” 18 Risks Related to Doing Business in China We and the former VIEs face risks and uncertainties related to doing business in China in general, including, but not limited to, the following: ● Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government determines that the contractual arrangements with the former VIEs structure did not comply with the regulations of mainland China, or if these regulations change or are interpreted differently in the future, our shares and/or ADSs may decline in value or become worthless if we are deemed to be unable to assert our contractual control rights over the assets of the former VIEs.” 14 Risks Related to Doing Business in China We and the former VIEs face risks and uncertainties related to doing business in China in general, including, but not limited to, the following: ● Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.
Since the interpretation and application of regulations and laws related to M2M Data SIM Cards in mainland China remain unclear, and there are uncertainties as to the restriction on the use of M2M Data SIM Cards, including the definition of resale and non-industry uses, our usage of M2M Data SIM Cards may be deemed in violation of relevant regulations.
Since the interpretation and application of regulations and laws related to M2M Data SIM Cards in mainland China remain unclear, and there are uncertainties as to the restriction on the use of M2M Data SIM Cards, including the definition of resale and non-industry uses, our usage of M2M Data SIM Cards may be deemed in violation of regulations.
For example, in August 2018, we filed a complaint against SIMO Holdings Inc., or SIMO, and Skyroam Inc. in the United States District Court for the Northern District of California, claiming infringement of two of our U.S. patents. On August 30, 2021, we entered into a settlement agreement with SIMO.
For example, in August 2018, we filed a complaint against SIMO Holdings Inc. and Skyroam Inc. in the United States District Court for the Northern District of California, claiming infringement of two of our U.S. patents. On August 30, 2021, we entered into a settlement agreement with SIMO Holdings Inc.
If our major distributors decide to exit the cooperation with us or if we fail to retain our key distributors or attract additional distributors on terms that are commercially reasonable, our business and results of operations could be materially and adversely affected. We are subject to payment-related risks.
If our major distributors decide to exit the cooperation with us or if we fail to retain our key distributors or attract additional distributors on terms that are commercially reasonable, our business and results of operations could be materially and adversely affected. 38 We are subject to payment-related risks.
As a result, our business, financial condition and results of operations may be materially and adversely affected. In addition, some of our leasehold interests in leased properties have not been registered with the relevant PRC governmental authorities as required by relevant laws of mainland China.
As a result, our business, financial condition and results of operations may be materially and adversely affected. In addition, some of our leasehold interests in leased properties have not been registered with the PRC governmental authorities as required by laws of mainland China.
Since we are a Cayman Islands exempted company, the rights of our shareholders may be more limited than those of shareholders of a company organized in the United States. 65 Under the laws of some jurisdictions in the United States, majority and controlling shareholders generally have certain fiduciary responsibilities to the minority shareholders.
Since we are a Cayman Islands exempted company, the rights of our shareholders may be more limited than those of shareholders of a company organized in the United States. Under the laws of some jurisdictions in the United States, majority and controlling shareholders generally have certain fiduciary responsibilities to the minority shareholders.
However, the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in mainland China-based issuers. For more detailed information, see “Item 3. Key Information—D.
However, the PRC government has indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in mainland China-based issuers. For more detailed information, see “Item 3. Key Information—D.
In addition, changes in economic sanctions laws in the future could adversely impact our business and investments in the ADSs. We cooperate with our contract manufacturers to manufacture our products. If we encounter issues with them, our business and results of operations could be materially and adversely affected. We cooperate with certain contract manufacturers to produce our products.
In addition, changes in economic sanctions laws in the future could adversely impact our business and investments in the ADSs. 37 We cooperate with our contract manufacturers to manufacture our products. If we encounter issues with them, our business and results of operations could be materially and adversely affected. We cooperate with certain contract manufacturers to produce our products.
For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.” We face various risks and uncertainties related to doing business in China.
For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.” 2 We face various risks and uncertainties related to doing business in China.
If our new business initiatives do not achieve the level of success we expected, our operating results and growth prospect can be adversely affected. 34 We generate a substantial portion of our revenues from provision of international mobile data connectivity services.
If our new business initiatives do not achieve the level of success we expected, our operating results and growth prospect can be adversely affected. We generate a substantial portion of our revenues from provision of international mobile data connectivity services.
As a network service provider in mainland China, we are obligated to require the users to provide their real identity information when signing agreements or confirmations on the provision of services stipulated under relevant laws and regulations.
As a network service provider in mainland China, we are obligated to require the users to provide their real identity information when signing agreements or confirmations on the provision of services stipulated under laws and regulations.
Our current and planned personnel, systems, resources and controls may not be adequate to support and effectively manage our future operations. 27 Our and the former VIEs’ business is subject to complex and evolving Chinese and international laws and regulations regarding data privacy and cybersecurity.
Our current and planned personnel, systems, resources and controls may not be adequate to support and effectively manage our future operations. Our and the former VIEs’ business is subject to complex and evolving Chinese and international laws and regulations regarding data privacy and cybersecurity.
If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities. See “Item 4. Information on the Company—B.
If our employees fail to pay or we fail to withhold their income taxes according to laws and regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities. See “Item 4. Information on the Company—B.
With respect to provision of marketing and software licensing services, our subsidiaries received cash from the former VIEs amounted to US$5.5 million, US$5.4 million and US$4.7 million for the year ended December 31, 2020, 2021 and 2022 respectively.
With respect to provision of marketing and software licensing services, our subsidiaries received cash from the former VIEs amounted to US$5.4 million and US$4.7 million for the year ended December 31, 2021 and 2022, respectively.
Any such tax may reduce the returns on your investment in the ADSs. 56 We face uncertainty with respect to indirect transfer of equity interests in mainland China resident enterprises by their non-resident holding companies.
Any such tax may reduce the returns on your investment in the ADSs. We face uncertainty with respect to indirect transfer of equity interests in mainland China resident enterprises by their non-resident holding companies.
We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs. 60 Our dual class share structure with different voting rights 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.
We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the ADSs. 55 Our dual class share structure with different voting rights 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.
If the PRC government finds such agreements non-compliant with relevant laws of mainland China, regulations, and rules, or if these laws, regulations, and rules or the interpretation thereof change in the future, and such changes may be retroactively applied to our historical contractual arrangements, we could be subject to severe penalties and our control over the former VIEs may be rendered ineffective, which could result in potential restatement of our financial statements for the years ended December 31, 2020, 2021 and 2022 included in this annual report.
If the PRC government finds such agreements non-compliant with laws of mainland China, regulations, and rules, or if these laws, regulations, and rules or the interpretation thereof change in the future, and such changes may be retroactively applied to our historical contractual arrangements, we could be subject to severe penalties and our control over the former VIEs may be rendered ineffective, which could result in potential restatement of our financial statements for the years ended December 31, 2021 and 2022 included in this annual report.
Under the circumstances that we decide to make an amendment to the deposit agreement that prejudices a substantial existing right of ADS holders or terminate the deposit agreement, the ADS holders may choose to sell their ADSs or surrender their ADSs and become direct holders of the underlying Class A ordinary shares, but will have no right to any compensation whatsoever. 63 ADSs holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.
Under the circumstances that we decide to make an amendment to the deposit agreement that prejudices a substantial existing right of ADS holders or terminate the deposit agreement, the ADS holders may choose to sell their ADSs or surrender their ADSs and become direct holders of the underlying Class A ordinary shares, but will have no right to any compensation whatsoever. 58 ADSs holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.
Our mainland China subsidiaries have obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options.
Our mainland China subsidiaries have obligations to file documents related to employee share options or restricted shares with tax authorities and to withhold individual income taxes of those employees who exercise their share options.
With respect to transfer of equity investment, our subsidiary paid cash to the former VIEs amounted to nil, nil and US$1.3 million for the year ended December 31, 2020, 2021 and 2022 respectively.
With respect to transfer of equity investment, our subsidiary paid cash to the former VIEs amounted to nil and US$1.3 million for the year ended December 31, 2021 and 2022, respectively.
We are subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act, or Section 404, requires that we include a report from management on the effectiveness of our internal control over financial reporting in our annual report.
We are subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act requires that we include a report from management on the effectiveness of our internal control over financial reporting in our annual report.
We cannot assure you that relevant PRC governmental authorities, including the CSRC, would reach the same conclusion as our PRC counsel, and hence, we may face regulatory actions or other sanctions from them.
We cannot assure you that PRC governmental authorities, including the CSRC, would reach the same conclusion as our PRC counsel, and hence, we may face regulatory actions or other sanctions from them.
Any funds we transfer to our mainland China subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration or filing with relevant governmental authorities in mainland China.
Any funds we transfer to our mainland China subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration or filing with governmental authorities in mainland China.
This concentration of share ownership and voting power may also discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company. 61 If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding the ADSs, the market price for the ADSs and trading volume could decline.
This concentration of share ownership and voting power may also discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company. 56 If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, or if they adversely change their recommendations regarding the ADSs, the market price for the ADSs and trading volume could decline.
Any failure to obtain or delay in obtaining such approval or completing such procedures for an offering, or a rescission of any such approval, could subject us to sanctions by the relevant PRC governmental authorities.
Any failure to obtain or delay in obtaining such approval or completing such procedures for an offering, or a rescission of any such approval, could subject us to sanctions by the PRC governmental authorities.
The cash flows that have occurred between our subsidiaries and the former VIEs are summarized as the following: For the year ended December 31, 2020 2021 2022 (US$ in millions) Cash paid by former VIEs to subsidiaries for purchase of data plans and raw materials 27.1 1.9 0.9 Cash paid by former VIEs to subsidiaries for marketing and software licensing services 5.5 5.4 4.7 Cash paid by former VIEs to subsidiaries for subsidiary establishment — — 0.2 Intercompany advances from former VIEs to subsidiaries — — 1.8 Cash paid by subsidiaries to former VIEs for purchase of Wi-Fi terminals 55.9 29.4 27.7 Intercompany advances from subsidiaries to former VIEs 7.7 3.1 1.5 Cash paid by subsidiaries to former VIEs for transfer of equity investment — — 1.3 Pursuant to historical contractual agreements, Beijing uCloudlink has the exclusive rights to provide former VIEs with operational supports and consulting and technical services required by the former VIEs’ businesses.
The cash flows that occurred between our subsidiaries and the former VIEs in 2021 and 2022 are summarized as the following: For the year ended December 31, 2021 2022 (US$ in millions) Cash paid by former VIEs to subsidiaries for purchase of data plans and raw materials 1.9 0.9 Cash paid by former VIEs to subsidiaries for marketing and software licensing services 5.4 4.7 Cash paid by former VIEs to subsidiaries for subsidiary establishment — 0.2 Intercompany advances from former VIEs to subsidiaries — 1.8 Cash paid by subsidiaries to former VIEs for purchase of Wi-Fi terminals 29.4 27.7 Intercompany advances from subsidiaries to former VIEs 3.1 1.5 Cash paid by subsidiaries to former VIEs for transfer of equity investment — 1.3 Pursuant to historical contractual agreements, Beijing uCloudlink has the exclusive rights to provide former VIEs with operational supports and consulting and technical services required by the former VIEs’ businesses.
Set forth below is the table showing the movement of investment in subsidiaries and the former VIEs in the parent’s financial statements as of and for the years ended December 31, 2020, 2021 and 2022.
Set forth below is the table showing the movement of investment in subsidiaries and the former VIEs in the parent’s financial statements as of and for the years ended December 31, 2021 and 2022.

… 483 more changes not shown on this page.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

258 edited+48 added−41 removed176 unchanged
If the manufacturer has compensated the infringed person but the defect is caused by the fault of the seller, the manufacturer is entitled to seek reimbursement from the seller.
If the manufacturer has compensated the infringed person but the defect is caused by the fault of the seller, the manufacturer is entitled to seek reimbursement from the seller. If the seller has compensated the infringed person but the defect is caused by the manufacturer, the seller is entitled to seek reimbursement from the manufacturer.
In addition, it simplifies the procedure of registration of foreign exchange so that investors can register with banks rather than SAFE or its local branches to have the registration of foreign exchange under the condition of direct domestic investment and direct overseas investment.
In addition, it simplifies the procedure of registration of foreign exchange so that investors can register with banks rather than with SAFE or its local branches to have the registration of foreign exchange under the condition of direct domestic investment and direct overseas investment.
The rest of the proposals from January 2020 are not yet enacted. If and when enacted, further costs may cause us to be subject to further regulatory and compliance obligations and may require additional expenditures on resources to ensure compliance and may also result in a change of our practices.
The rest of the proposals from January 2020 are not yet enacted. If and when enacted, further costs may cause us to be subject to regulatory and compliance obligations and may require additional expenditures on resources to ensure compliance and may also result in a change of our practices.
The Ministry of Public Security has promulgated measures that prohibit use of the Internet in ways which, among other things, result in a leakage of state secrets or a spread of socially destabilizing content and require Internet service providers to take proper measures, including anti-virus, data backup and other related measures, and keep records of certain information about the users (including user registration information, log-in and log-out time, IP address, content and time of posts by users) for at least 60 days, and detect illegal information, stop transmission of such information and keep relevant records.
The Ministry of Public Security has promulgated measures that prohibit use of the internet in ways which, among other things, result in a leakage of state secrets or a spread of socially destabilizing content and require internet service providers to take proper measures, including anti-virus, data backup and other related measures, and keep records of certain information about the users (including user registration information, log-in and log-out time, IP address, content and time of posts by users) for at least 60 days, and detect illegal information, stop transmission of such information and keep records.
Pursuant to the Interim Provisions of the State Administration for Industry and Commerce on the Ratio of the Registered Capital to the Total Investment of a Sino-foreign Equity Joint Venture Enterprise, issued by SAIC on March 1, 1987, with respect to a Sino-foreign equity join venture, the registered capital shall be (i) no less than 7/10 of its total investment, if the total investment is US$3 million or under US$3 million; (ii) no less than ½ of its total investment, if the total investment is ranging from US$3 million to US$10 million (including US$10 million), provided that the registered capital shall not be less than US$2.1 million if the total investment is less than US$4.2 million; (iii) no less than 2/5 of its total investment, if the total investment is ranging from US$10 million to US$30 million (including US$30 million), provided that the registered capital shall not be less than US$5 million if the total investment is less than US$12.5 million; and (iv) no less than 1/3 of its total investment, if the total investment exceeds US$30 million, provided that the registered capital shall not be less than US$12 million if the total investment is less than US$36 million.
Pursuant to the Interim Provisions of the State Administration for Industry and Commerce on the Ratio of the Registered Capital to the Total Investment of a Sino-foreign Equity Joint Venture Enterprise, issued by the State Administration for Industry and Commerce on March 1, 1987, with respect to a Sino-foreign equity join venture, the registered capital shall be (i) no less than 7/10 of its total investment, if the total investment is US$3 million or under US$3 million; (ii) no less than ½ of its total investment, if the total investment is ranging from US$3 million to US$10 million (including US$10 million), provided that the registered capital shall not be less than US$2.1 million if the total investment is less than US$4.2 million; (iii) no less than 2/5 of its total investment, if the total investment is ranging from US$10 million to US$30 million (including US$30 million), provided that the registered capital shall not be less than US$5 million if the total investment is less than US$12.5 million; and (iv) no less than 1/3 of its total investment, if the total investment exceeds US$30 million, provided that the registered capital shall not be less than US$12 million if the total investment is less than US$36 million.
Our business partners can also utilize our platform-as-a-service (PaaS) and software-as-a-service (SaaS) to manage their business operations such as connectivity management, terminal management, customer relationship management (CRM) system and big data analysis, thereby improving end-users’ experience with their services. 70 We have developed proprietary algorithms to analyze historical data usage patterns and predict future data traffic demand.
Our business partners can also utilize our platform-as-a-service (PaaS) and software-as-a-service (SaaS) to manage their business operations such as connectivity management, terminal management, customer relationship management (CRM) system and big data analysis, thereby improving end-users’ experience with their services. We have developed proprietary algorithms to analyze historical data usage patterns and predict future data traffic demand.
Simultaneously, our business partners will also further comprehend our mobile network offering by hosting their SIM cards on our platform locally. We constantly focus on elevating user experience and one way we are able to do it is via our “Navigation + Electronic Toll Pass” service over mobile network accomplished through our hyper-connectivity technology through PaaS and SaaS platform.
Simultaneously, our business partners will also comprehend our mobile network offering by hosting their SIM cards on our platform locally. We constantly focus on elevating user experience and one way we are able to do it is via our “Navigation + Electronic Toll Pass” service over mobile network accomplished through our hyper-connectivity technology through PaaS and SaaS platform.
Users may contact customer support directly from GlocalMe Connect app anytime to report issues and voluntarily provide feedback on our products and services, which help us further improve our current business or develop and launch new services. We currently provide all of customer service by ourselves, but some of our customer service was outsourced in the past.
Users may contact customer support directly from GlocalMe Connect app anytime to report issues and voluntarily provide feedback on our products and services, which help us improve our current business or develop and launch new services. We currently provide all of customer service by ourselves, but some of our customer service was outsourced in the past.
Risk Factors—Risks Related to Our Business and Industry—We are, and may in the future be, subject to intellectual property claims, which are costly to defend, could result in significant damage awards, disrupt our business operation, and could limit our ability to use certain technologies in the future.” Competition The mobile data connectivity services industry is rapidly evolving and increasingly competitive.
Risk Factors—Risks Related to Our Business and Industry—We are, and may in the future be, subject to intellectual property claims, which are costly to defend, could result in significant damage awards, disrupt our business operation, and could limit our ability to use certain technologies in the future.” 76 Competition The mobile data connectivity services industry is rapidly evolving and increasingly competitive.
In the area of online sales, we are subject to the above-mentioned regulations, because Shenzhen uCloudlink Co., Ltd and Shenzhen uCloudlink act as e-commerce operators in online platform for online transactions in relation to our portable Wi-Fi terminals. Regulations Related to Intellectual Property Right Patents Patents in mainland China are principally protected under the Patent Law of the PRC.
In the area of online sales, we are subject to the above-mentioned regulations, because Shenzhen uCloudlink Co., Ltd and Shenzhen uCloudlink act as e-commerce operators in online platform for online transactions in relation to our portable Wi-Fi terminals. 88 Regulations Related to Intellectual Property Right Patents Patents in mainland China are principally protected under the Patent Law of the PRC.
Our platform supports various kind of SIM cards and enables users to smoothly switch between multiple types of network. Our cloud SIM technology such as smart multi-network reselection technology reduces network crossing time to milliseconds and facilitates cloud application. We believe hyper-connectivity will bring higher efficiency and better experience to our business partners and users, respectively. ● Security .
Our platform supports various kind of SIM cards and enables users to smoothly switch between multiple types of networks. Our cloud SIM technology such as smart multi-network reselection technology reduces network crossing time to milliseconds and facilitates cloud application. We believe hyper-connectivity will bring higher efficiency and better experience to our business partners and users, respectively. ● Security .
In addition, according to the EIT Law, enterprises registered in countries or regions outside mainland China but have their “de facto management bodies” located within mainland China may be considered as mainland China resident enterprises and are therefore subject to mainland China’s enterprise income tax at the rate of 25% on their worldwide income.
In addition, according to the Enterprise Income Tax Law, enterprises registered in countries or regions outside mainland China but have their “de facto management bodies” located within mainland China may be considered as mainland China resident enterprises and are therefore subject to mainland China’s enterprise income tax at the rate of 25% on their worldwide income.
Entities or individuals that have direct obligations to make relevant payments to non-resident enterprises in accordance with relevant legal provisions or contracts shall be the withholding agents. The withholding agent shall, within seven days from occurrence of the withholding obligation, declare and turn over the withholding tax to the tax authorities in charge at the withholding agent’s location.
Entities or individuals that have direct obligations to make payments to non-resident enterprises in accordance with legal provisions or contracts shall be the withholding agents. The withholding agent shall, within seven days from occurrence of the withholding obligation, declare and turn over the withholding tax to the tax authorities in charge at the withholding agent’s location.
Laws and Regulations Related to Privacy Protection The Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) (“PDPO”), covers any personal data that relates directly or indirectly to a living individual in Hong Kong, from which it is practicable for the identity of the individual to be directly or indirectly ascertained, and exists in a form in which access or processing of the data is practicable.
Laws and Regulations Related to Privacy Protection The Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong), covers any personal data that relates directly or indirectly to a living individual in Hong Kong, from which it is practicable for the identity of the individual to be directly or indirectly ascertained, and exists in a form in which access or processing of the data is practicable.
The cloud SIM technology enables compatible terminals to use local data network without changing SIM cards, whereas the cloud SIM architecture supports the operation of cloud SIM technology. Cloud SIM Technology We have developed our cloud SIM technology based on remote SIM connection, which means that SIM cards are not located inside the mobile terminals but remotely connected.
The cloud SIM technology enables compatible terminals to use local data network without changing SIM cards, whereas the cloud SIM architecture supports the operation of cloud SIM technology. 66 Cloud SIM Technology We have developed our cloud SIM technology based on remote SIM connection, which means that SIM cards are not located inside the mobile terminals but remotely connected.
As our user base grows, larger demand for data also drives up our bargaining power with data suppliers. We further increase our bargaining power from our algorithm on pricing and user demand prediction. We technically analyze data packages across MNOs and other data suppliers and choose the combination with lower price or better network coverage.
As our user base grows, larger demand for data also drives up our bargaining power with data suppliers. We also increase our bargaining power from our algorithm on pricing and user demand prediction. We technically analyze data packages across MNOs and other data suppliers and choose the combination with lower price or better network coverage.
We continue to focus on developing and serving our customers and business partners with our core capabilities – cloud SIM technology, hyper-connectivity technology and architecture, and delegate other functions to our local business partners. This model will allow us to further expedite our global expansion by forming a global partner ecosystem.
We continue to focus on developing and serving our customers and business partners with our core capabilities – cloud SIM technology, hyper-connectivity technology and architecture, and delegate other functions to our local business partners. This model will allow us to expedite our global expansion by forming a global partner ecosystem.
According to the Circular on the Implementation of the Provisions of the Anti-terrorism Law and other Legal Provisions to Further Implementing Real Identity Information Registration of Users, telecommunication enterprises (including MNOs and MVNOs) shall further solidify and standardize relevant procedures and operations, when conducting formalities for new users to enter the network.
According to the Circular on the Implementation of the Provisions of the Anti-terrorism Law and other Legal Provisions to Further Implementing Real Identity Information Registration of Users, telecommunication enterprises (including MNOs and MVNOs) shall solidify and standardize procedures and operations, when conducting formalities for new users to enter the network.
This ensures that the data included in the SIM card has the volume and network performance parameters as the agreement specified. 79 Data Demand Projection To ensure reliable mobile data connectivity services to our users, we have a planning team to predict mobile data demand through modeling.
This ensures that the data included in the SIM card has the volume and network performance parameters as the agreement specified. Data Demand Projection To ensure reliable mobile data connectivity services to our users, we have a planning team to predict mobile data demand through modeling.
GAAP, the financial statements of the former VIEs are consolidated as part of our financial statements for the years ended December 31, 2020, 2021 and 2022 in this annual report. As we continued to evaluate our business plan, we have decided to adjust our business model in mainland China.
GAAP, the financial statements of the former VIEs are consolidated as part of our financial statements for the years ended December 31, 2021 and 2022 in this annual report. As we continued to evaluate our business plan, we have decided to adjust our business model in mainland China.
The Measures for the Security Review of Foreign Investment further require 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.
The Measures for the Security Review of Foreign Investment also require 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.
This has created great opportunities for our uCloudlink 2.0 model, which can scan for multiple mobile networks and provide better coverage, better speed and better connectivity service quality for users. 71 We have expanded the business scope of our local data connectivity service.
This has created great opportunities for our uCloudlink 2.0 model, which can scan for multiple mobile networks and provide better coverage, better speed and better connectivity service quality for users. We have expanded the business scope of our local data connectivity service.
The mainland China subsidiaries of an overseas listed company are required to file documents related to employee stock options and restricted shares with relevant tax authorities and to withhold individual income taxes of employees who exercise their stock option or purchase restricted shares.
The mainland China subsidiaries of an overseas listed company are required to file documents related to employee stock options and restricted shares with tax authorities and to withhold individual income taxes of employees who exercise their stock option or purchase restricted shares.
Where the participation in concentration of undertakings by way of foreign-funded merger and acquisition of domestic enterprises or any other method which involves national security, the examination of concentration of undertakings shall be carried out pursuant to the provisions of this Law and examination of national security shall be carried out pursuant to the relevant provisions of the State.
Where the participation in concentration of undertakings by way of foreign-funded merger and acquisition of domestic enterprises or any other method which involves national security, the examination of concentration of undertakings shall be carried out pursuant to the provisions of this Law and examination of national security shall be carried out pursuant to the provisions of the State.
During the effective period of these contractual arrangements, these contractual arrangements have enabled us to: (i) receive the economic benefits that could potentially be significant to the former VIEs in consideration for the services provided by our subsidiaries; (ii) exercise effective control over the former VIEs; and (iii) hold an exclusive option to purchase all or part of the equity interests in and assets of the former VIEs when and to the extent permitted by the laws of mainland China. 103 These contractual agreements included exclusive technology consulting and services agreements, business operation agreements, powers of attorney, equity interest pledge agreements, option agreements and/or spousal consent letters, as the case may be.
During the effective period of these contractual arrangements, these contractual arrangements have enabled us to: (i) receive the economic benefits that could potentially be significant to the former VIEs in consideration for the services provided by our subsidiaries; (ii) exercise effective control over the former VIEs; and (iii) hold an exclusive option to purchase all or part of the equity interests in and assets of the former VIEs when and to the extent permitted by the laws of mainland China. 99 These contractual agreements included exclusive technology consulting and services agreements, business operation agreements, powers of attorney, equity interest pledge agreements, option agreements and/or spousal consent letters, as the case may be.
Under this notice and other relevant rules and regulations, domestic residents who participate in a stock incentive plan in an overseas publicly-listed company are required to register with SAFE or its local branches and complete certain other procedures.
Under this notice and other rules and regulations, domestic residents who participate in a stock incentive plan in an overseas publicly listed company are required to register with SAFE or its local branches and complete certain other procedures.
Business Overview—Regulation—Mainland China—Regulations Related to Internet Information Security and Personal Information Protection.” 81 Intellectual Property We regard our patents, trademarks, copyrights, domain names, know-how, proprietary technologies, and similar intellectual property as critical to our success.
Business Overview—Regulation—Mainland China—Regulations Related to Internet Information Security and Personal Information Protection.” Intellectual Property We regard our patents, trademarks, copyrights, domain names, know-how, proprietary technologies, and similar intellectual property as critical to our success.
BHD. in Malaysia in August 2017; ● uCloudlink Japan Co., Ltd. in Japan in March 2018; ● UCLOUDLINK UK LIMITED in the UK in February 2021; primarily for technology research and development: ● Shenzhen Ucloudlink Technology Limited in mainland China in July 2015; and primarily for hardware exportation: ● Shenzhen uCloudlink Co., Ltd. in mainland China in June 2018.
BHD. in Malaysia in August 2017; ● uCloudlink Japan Co., Ltd. in Japan in March 2018; ● UCLOUDLINK UK LIMITED in the UK in February 2021; 62 primarily for technology research and development: ● Shenzhen Ucloudlink Technology Limited in mainland China in July 2015; and primarily for hardware exportation: ● Shenzhen uCloudlink Co., Ltd. in mainland China in June 2018.
The EIT Law imposes a uniform enterprise income tax rate of 25% on all resident enterprises in mainland China, including foreign-invested enterprises and domestic enterprises, unless they are qualified for certain exceptions.
The Enterprise Income Tax Law imposes a uniform enterprise income tax rate of 25% on all resident enterprises in mainland China, including foreign-invested enterprises and domestic enterprises, unless they are qualified for certain exceptions.
Risk Factors—Risks Related to Our Business and Industry—We depend on network operators for their wireless networks, infrastructures and data traffic, and any disruptions of or limitations on our use of such networks, infrastructures and data traffic may adversely affect our business and financial results.” As we have aggregated mobile data traffic allowances from 337 MNOs, we possess bargaining power during the negotiation due to competition among MNOs and sometimes offer bidding process to purchase data with better price and terms.
Risk Factors—Risks Related to Our Business and Industry—We depend on network operators for their wireless networks, infrastructures and data traffic, and any disruptions of or limitations on our use of such networks, infrastructures and data traffic may adversely affect our business and financial results.” As we have aggregated mobile data traffic allowances from 382 MNOs, we possess bargaining power during the negotiation due to competition among MNOs and sometimes offer bidding process to purchase data with better price and terms.
The SGO provides for circumstances where certain terms will be implied in contracts of sale of goods in Hong Kong, which include, among others, implied conditions that the seller has or will have a right to sell the goods at the time when the property is to pass and that goods supplied are of merchantable quality subject to certain exceptions as stipulated in the SGO, reasonably fit for the buyer’s purposes for which the goods are being bought, and correspond with the descriptions provided by the seller and/or the samples.
The Sale of Goods Ordinance provides for circumstances where certain terms will be implied in contracts of sale of goods in Hong Kong, which include, among others, implied conditions that the seller has or will have a right to sell the goods at the time when the property is to pass and that goods supplied are of merchantable quality subject to certain exceptions as stipulated in the Sale of Goods Ordinance, reasonably fit for the buyer’s purposes for which the goods are being bought, and correspond with the descriptions provided by the seller and/or the samples.
The SSO implies certain terms into contracts for the supply of services in Hong Kong, which include implied conditions that, (i) the supplier will carry out the services with reasonable care and skill (which generally means the services must meet the standard that a reasonable person would regard as satisfactory); (ii) the supplier will carry out the services within a reasonable time if the time of performance has not been fixed by the contract; and (iii) the party contracting with the supplier will pay a reasonable charge if the consideration for the service has not been fixed by the contract.
The Supply of Services (Implied Terms) Ordinance implies certain terms into contracts for the supply of services in Hong Kong, which include implied conditions that, (i) the supplier will carry out the services with reasonable care and skill (which generally means the services must meet the standard that a reasonable person would regard as satisfactory); (ii) the supplier will carry out the services within a reasonable time if the time of performance has not been fixed by the contract; and (iii) the party contracting with the supplier will pay a reasonable charge if the consideration for the service has not been fixed by the contract.
If the employees fail to pay or the mainland China subsidiaries fail to withhold income tax in accordance with relevant laws and regulations, the mainland China subsidiaries may face sanctions imposed by the tax authorities or other PRC governmental authorities.
If the employees fail to pay or the mainland China subsidiaries fail to withhold income tax in accordance with laws and regulations, the mainland China subsidiaries may face sanctions imposed by the tax authorities or other PRC governmental authorities.
In February 2021, we established a new subsidiary in the U.K. named UCLOUDLINK UK LIMITED to further facilitate our expansion in the U.K. market and improve the efficiency of local management.
In February 2021, we established a new subsidiary in the U.K. named UCLOUDLINK UK LIMITED to facilitate our expansion in the U.K. market and improve the efficiency of local management.
However, remedial registration applications made by mainland China residents that previously failed to comply with SAFE Circular 37 continue to fall under the jurisdiction of the relevant local branch of SAFE.
However, remedial registration applications made by mainland China residents that previously failed to comply with SAFE Circular 37 continue to fall under the jurisdiction of the local branch of SAFE.
On July 22, 2020, the Ministry of Public Security issued the Guiding Opinions on Implementing the Cyber Security Protection System and Critical Information Infrastructure Security Protection System to further improve the national cyber security prevention and control system.
On July 22, 2020, the Ministry of Public Security issued the Guiding Opinions on Implementing the Cyber Security Protection System and Critical Information Infrastructure Security Protection System to improve the national cyber security prevention and control system.
Since 2021, in order to further elevate our local service brand GlocalMe , we have enhanced our e-commerce exposure in key markets such as the United States, Europe and Southeast Asia, optimized our websites and streamlined our sales team. Cooperation with Business Partners We have collaborated with business partners to provide access to our portable Wi-Fi solutions in other countries.
Since 2021, in order to elevate our local service brand GlocalMe , we have enhanced our e-commerce exposure in key markets such as the United States, Europe and Southeast Asia, optimized our websites and streamlined our sales team. 70 Cooperation with Business Partners We have collaborated with business partners to provide access to our portable Wi-Fi solutions in other countries.
Pursuant to these rules and regulations, the balance of the foreign debts of a foreign invested enterprise shall not exceed the difference between the total investment and the registered capital of the foreign invested enterprise, or Total Investment and Registered Capital Balance.
Pursuant to these rules and regulations, the balance of the foreign debts of a foreign invested enterprise shall not exceed the difference between the total investment and the registered capital of the foreign invested enterprise.
SIM banks can be hosted by us with SIM cards from us or business partners, and business partners can purchase SIM banks and manage relevant business via our PaaS and SaaS platform. Our SIM Banks .
SIM banks can be hosted by us with SIM cards from us or business partners, and business partners can purchase SIM banks and manage relevant business via our PaaS and SaaS platform. 67 Our SIM Banks .
We may provide such insights as business intelligence to our business partners in the future to optimize their network infrastructure deployment and improve the service experience of their customers and to provide more advanced value-added services, such as advertisement. 74 Cloud Infrastructure . We have built a robust technology infrastructure to support the delivery of mobile data connectivity solutions globally.
We may provide such insights as business intelligence to our business partners in the future to optimize their network infrastructure deployment and improve the service experience of their customers and to provide more advanced value-added services, such as advertisement. 68 Cloud Infrastructure . We have built a robust technology infrastructure to support the delivery of mobile data connectivity solutions globally.
By giving users access to our distributed SIM card pool, we free users from this exclusivity, and give them the freedom to access the mobile networks of other MNOs without physically changing SIM cards wherever they are in the world as long as it is one of the 144 countries and regions we cover.
By giving users access to our distributed SIM card pool, we free users from this exclusivity, and give them the freedom to access the mobile networks of other MNOs without physically changing SIM cards wherever they are in the world as long as it is one of the 157 countries and regions we cover.
After the Restructuring, we now carry out the PaaS and SaaS platform services in mainland China, which were the primary business operated by the former VIEs, in cooperation with local business partners, such as Beijing Huaxianglianxin Technology Company, which have the required licenses to provide local data connectivity services in mainland China. 104 D.
After the Restructuring, we now carry out the PaaS and SaaS platform services in mainland China, which were the primary business operated by the former VIEs, in cooperation with local business partners, such as Beijing Huaxianglianxin Technology Company, which have the required licenses to provide local data connectivity services in mainland China. 100 D.
We have a dedicated team of data procurement personnel to purchase global mobile data from various sources. Our data purchasing team covers 144 countries and regions, divided by geographic regions and languages. We ask for quotations from MNOs and resellers in a region and specify our technical requirements to support cloud SIM technology.
We have a dedicated team of data procurement personnel to purchase global mobile data from various sources. Our data purchasing team covers 157 countries and regions, divided by geographic regions and languages. We ask for quotations from MNOs and resellers in a region and specify our technical requirements to support cloud SIM technology.
We operate our own distributed SIM banks to host a large number of local data SIM cards, which altogether enable us to provide global mobile data connectivity services in 144 countries and regions, including those countries traditionally renowned for high roaming cost.
We operate our own distributed SIM banks to host a large number of local data SIM cards, which altogether enable us to provide global mobile data connectivity services in 157 countries and regions, including those countries traditionally renowned for high roaming cost.
We offer our uCloudlink cloud SIM platform as PaaS/SaaS to our business partners and charge associated service fees. Our SIM card allocation algorithm increases the efficiency and utilization rate of the SIM cards, allowing business partners and us to generate attractive usage economics and minimize data wastage.
Platform-as-a-Service (PaaS)/Software-as-a-Service (SaaS) . We offer our uCloudlink cloud SIM platform as PaaS/SaaS to our business partners and charge associated service fees. Our SIM card allocation algorithm increases the efficiency and utilization rate of the SIM cards, allowing business partners and us to generate attractive usage economics and minimize data wastage.
Restrictions on Foreign Direct Investment in Value-Added Telecommunications Services Foreign direct investment in telecommunications companies in mainland China is governed by the Provisions on the Administration of Foreign-Invested Telecommunications Enterprises, which was promulgated on December 11, 2001 and amended on September 10, 2008 and February 6, 2016 by the State Council.
Restrictions on Foreign Direct Investment in Value-Added Telecommunications Services Foreign direct investment in telecommunications companies in mainland China is governed by the Provisions on the Administration of Foreign-Invested Telecommunications Enterprises, which were promulgated on December 11, 2001 and amended on September 10, 2008 and February 6, 2016 by the State Council.
It is also an offense for any person to have in his/her/its possession for sale or for any purpose of trade or manufacture any goods to which a false trade description is applied (section 7 of the TDO). To amount to a false trade description, the falsity of the trade descriptions has to be to a material degree.
It is also an offense for any person to have in his/her/its possession for sale or for any purpose of trade or manufacture any goods to which a false trade description is applied (section 7 of the Trade Descriptions Ordinance). To amount to a false trade description, the falsity of the trade descriptions has to be to a material degree.
SAFE Circular 37 supersedes SAFE Circular 75 and revises and regulates the relevant matters involving foreign exchange registration for round-trip investment.
SAFE Circular 37 supersedes SAFE Circular 75 and revises and regulates the matters involving foreign exchange registration for round-trip investment.
As we allocate local data SIM cards in our distributed SIM card pool using our cloud SIM technology, cross-border travelers using our portable Wi-Fi solutions enjoy local mobile data connection just like local users, which is reliable and fast and at competitive rates.
As we allocate local data SIM cards in our distributed SIM card pool using our cloud SIM technology, cross-border travelers using our portable Wi-Fi terminals enjoy local mobile data connection just like local users, which is reliable and fast and at competitive rates.
Where users fail to provide their real identity information, the network operators shall not provide them with relevant services.
Where users fail to provide their real identity information, the network operators shall not provide them with services.
The Foreign Investment Law of the PRC is formulated to further expand opening-up, vigorously promote foreign investment and protect the legitimate rights and interests of foreign investors. According to the Foreign Investment Law, foreign investments are entitled to pre-entry national treatment and are subject to negative list management system.
The Foreign Investment Law of the PRC is formulated to also expand opening-up, vigorously promote foreign investment and protect the legitimate rights and interests of foreign investors. According to the Foreign Investment Law, foreign investments are entitled to pre-entry national treatment and are subject to negative list management system.
We further believe providing direct contact with our business partners is an effective way to demonstrate the advantages of our products and providing a high-quality sales and after-sales support experience is critical to attracting new and retaining existing business partners.
We also believe providing direct contact with our business partners is an effective way to demonstrate the advantages of our products and providing a high-quality sales and after-sales support experience is critical to attracting new and retaining existing business partners.
The TDO was amended in July 2013 to expand certain existing provisions, including the prohibition of false trade descriptions in respect of goods and services in the course of trade, prohibition on certain unfair trade practices and the introduction of a civil, compliance-based enforcement mechanism.
The Trade Descriptions Ordinance was amended in July 2013 to expand certain existing provisions, including the prohibition of false trade descriptions in respect of goods and services in the course of trade, prohibition on certain unfair trade practices and the introduction of a civil, compliance-based enforcement mechanism.
The National Copyright Administration, or the NCA, administers software copyright registration and the Copyright Protection Center of China is designated as the software registration authority. The Copyright Protection Center of China shall grant registration certificates to the Computer Software Copyright applicants which meet the requirements of both the Software Copyright Measures and the Computer Software Protection Regulations (Revised in 2013).
The National Copyright Administration administers software copyright registration and the Copyright Protection Center of China is designated as the software registration authority. The Copyright Protection Center of China shall grant registration certificates to the Computer Software Copyright applicants which meet the requirements of both the Computer Software Copyright Registration Measures and the Computer Software Protection Regulations (Revised in 2013).
We have evaluated the guidance in FASB ASC 810 and concluded that we are the primary beneficiary of the former VIEs for accounting purposes because of these contractual arrangements for the effective period of these contractual agreements. Accordingly, under U.S.
We have evaluated the guidance in FASB ASC 810 and concluded that we were the primary beneficiary of the former VIEs for accounting purposes because of these contractual arrangements for the effective period of these contractual agreements. Accordingly, under U.S.
We have obtained the Compulsory Product Certifications, the Radio Transmission Equipment Type Approval Certificates and the Network Access Permits for our portable Wi-Fi terminals. 87 Regulations Related to Internet Information Security and Personal Information Protection Regulations related to Internet Information Security (i) Decisions on Maintaining Internet Security Internet content in mainland China is regulated and restricted from a state security standpoint.
We have obtained the Compulsory Product Certifications, the Radio Transmission Equipment Type Approval Certificates and the Telecommunications Equipment Network Access Permits for our portable Wi-Fi terminals. 82 Regulations Related to Internet Information Security and Personal Information Protection Regulations related to Internet Information Security (i) Decisions on Maintaining Internet Security Internet content in mainland China is regulated and restricted from a state security standpoint.
Pursuant to the Announcement of the SAT on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises which was promulgated by the SAT on October 17, 2017 and became effective on December 1, 2017 and amended on June 15, 2018, with regard to dividends, bonuses and other equity investment proceeds and interest therefrom, rentals, royalties, property transfer income and other kinds of income earned by non-resident enterprises from inside mainland China, on which enterprise income tax shall be levied, withholding tax at source shall be applicable thereto.
Pursuant to the Announcement of the State Administration of Taxation on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises which was promulgated by the State Administration of Taxation on October 17, 2017 and became effective on December 1, 2017 and amended on June 15, 2018, with regard to dividends, bonuses and other equity investment proceeds and interest therefrom, rentals, royalties, property transfer income and other kinds of income earned by non-resident enterprises from inside mainland China, on which enterprise income tax shall be levied, withholding tax at source shall be applicable thereto.
The Decisions on Maintaining Internet Security, which was introduced and enacted by the SCNPC on December 28, 2000 and amended on August 27, 2009, may subject violators to criminal punishment in mainland China for any effort to: (1) use the Internet to market fake and substandard products or carry out false publicity for any commodity or service; (2) use the Internet for the purpose of damaging the commercial goodwill and product reputation of any other person; (3) use the Internet for the purpose of infringing on the intellectual property of any person; (4) use the Internet for the purpose of fabricating and spreading false information that affects the trading of securities and futures or otherwise jeopardizes the financial order; or (5) create any pornographic website or webpage on the Internet, providing links to pornographic websites, or disseminating pornographic books and magazines, movies, audiovisual products or images.
The Decisions on Maintaining Internet Security, which was introduced and enacted by the Standing Committee of the National People’s Congress on December 28, 2000 and amended on August 27, 2009, may subject violators to criminal punishment in mainland China for any effort to: (1) use the internet to market fake and substandard products or carry out false publicity for any commodity or service; (2) use the internet for the purpose of damaging the commercial goodwill and product reputation of any other person; (3) use the internet for the purpose of infringing on the intellectual property of any person; (4) use the internet for the purpose of fabricating and spreading false information that affects the trading of securities and futures or otherwise jeopardizes the financial order; or (5) create any pornographic website or webpage on the internet, providing links to pornographic websites, or disseminating pornographic books and magazines, movies, audiovisual products or images.
Social Insurance and Housing Fund Enterprises in mainland China are required by the Social Insurance Law of the PRC promulgated by the SCNPC in October 2010, which became effective in July 2011 and was amended on December 29, 2018, or the Social Insurance Law, the Regulations on Management of Housing Provident Fund released by the State Council in April 1999, and amended in March 2002 and 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, a work-related 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 from time to time at locations where they operate their businesses or where they are located.
Social Insurance and Housing Fund Enterprises in mainland 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, which became effective in July 2011 and was amended on December 29, 2018, the Regulations on Management of Housing Provident Fund released by the State Council in April 1999, and amended in March 2002 and 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, a work-related 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 from time to time at locations where they operate their businesses or where they are located.
Furthermore, under the MII Circular, the Internet domain names and registered trademarks used by a foreign-invested value-added telecommunications services operator shall be legally owned by that operator (or its shareholders).
Furthermore, under this circular, the internet domain names and registered trademarks used by a foreign-invested value-added telecommunications services operator shall be legally owned by that operator (or its shareholders).
In addition, the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by the MOFCOM in 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 MOFCOM, and prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.
In addition, the Rules on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors issued by the Ministry of Commerce of the PRC in 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 Ministry of Commerce, and prohibit any activities attempting to bypass such security review, including by structuring the transaction through a proxy or contractual control arrangement.
There are several classes of SBO services. ● A “Class 1 service” is an internal telecommunications service (a) for carrying real-time voice communications which may be integrated with other types of communications, (b) which is capable of allowing customers to make and receive calls to and from parties assigned with numbers from the numbering plan of Hong Kong, (c) to which customers are assigned with numbers from the numbering plan of Hong Kong, and (d) which is not a “Class 2 service”. ● A “Class 2 service” is an internal telecommunications service (a) for carrying real-time voice communications which may be integrated with other types of communications, (b) which is capable of allowing customers to make and receive calls to and from parties assigned with numbers from the numbering plan of Hong Kong; (c) to which customers are assigned with numbers from the numbering plan of Hong Kong; and (d) in the provision of which – (i) the licensee (and where appropriate its agents, contractors and resellers) in all promotion, marketing or advertising materials concerning such service declares the service as a “Class 2 service”; or (ii) the licensee, in lieu of (i), complies with such conditions as may be specified by CA in a direction that may be issued by CA. ● “Class 3 service” is a non-facility based public telecommunications service.
There are several classes of Services-Based Operator services. ● A “Class 1 service” is an internal telecommunications service (a) for carrying real-time voice communications which may be integrated with other types of communications; (b) which is capable of allowing customers to make and receive calls to and from parties assigned with numbers from the numbering plan of Hong Kong; (c) to which customers are assigned with numbers from the numbering plan of Hong Kong; and (d) which is not a “Class 2 service.” ● A “Class 2 service” is an internal telecommunications service (a) for carrying real-time voice communications which may be integrated with other types of communications; (b) which is capable of allowing customers to make and receive calls to and from parties assigned with numbers from the numbering plan of Hong Kong; and (c) where the customers are assigned with numbers from the numbering plan of Hong Kong, (d) in the provision of service – (i) the licensee (and where appropriate its agents, contractors and resellers) in all promotion, marketing or advertising materials concerning such service declares the service as a “Class 2 service”; or 95 (ii) the licensee, in lieu of (i), complies with such conditions as may be specified by the Communications Authority in a direction that may be issued by the Communications Authority. ● “Class 3 service” is a non-facility based public telecommunications service.
Therefore, we initiated the Restructuring to adjust our local business in mainland China and unwind the aforementioned contractual arrangements so that the former VIEs become wholly-owned subsidiaries of Shenzhen Ucloudlink Technology Limited. On March 17, 2022, the equity of the former VIEs was transferred to Shenzhen Ucloudlink Technology Limited, and the original VIE agreements were terminated. Confirmation Letter .
Therefore, we initiated the Restructuring to adjust our local business in mainland China and unwind the aforementioned contractual arrangements so that the former VIEs become wholly-owned subsidiaries of Shenzhen Ucloudlink Technology Limited. In 2022, the equity of the former VIEs was transferred to Shenzhen Ucloudlink Technology Limited, and the original VIE agreements were terminated. Confirmation Letter .
The price of the daily service fee depends on the countries and regions the users plan to visit. Direct Sales We also directly sell our GlocalMe portable Wi-Fi solutions to enterprise and retail customers through online and offline channels in multiple countries and regions, such as China, Japan, Europe and the United States.
The price of the daily service fee depends on the countries and regions the users plan to visit. Direct Sales We also directly sell our GlocalMe Wi-Fi terminals to enterprise and retail customers through online and offline channels in multiple countries and regions, such as China, Japan, Europe and the United States.
Apart from the approval of the CSRC, the CAC or other PRC government authorities that may be required in connection with our offshore offerings under the laws of mainland China, we and our mainland China subsidiaries are not required to obtain other permissions from Chinese authorities for our material operations in mainland China and issuance of securities to foreign investors.
Apart from the approval of the CSRC, the Cyberspace Administration of China or other PRC government authorities that may be required in connection with our offshore offerings under the laws of mainland China, we and our mainland China subsidiaries are not required to obtain other permissions from Chinese authorities for our material operations in mainland China and issuance of securities to foreign investors.
When selling M2M Data SIM Cards, telecommunication enterprises should strictly examine and verify the purchaser, register the real name information of end users, if it is difficult to match the M2M Data SIM Cards with the end users, the telecommunication enterprises shall register the information of the responsible entities and persons, and prohibit a second sale in the agreement. 86 Regulations Related to Manufacture and Sell of Portable Wi-Fi terminals Administrative Regulations for Compulsory Product Certification According to the Administrative Regulations for Compulsory Product Certification, which was promulgated by the General Administration of Quality Supervision, Inspection and Quarantine of the PRC, which has merged into the SAMR, on July 3, 2009, and last amended on September 29, 2022, products specified by the state shall not be delivered, sold, imported or used in other business activities until they are certified, or the Compulsory Product Certification, and labeled with China Compulsory Certification mark.
When selling M2M Data SIM Cards, telecommunication enterprises should strictly examine and verify the purchaser, register the real name information of end users, if it is difficult to match the M2M Data SIM Cards with the end users, the telecommunication enterprises shall register the information of the responsible entities and persons, and prohibit a second sale in the agreement. 81 Regulations Related to Manufacture and Sell of Portable Wi-Fi terminals Administrative Regulations for Compulsory Product Certification According to the Administrative Regulations for Compulsory Product Certification, which were promulgated by the General Administration of Quality Supervision, Inspection and Quarantine of the PRC, which has merged into the State Administration for Market Regulation, on July 3, 2009, and last amended on September 29, 2022, products specified by the state shall not be delivered, sold, imported or used in other business activities until they are certified, or the Compulsory Product Certification, and labeled with China Compulsory Certification mark.
Therefore, we initiated the Restructuring to adjust our local business in mainland China and unwind the aforementioned contractual arrangements so that the former VIEs become wholly-owned subsidiaries of Shenzhen Ucloudlink Technology Limited. On March 17, 2022, the equity of the former VIEs was transferred to Shenzhen Ucloudlink Technology Limited, and the original VIE agreements were terminated.
Therefore, we initiated the Restructuring to adjust our local business in mainland China and unwind the aforementioned contractual arrangements so that the former VIEs become wholly-owned subsidiaries of Shenzhen Ucloudlink Technology Limited. In 2022, the equity of the former VIEs was transferred to Shenzhen Ucloudlink Technology Limited, and the original VIE agreements were terminated.
The maximum penalty for breach under the PDPO is a fine of HK$1.0 million and imprisonment for five years. 101 Proposals for legislative amendment of the PDPO were made in January 2020 seeking to introduce mandatory data breach notification mechanisms, requirements on data retention policies, increase of sanction powers of the Privacy Commissioner, direct regulation of the data processors, clarification of the definition of personal data and regulation of disclosure of third party personal data.
The maximum penalty for breach under the Personal Data (Privacy) Ordinance is a fine of HK$1.0 million and imprisonment for five years. 97 Proposals for legislative amendment of the Personal Data (Privacy) Ordinance were made in January 2020 seeking to introduce mandatory data breach notification mechanisms, requirements on data retention policies, increase of sanction powers of the commissioner, direct regulation of the data processors, clarification of the definition of personal data and regulation of disclosure of third-party personal data.
The Regulations on Personal Information Protection require that telecommunications business operators and internet information service providers shall, in the course of providing services, collect and use the personal information of users in a lawful and proper manner by following the principle that information collection or use is necessary and responsible for the security of the personal information of users collected and used in the course of providing services.
These regulations require that telecommunications business operators and internet information service providers shall, in the course of providing services, collect and use the personal information of users in a lawful and proper manner by following the principle that information collection or use is necessary and responsible for the security of the personal information of users collected and used in the course of providing services.
Laws and Regulations Related to Product Quality and Product Liability Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) (“TDO”) Products sold in Hong Kong (including products sold online to customers in Hong Kong) are subject to the TDO.
Laws and Regulations Related to Product Quality and Product Liability Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) Products sold in Hong Kong (including products sold online to customers in Hong Kong) are subject to the Trade Descriptions Ordinance.
Pursuant to the Measures for the Security Review of Foreign Investment, the NDRC and the MOFCOM will establish a working mechanism office in charge of the security review of foreign investment, and any foreign investment which has or would possibly have an impact on the national security shall be subject to security review by such working mechanism office.
Pursuant to the Measures for the Security Review of Foreign Investment, the NDRC and the Ministry of Commerce will establish a working mechanism office in charge of the security review of foreign investment, and any foreign investment which has or would possibly have an impact on the national security shall be subject to security review by such working mechanism office.
Our Hong Kong counsel has advised us that there remains some uncertainty, mainly related to the determination by the relevant authority of factual circumstances of our operations, as to whether we are required to obtain the SBO license, and based on communication with the relevant authority, the latter has not reached a final determination and will further consider the issue after reviewing our application.
Our Hong Kong counsel has advised us that there remains some uncertainty, mainly related to the determination by the authority of factual circumstances of our operations, as to whether we are required to obtain the Services-Based Operator license, and based on communication with the authority, the latter has not reached a final determination and will further consider the issue after reviewing our application.
The PIPL aims at protecting the personal information rights and interests, regulating the processing of personal information, ensuring the orderly and free flow of personal information in accordance with the law, and promoting the reasonable use of personal information.
The Personal Information Protection Law aims at protecting the personal information rights and interests, regulating the processing of personal information, ensuring the orderly and free flow of personal information in accordance with the law, and promoting the reasonable use of personal information.
The data export measures requires that any data processor who processes or exports personal information exceeding a certain volume threshold pursuant to the measures shall apply for a security assessment by the CAC before transferring any personal information abroad, including the following circumstances: (i) important data will be provided overseas by any data processor; (ii) personal information will be provided overseas by any operator of critical information infrastructure or any data processor who processes the personal information of more than 1,000,000 individuals; (iii) personal information will be provided overseas by any data processor who has provided the personal information of more than 100,000 individuals in aggregate or has provided the sensitive personal information of more than 10,000 individuals in aggregate since January 1 of last year; and (iv) other circumstances where the security assessment is required as prescribed by the CAC.
The data export measures require that any data processor who processes or exports personal information exceeding a certain volume threshold pursuant to the measures shall apply for a security assessment by the Cyberspace Administration of China before transferring any personal information abroad, including the following circumstances: (i) important data will be provided overseas by any data processor; (ii) personal information will be provided overseas by any operator of critical information infrastructure or any data processor who processes the personal information of more than 1,000,000 individuals; (iii) personal information will be provided overseas by any data processor who has provided the personal information of more than 100,000 individuals in aggregate or has provided the sensitive personal information of more than 10,000 individuals in aggregate since January 1 of last year; and (iv) other circumstances where the security assessment is required as prescribed by the Cyberspace Administration of China.
Business Overview—Data Privacy and Security.” Ninth Amendment to the Criminal Law of the PRC Pursuant to the Ninth Amendment to the Criminal Law issued by the SCNPC on August 29, 2015, effective on November 1, 2015, any network service provider that fails to fulfill the obligations related to internet information security as required by applicable laws and refuses to take corrective measures, will be subject to criminal liability for (1) any large-scale dissemination of illegal information; (2) any severe effect due to the leakage of users’ personal information; (3) any serious loss of evidence of criminal activities; or (4) other severe situations, and any individual or entity that (1) sells or provides personal information to others unlawfully or (2) illegally obtains any personal information will be subject to criminal liability in severe situations.
Business Overview—Data Privacy and Security.” 86 Ninth Amendment to the Criminal Law of the PRC Pursuant to the Ninth Amendment to the Criminal Law issued by the Standing Committee of the National People’s Congress on August 29, 2015, effective on November 1, 2015, any network service provider that fails to fulfill the obligations related to internet information security as required by applicable laws and refuses to take corrective measures, will be subject to criminal liability for (1) any large-scale dissemination of illegal information; (2) any severe effect due to the leakage of users’ personal information; (3) any serious loss of evidence of criminal activities; or (4) other severe situations, and any individual or entity that (1) sells or provides personal information to others unlawfully or (2) illegally obtains any personal information will be subject to criminal liability in severe situations.
Data Procurement Our data sources include MNOs and their sales channels, MVNOs, and other SIM-card trading companies. We have aggregated mobile data traffic allowances from 337 MNOs in 144 countries and regions in our cloud SIM architecture. When we start to offer uCloudlink 3.0 model in the future, users will also become our suppliers of mobile data.
Data Procurement Our data sources include MNOs and their sales channels, MVNOs, and other SIM-card trading companies. We have aggregated mobile data traffic allowances from 382 MNOs in 157 countries and regions in our cloud SIM architecture. When we start to offer uCloudlink 3.0 model in the future, users will also become our suppliers of mobile data.
The PIPL provides the circumstances under which a personal information processor could process personal information, which include but not limited to, where the consent of the individual concerned is obtained and where it is necessary for the conclusion or performance of a contract to which the individual is a contractual party.
The Personal Information Protection Law provides the circumstances under which a personal information processor could process personal information, which include but not limited to, where the consent of the individual concerned is obtained and where it is necessary for the conclusion or performance of a contract to which the individual is a contractual party.
Laws and Regulations Related to Tax The Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong), or IRO, imposes taxes on properties, earnings and profits in Hong Kong.
Laws and Regulations Related to Tax The Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) imposes taxes on properties, earnings and profits in Hong Kong.
The MII Circular prohibits domestic telecommunications enterprises from leasing, transferring or selling telecommunications business operation licenses to foreign investors in any form, or providing any resources, sites or facilities to any foreign investor for their illegal operation of a telecommunication business in mainland China.
This circular prohibits domestic telecommunications enterprises from leasing, transferring or selling telecommunications business operation licenses to foreign investors in any form, or providing any resources, sites or facilities to any foreign investor for their illegal operation of a telecommunication business in mainland China.
Non-compliance with a data protection principle may lead to a complaint to the Privacy Commissioner for Personal Data in Hong Kong (the “Privacy Commissioner”). The Privacy Commissioner may serve an enforcement notice to direct the data user to remedy the contravention and/ or instigate prosecution actions.
Non-compliance with a data protection principle may lead to a complaint to the Privacy Commissioner for Personal Data in Hong Kong. This commissioner may serve an enforcement notice to direct the data user to remedy the contravention and/ or instigate prosecution actions.

… 267 more changes not shown on this page.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

135 edited+16 added−47 removed85 unchanged
Data connectivity services . Our data connectivity services revenues include revenues from international data connectivity services and local data connectivity services.
Our data connectivity services revenues include revenues from international data connectivity services and local data connectivity services.
We generate international data connectivity services revenues from (i) data service fees from providing portable Wi-Fi to users under our service model with Roamingman brand, (ii) data service fees generated from sales of data connectivity services to business partners, and (iii) certain retail sales of data connectivity services.
We generate international data connectivity services revenues from (i) data service fees from providing portable Wi-Fi to users under our service model with our Roamingman brand, (ii) data service fees generated from sales of data connectivity services to business partners, and (iii) certain retail sales of data connectivity services.
We charge users service fee for data connectivity services for Roamingman brand, typically on a daily basis. We sell our data connectivity services as part of the portable Wi-Fi and smart terminals to our business partners and charge the business partners data service fees.
We charge users service fee for data connectivity services for our Roamingman brand, typically on a daily basis. We sell our data connectivity services as part of the portable Wi-Fi and smart terminals to our business partners and charge the business partners data service fees.
Our revenues from sales of products decreased by 30.0% from US$36.0 million in 2021 to US$25.2 million in 2022, which was primarily due to the decrease in demand for certain terminals and data related products. ● Our revenues from sales of terminals decreased by 20.7% from US$27.4 million in 2021 to US$21.8 million in 2022. ● Our revenues from sales of data related products decreased by 44.7% from US$5.8 million in 2021 US$3.2 million in 2022.
Our revenues from sales of products decreased by 30.0% from US$36.0 million in 2021 to US$25.2 million in 2022, which was primarily due to the decrease in demand for certain terminals and data related products. ● Our revenues from sales of terminals decreased by 20.7% from US$27.4 million in 2021 to US$21.8 million in 2022. ● Our revenues from sales of data related products decreased by 44.7% from US$5.8 million in 2021 to US$3.2 million in 2022.
Investing Activities Net cash used in investing activities in 2022 was US$0.2 million, primarily due to the purchase of property and equipment of US$0.4 million, which was partially offset by proceeds from disposal of property and equipment of US$0.3 million.
Net cash used in investing activities in 2022 was US$0.2 million, primarily due to the purchase of property and equipment of US$0.4 million, which was partially offset by proceeds from disposal of property and equipment of US$0.3 million.
Under the laws of mainland China, each of our subsidiaries and former VIEs in mainland China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital.
Under the laws of mainland China, each of our subsidiaries and the former VIEs in mainland China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital.
In addition, our subsidiaries and former VIEs may allocate a portion of their after-tax profits based on mainland China’s accounting standards to discretionary surplus funds at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends.
In addition, our subsidiaries and the former VIEs may allocate a portion of their after-tax profits based on mainland China’s accounting standards to discretionary surplus funds at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends.
The Restricted Shares were classified as equity awards under ASC 718 and are accounted for as share-based compensation based on the grant date fair value over the vesting period using graded vesting method.
The Restricted Shares were classified as equity awards under ASC 718 and are accounted for as share-based compensation based on the grant date fair value over the vesting period using graded vesting method.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our mainland China subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our mainland China subsidiaries to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business.” 111 If our holding company in the Cayman Islands or any of our subsidiaries outside of mainland China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our mainland China subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our mainland China subsidiaries to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business.” If our holding company in the Cayman Islands or any of our subsidiaries outside of mainland China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a mainland China resident enterprise for income tax purposes, such classification could result in unfavorable tax consequences to us and our non-mainland-China noteholders, shareholders or ADS holders.” Results of Operations The following table sets forth a summary of our consolidated results of operations for the years presented, both in absolute amount and as a percentage of our revenues for the periods presented.
Risk Factors—Risks Related to Doing Business in China—If we are classified as a mainland China resident enterprise for income tax purposes, such classification could result in unfavorable tax consequences to us and our non-mainland-China noteholders, shareholders or ADS holders.” 106 Results of Operations The following table sets forth a summary of our consolidated results of operations for the years presented, both in absolute amount and as a percentage of our revenues for the periods presented.
Dividends paid by our wholly foreign-owned subsidiary in mainland China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between mainland China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and receives approval from the relevant tax authority.
Dividends paid by our wholly foreign-owned subsidiary in mainland China to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the Hong Kong entity satisfies all the requirements under the Arrangement between mainland China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and receives approval from the tax authority.
Cost of services consists primarily of (i) expenditure on data procurement to support uCloudlink 1.0 and 2.0 models, which includes procurement of data consumed by users who contributed to our revenues from data connectivity services, but not that consumed by users who did not contribute to such revenues, and (ii) depreciations of our GlocalMe portable Wi-Fi terminals mainly under the Roamingman brand.
Cost of services consists primarily of (i) expenditure on data procurement to support uCloudlink 1.0 and 2.0 models, which includes procurement of data consumed by users who contributed to our revenues from data connectivity services, but not that consumed by users who did not contribute to such revenues, and (ii) depreciations of our GlocalMe portable Wi-Fi terminals mainly under our Roamingman brand.
If any of the assumptions used to determine the fair value of the share-based awards change significantly in the future, share-based compensation expense may differ materially. 118 Recently Issued Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in note 3 to our consolidated financial statements included elsewhere in this annual report. B.
If any of the assumptions used to determine the fair value of the share-based awards change significantly in the future, share-based compensation expense may differ materially. Recently Issued Accounting Pronouncements A list of recently issued accounting pronouncements that are relevant to us is included in note 3 to our consolidated financial statements included elsewhere in this annual report. B.
Hong Kong Under the current Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong), from the year of assessment 2018/2019 onwards, our subsidiaries in Hong Kong are subject to profits tax at the rate of 8.25% on assessable profits up to HK$2.0 million; and 16.5% on any part of assessable profits over HK$2.0 million.
Hong Kong Under the current Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong), starting from the year of assessment 2018/2019 onwards, our subsidiaries in Hong Kong are subject to profits tax at the rate of 8.25% on assessable profits up to HK$2.0 million; and 16.5% on any part of assessable profits over HK$2.0 million.
Subsequent to our initial public offering in June 2020, the market price of our publicly traded ADSs is used as an indicator of fair value of our ordinary shares. 126 We calculated the estimated fair value of an options on the grant date using the binomial option pricing model with assistance from an independent valuation firm.
Subsequent to our initial public offering in June 2020, the market price of our publicly traded ADSs is used as an indicator of fair value of our ordinary shares. We calculated the estimated fair value of an options on the grant date using the binomial option pricing model with assistance from an independent valuation firm.
Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates. 115 The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and other disclosures included in this annual report.
Some of our accounting policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates. The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and other disclosures included in this annual report.
We plan to continue to increase the number of terminals and data usage by entering into new markets through cooperating with successful local business partners, and by penetrating further into current markets by expanding service offerings, offering more bundling and promotional data packages, and conducting more active branding and marketing activities.
We plan to continue to increase the number of terminals and data usage by entering into new markets through cooperating with successful local business partners, and by penetrating into current markets by expanding service offerings, offering more bundling and promotional data packages, and conducting more active branding and marketing activities.
The decrease was primarily due to a decrease of US$3.9 million in staff costs related to cost control measures, and a decrease of US$0.7 million in professional service fees. Sales and marketing expenses . Our sales and marketing expenses decreased by 24.3% from US$13.6 million in 2021 to US$10.3 million in 2022.
The decrease was primarily due to a decrease of US$3.9 million in staff costs related to cost control measures, and a decrease of US$0.7 million in professional service fees. 109 Sales and marketing expenses . Our sales and marketing expenses decreased by 24.3% from US$13.6 million in 2021 to US$10.3 million in 2022.
We conduct our business through various contracts with customers, including: Data connectivity services We generate international data connectivity services revenues from (i) data service fees from the use of portable Wi-Fi terminals (under our brand of “ Roamingman ”), (ii) data service fees generated from sales of data connectivity services to business partners, and (iii) retail sales of data connectivity services.
We conduct our business through various contracts with customers, including: Data connectivity services We generate international data connectivity services revenues from (i) data service fees from the use of portable Wi-Fi terminals (under our Roamingman brand), (ii) data service fees generated from sales of data connectivity services to business partners, and (iii) retail sales of data connectivity services.
The decrease was primarily due to a decrease of US$2.1 million in staff costs related to cost control measures, and a decrease of US$1.1 million in promotional fees. 113 General and administrative expenses . Our general and administrative expenses decreased by 34.4% from US$28.6 million in 2021 to US$18.7 million in 2022.
The decrease was primarily due to a decrease of US$2.1 million in staff costs related to cost control measures, and a decrease of US$1.1 million in promotional fees. General and administrative expenses . Our general and administrative expenses decreased by 34.4% from US$28.6 million in 2021 to US$18.7 million in 2022.
Contract balance Contract liabilities represent the cash collected upfront from the customers for purchase of data connectivity services or purchase of Wi-Fi terminals, while the underlying data connectivity services have not yet been rendered or the Wi-Fi terminals have not been delivered to the customers by us, which is included in the presentation of contract liabilities.
Contract liabilities Contract liabilities represent the cash collected upfront from the customers for purchase of data connectivity services or purchase of Wi-Fi terminals, while the underlying data connectivity services have not yet been rendered or the Wi-Fi terminals have not been delivered to the customers by us, which is included in the presentation of contract liabilities.
If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the relevant tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%.
If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%.
Remittance of dividends by a wholly foreign-owned company out of mainland China is subject to examination by the banks designated by SAFE. Some of our mainland China subsidiaries will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds or general risk reserves. 124 C.
Remittance of dividends by a wholly foreign-owned company out of mainland China is subject to examination by the banks designated by SAFE. Some of our mainland China subsidiaries will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds or general risk reserves. 117 C.
We have provided a full valuation allowance for the deferred tax assets as of December 31, 2020, 2021 and 2022, as management is not able to conclude that the future realization of those net operating loss carry forwards and other deferred tax assets are more likely than not.
We have provided a full valuation allowance for the deferred tax assets as of December 31, 2021, 2022 and 2023, as management is not able to conclude that the future realization of those net operating loss carry forwards and other deferred tax assets are more likely than not.
The difference between net cash used in operating activities and net loss of US$46.0 million in the same period was primarily due to (i) US$12.4 million of losses of fair value on other investments, (ii) US$8.8 million of share-based compensation expenses, (iii) the increase of US$6.9 million of accrued expenses, accounts payable, and other liabilities, (iv) US$2.0 million of depreciation of property and equipment, (v) the decrease of US$1.1 million of amounts due from related parties, and (vi) the increase of US$0.6 million of contract liabilities.
The difference between net cash used in operating activities and net loss of US$46.0 million in the same period was primarily due to (i) US$12.4 million of losses of fair value on other investments, (ii) US$8.8 million of share-based compensation expenses, (iii) the increase of US$5.9 million of accrued expenses, accounts payable, and other liabilities, (iv) US$2.0 million of depreciation of property and equipment, (v) the decrease of US$1.1 million of amounts due from related parties, and (vi) the increase of US$0.7 million of contract liabilities.
The Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of the Treatment under Tax Agreements, which was promulgated by the STA on August 27, 2015 and became effective on November 1, 2015, abolished the former approval requirement, but a Hong Kong entity is still required to file application package with the relevant tax authority, and settle the overdue taxes if the preferential 5% tax rate is denied based on the subsequent review of the application package by the relevant tax authority.
The Measures for the Administration of Non-Resident Taxpayers’ Enjoyment of the Treatment under Tax Agreements, which were promulgated by the STA on August 27, 2015 and became effective on November 1, 2015, abolished the former approval requirement, but a Hong Kong entity is still required to file application package with the tax authority, and settle the overdue taxes if the preferential 5% tax rate is denied based on the subsequent review of the application package by the tax authority.
In determining the grant date fair value of our ordinary shares for purposes of (i) assessing whether there is a beneficial conversion feature in connection with our convertible bond issued in April 2017 and (ii) determining share-based compensation expenses in connection with share options granted under the 2018 Stock Option Scheme, we, with the assistance of an independent external valuer, evaluated the use of income approach / discounted cash flow, or DCF method.
In determining the grant date fair value of our ordinary shares for purposes of (i) assessing whether there is a beneficial conversion feature in connection with our convertible bond issued in April 2017 and (ii) determining share-based compensation expenses in connection with share options granted under the 2018 Stock Option Scheme, we, with the assistance of an independent external valuer, evaluated the use of income approach / discounted cash flow.
Sales of terminals and data related products We generate revenues from selling tangible products, including GlocalMe portable Wi-Fi terminals, GlocalMe World Phone series and smartphones with GMI implemented, IoT models, as well as SIM cards, to enterprise and retail customers and business partners.
Sales of terminals and data related products We generate revenues from selling tangible products, including GlocalMe portable Wi-Fi terminals, GlocalMe World Phone series and smartphones with GlocalMe Inside implemented, IoT models, as well as SIM cards, to enterprise and retail customers and business partners.
Cash Requirements Our material cash requirements as of December 31, 2022 and any subsequent interim period primarily include our capital expenditures, contractual obligations and commitments. We intend to fund our existing and future material cash requirements with our existing cash balance, cash from operating activities, financing from investors and borrowing from external sources.
Cash Requirements Our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include our capital expenditures, contractual obligations and commitments. We intend to fund our existing and future material cash requirements with our existing cash balance, cash from operating activities, financing from investors and borrowing from external sources.
Sales of data related products . We generate revenues from selling SIM cards with prepaid data packages that can be used outside of China, which effectively help us grow our user base and data usage among travelers and cross-sell our other products and services.
We generate revenues from selling SIM cards with prepaid data packages that can be used outside of China, which effectively help us grow our user base and data usage among travelers and cross-sell our other products and services.
We determine that we are the lessor in the arrangement which contains an equipment lease component and a service non-lease component. We further determine that lease component is an operating lease under ASC 840, and that the operating lease component and service component are delivered over the same time and pattern.
We determine that we are the lessor in the arrangement which contains an equipment lease component and a service non-lease component. We also determine that lease component is an operating lease under ASC 840, and that the operating lease component and service component are delivered over the same time and pattern.
We classify this non-current investment as a debt security, measured and recorded at fair value on a recurring basis based on the quoted transaction price by the asset management company. The fair value of this investment was US$17.8 million, US$12.0 million and US$4.6 million as of December 31, 2020, 2021 and 2022, respectively.
We classify this non-current investment as a debt security, measured and recorded at fair value on a recurring basis based on the quoted transaction price by the asset management company. The fair value of this investment was US$12.0 million and US$4.6 million as of December 31, 2021 and 2022, respectively.
Risk Factors—Risks Related to Doing Business in China—Mainland China’s regulation of loans to and direct investment in mainland China entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of any financing outside mainland China to make loans to or make additional capital contributions to our mainland China subsidiaries and former VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” Operating Activities Net cash generated from operating activities in 2022 was US$4.4 million.
Risk Factors—Risks Related to Doing Business in China—Mainland China’s regulation of loans to and direct investment in mainland China entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of any financing outside mainland China to make loans to or make additional capital contributions to our mainland China subsidiaries and the former VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” Operating Activities Net cash generated from operating activities in 2023 was US$6.5 million.
The fair value of this investment was US$19.2 million, US$12.6 million and US$7.1 million as of December 31, 2020, 2021, and 2022 respectively. 121 ● In June 2020, we made an investment in an investment product for which the underlying assets were mainly comprised of unlisted bonds and subordinated debentures for a cash consideration of US$17 million with a period of three years.
The fair value of this investment was US$12.6 million, US$7.1 million and US$7.6 million as of December 31, 2021, 2022 and 2023, respectively. ● In June 2020, we made an investment in an investment product for which the underlying assets were mainly comprised of unlisted bonds and subordinated debentures for a cash consideration of US$17 million with a period of three years.
The statutory rate of 15% to 25%, depending on which entity, was applied when calculating deferred tax assets. As of December 31, 2020, 2021 and 2022, we had net operating loss carryforwards of approximately US$61.3 million, US$101.0 million and US$134.9 million, respectively, which arose from the subsidiaries and former VIE established in Hong Kong and mainland China.
The statutory rate of 15% to 25%, depending on which entity, was applied when calculating deferred tax assets. As of December 31, 2021, 2022 and 2023, we had net operating loss carryforwards of approximately US$101.0 million, US$134.9 million and US$129.7 million, respectively, which arose from the subsidiaries and former VIE established in Hong Kong and mainland China.
We will continue to enhance our research and development efforts to enhance our cloud SIM technology and architecture, develop and upgrade our products and services, optimize our data traffic usage, and improve data procurement and operational efficiency. Our research and development expenses accounted for 28.9%, 20.2% and 16.3% of our total operating expenses in 2020, 2021 and 2022, respectively.
We will continue to enhance our research and development efforts to enhance our cloud SIM technology and architecture, develop and upgrade our products and services, optimize our data traffic usage, and improve data procurement and operational efficiency. Our research and development expenses accounted for 20.2%,16.3% and 16.4% of our total operating expenses in 2021, 2022 and 2023, respectively.
Our gross profits on sales of products are US$8.5 million, US$5.6 million and US$6.6 million, corresponding to 19.7%, 15.5% and 26.4% gross margins relating to sales of products, in 2020, 2021 and 2022, respectively. Our gross profit margin is mainly affected by the mix of data connectivity services, PaaS and SaaS services, and sales of terminals.
Our gross profits on sales of products are US$5.6 million, US$6.6 million and US$7.7 million, corresponding to 15.5%, 26.4% and 28.6% gross margins relating to sales of products, in 2021, 2022 and 2023, respectively. Our gross profit margin is mainly affected by the mix of data connectivity services, PaaS and SaaS services, and sales of terminals.
For the years of assessment 2018/2019 and 2019/2020, our subsidiaries in Hong Kong were subject to 16.5% Hong Kong profit tax on their taxable income generated from operations in Hong Kong. Additionally, payments of dividends by our subsidiary incorporated in Hong Kong to the Company is not subject to any withholding tax in Hong Kong.
For the years of assessment 2021/2022 and 2022/2023, our subsidiaries in Hong Kong were subject to 16.5% Hong Kong profit tax on their taxable income generated from operations in Hong Kong. Additionally, payments of dividends by our subsidiary incorporated in Hong Kong to the Company is not subject to any withholding tax in Hong Kong.
Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We may need additional capital, and financing may not be available on terms acceptable to us, or at all.” As of December 31, 2020, 2021 and 2022, we had US$37.0 million, US$24.6 million and US$11.7 million other investments, respectively.
Risk Factors—Risks Related to Our Business and Industry—We may need additional capital, and financing may not be available on terms acceptable to us, or at all.” As of December 31, 2021, 2022 and 2023, we had US$24.6 million, US$11.7 million and US$7.6 million other investments, respectively.
We have fully repaid the loan. ● In December 2021, we obtained a one-year short-term bank borrowing of RMB6.0 million (US$0.9 million) from a commercial bank, bearing interest at a rate of 4.75% per annum. As of December 31, 2021 and 2022, the outstanding balance of this loan was RMB6.0 million (US$0.9 million) and nil, respectively.
We have fully repaid the loan. ● In January 2022, we obtained a one-year short-term bank borrowing of RMB4.0 million (US$0.6 million) from a commercial bank, bearing interest at a rate of 4.75% per annum. As of December 31, 2022 and 2023, the outstanding balance of this loan was RMB4.0 million (US$0.6 million) and nil, respectively.
While our business is influenced by these general factors, our results of operations are more directly affected by company specific factors, including the following major factors: ● innovative monetization models offering mobile data connectivity services; ● our ability to increase our user base and usage of our mobile data connectivity services; ● efficient data allowance procurement; 105 ● the mix of our product and service offerings; ● our ability to improve operational efficiency; and ● further penetration into international markets.
While our business is influenced by these general factors, our results of operations are more directly affected by company specific factors, including the following major factors: ● innovative monetization models offering mobile data connectivity services; ● our ability to increase our user base and usage of our mobile data connectivity services; ● efficient data allowance procurement; ● the mix of our product and service offerings; ● our ability to improve operational efficiency; and ● penetration into international markets. 101 Innovative monetization models offering mobile data connectivity services We create and develop various monetization models as our company evolves.
DCF method of the income approach involves applying appropriate weighted average cost of capital, or WACC, to discount the future cash flows forecast, based on our best estimates as of the valuation date, to present value.
The discounted cash flow method of the income approach involves applying appropriate weighted average cost of capital to discount the future cash flows forecast, based on our best estimates as of the valuation date, to present value.
Our accounts payable represent primarily accounts payable to hardware suppliers and mobile data allowance providers. As of December 31, 2020, 2021 and 2022, our accounts payable were US$8.7 million, US$13.0 million and US$6.8 million, respectively.
Our accounts payable represent primarily accounts payable to hardware suppliers and mobile data allowance providers. As of December 31, 2021, 2022 and 2023, our accounts payable were US$13.0 million, US$6.8 million and US$5.3 million, respectively.
As of December 31, 2022, the outstanding balance of this loan was nil. We have fully repaid the loan. ● In January 2022, we obtained a one-year short-term bank borrowing of RMB6.0 million (US$1.0 million) from a commercial bank, bearing interest at a rate of 4.0% per annum.
As of December 31, 2023, the outstanding balance of this loan was nil. We have fully repaid the loan. ● In January 2023, we obtained a one-year short-term bank borrowing of RMB6.0 million (US$0.9 million) from a commercial bank, bearing interest at a rate of 3.85% per annum.
Those SIM cards are activated and hosted on our cloud SIM platform. Our cloud SIM platform manages terminal information and customer accounts and intelligently allocates the SIM cards and data plans and makes them available to customers who purchase our data connectivity services.
Our cloud SIM platform manages terminal information and customer accounts and intelligently allocates the SIM cards and data plans and makes them available to customers who purchase our data connectivity services.
Assumptions used to determine the fair value of share options granted during the year ended December 31, 2020, 2021 and 2022 is summarized in the following table: Years ended December 31, (In thousands) 2020 2021 2022 Risk-free interest rate (i) 0.33%—0.88% 1.22%—1.52% 0.91%-1.67% Expected dividend yield (ii) 0.00% 0.00% 0.00% Expected volatility (iii) 37.94%—40.07% 35.01%—36.00% 29.44%-34.81% Grant date fair value $0.98—$1.93 $0.06—$0.65 $0.000-$0.0044 (i) Risk-free interest rate is based on the yields of United States Treasury securities with maturities similar to the expected life of the share options in effect at the time of grant.
Assumptions used to determine the fair value of share options granted during the years ended December 31, 2021, 2022 and 2023 is summarized in the following table: Years ended December 31, (In thousands) 2021 2022 2023 Risk-free interest rate (i) 1.22% – 1.52 % 0.91% – 1.67 % N/A Expected dividend yield (ii) 0.00 % 0.00 % N/A Expected volatility (iii) 35.01% – 36.00 % 29.44% – 34.81 % N/A Grant date fair value $0.06 – $0.65 $0.000 – $0.0044 N/A Notes: (i) Risk-free interest rate is based on the yields of United States Treasury securities with maturities similar to the expected life of the share options in effect at the time of grant.
The growth of our user base and data usage will lead to the increased revenues from data connectivity services. Efficient data allowance procurement Efficient data procurement is a key factor for managing our cost of revenues. Our gross margin relating to data connectivity services decreased from 35.9% in 2020 to 22.5% in 2021, and increased to 45.8% in 2022.
The growth of our user base and data usage will lead to the increased revenues from data connectivity services. Efficient data allowance procurement Efficient data procurement is a key factor for managing our cost of revenues. Our gross margin relating to data connectivity services increased from 22.5% in 2021 to 45.8% in 2022, and further to 51.0% in 2023.
The longest carry-over period is extended from 5 years to 10 years. As of December 31, 2022, the net operating loss carry forwards arose from Shenzhen Ucloudlink Technology Limited and Shenzhen uCloudlink will expire during the period from 2027 to 2031, if unused. 127
The longest carry-over period is extended from 5 years to 10 years. As of December 31, 2023, the net operating loss carry forwards arose from Shenzhen Ucloudlink Technology Limited and Shenzhen uCloudlink will expire during the period from 2024 to 2033, if unused.
Data services tend to have higher gross profit margin than sales of terminals. Our gross profit margin of data connectivity services is further affected by the mix of international and local data connectivity services we provide.
Data services tend to have higher gross profit margin than sales of terminals. Our gross profit margin of data connectivity services is also affected by the international data connectivity services we provide.
As of December 31, 2022, the outstanding balance of this loan was RMB4.0 million (US$0.6 million). ● In March 2022, we entered into an eleven-month financing agreement with a third-party financial lease company amounting to RMB1.4 million (US$0.2 million), with an equivalent amount of equipment pledged by us as collateral. The interest at a rate is 5.6% per annum.
We have fully repaid the loan. ● In March 2022, we entered into an eleven-month financing agreement with a third-party financial lease company amounting to RMB1.4 million (US$0.2 million), with an equivalent amount of equipment pledged by us as collateral. The interest at a rate is 5.6% per annum.
The WACC was determined based on a consideration of the factors including risk-free rate, comparative industry risk, equity risk premium, company size and non-systematic risk factors.
The weighted average cost of capital was determined based on a consideration of the factors including risk-free rate, comparative industry risk, equity risk premium, company size and non-systematic risk factors.
Net (loss)/income As a result of the foregoing, we had net loss of US$46.0 million in 2021, compared to net loss of US$63.4 million in 2020. Inflation To date, inflation in China has not materially affected our results of operations in recent years.
Net loss As a result of the foregoing, we had net loss of US$19.9 million in 2022, compared to net loss of US$46.0 million in 2021. Inflation To date, inflation in China has not materially affected our results of operations in recent years.
Financing Activities Net cash generated from financing activities in 2022 was US$3.5 million, primarily attributable to net proceeds from the proceeds from bank borrowings and other borrowings of US$9.7 million, and proceeds from issuance of convertible bonds of US$4.7 million, which was partially offset by repayment of bank borrowings and other borrowings of US$9.6 million, and redemption of convertible bonds of US$1.1 million.
Net cash generated from financing activities in 2022 was US$3.5 million, primarily attributable to net proceeds from the proceeds from bank borrowings and other borrowings of US$9.7 million, and proceeds from issuance of convertible bonds of US$4.7 million, which was partially offset by repayment of bank borrowings and other borrowings of US$9.6 million, and redemption of convertible bonds of US$1.1 million. 116 Net cash generated from financing activities in 2021 was US$0.7 million, primarily due to net proceeds from the proceeds from bank borrowings of US$11.4 million, and proceeds from exercise of share options of US$1.3 million, which was partially offset by repayment of bank borrowings of US$12.0 million.
Geographic Distribution In terms of revenue contribution, mainland China, Japan, Hong Kong, Taiwan, North America, Southeast Asia and Europe are the top geographies according to the location of customers, which contributed 11%, 53%, 3%, 1%, 26%, 3% and 2% in 2020, respectively, contributed 5%, 49%, 3%, 0.3%, 33%, 6% and 3% in 2021, respectively, and contributed 3%, 39%, 6%, 1%, 38%, 7% and 5% of our total revenues in 2022, respectively.
Geographic Distribution In terms of revenue contribution, mainland China, Japan, Hong Kong, Taiwan, North America, Southeast Asia and Europe are the top geographies according to the location of customers, which contributed 5%, 49%, 3%, 0.3%, 33%, 6% and 3% in 2021, respectively, contributed 3%, 39%, 6%, 1%, 38%, 7% and 5% in 2022, respectively, and contributed 13.0%, 43.4%, 1.9%, 1.0%, 28.1%, 5.4% and 4.9% of our total revenues in 2023, respectively.
The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. See “Item 3.
The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. See “Item 3. Key Information—D.
Cost of revenues The following table sets forth the components of our cost of revenues by amounts and percentages of cost of revenues for the periods presented: For the Year Ended December 31, 2020 2021 2022 US$ % US$ % US$ % (in thousands, except percentages) Cost of revenues: Cost of services (26,392 ) 43.1 (21,556 ) 41.5 (20,346 ) 52.3 Cost of products sold (34,872 ) 56.9 (30,434 ) 58.5 (18,581 ) 47.7 Total cost of revenues (61,264 ) 100.0 (51,990 ) 100.0 (38,927 ) 100.0 Cost of revenue consists primarily of data connectivity service costs, cost of inventory, logistics costs, depreciation and maintenance costs for equipment, product replacement costs, payment processing fees and other related incidental expenses that are directly attributable to our principal operations.
Cost of revenues The following table sets forth the components of our cost of revenues by amounts and percentages of cost of revenues for the periods presented: For the Year Ended December 31, 2021 2022 2023 US$ % US$ % US$ % (in thousands, except percentages) Cost of revenues: Cost of services (21,556 ) 41.5 (20,346 ) 52.3 (24,318 ) 55.8 Cost of products sold (30,434 ) 58.5 (18,581 ) 47.7 (19,293 ) 44.2 Total cost of revenues (51,990 ) 100.0 (38,927 ) 100.0 (43,611 ) 100.0 104 Cost of revenue consists primarily of data connectivity service costs, cost of inventory, logistics costs, depreciation and maintenance costs for equipment, product replacement costs, payment processing fees and other related incidental expenses that are directly attributable to our principal operations.
We generate revenues from selling hardware terminals, including GlocalMe portable Wi-Fi terminals, GlocalMe World Phone series and IoT modules, and smartphones with GlobalMe Inside (“GMI”) installed to enterprise and retail users and business partners, which is part of our strategy to drive revenues from services, including data connectivity services, PaaS and SaaS services and other services.
We generate revenues from selling hardware terminals, including GlocalMe portable Wi-Fi terminals, IoT modules, and other smart devices with GlobalMe Inside installed to enterprise and retail users and business partners, which is part of our strategy to drive revenues from services, including data connectivity services, PaaS and SaaS services and other services. Sales of data related products .
Liquidity and Capital Resources The following table sets forth a summary of our cash flows for the periods presented: For the Year Ended December 31, 2020 2021 2022 US$ US$ US$ (in thousands) Net cash (used in)/generated from operating activities (2,038 ) (21,738 ) 4,404 Net cash used in investing activities (35,444 ) (935 ) (162 ) Net cash generated from financing activities 26,685 735 3,540 (Decrease)/increase in cash, cash equivalents and restricted cash (10,797 ) (21,938 ) 7,782 Effect of exchange rates on cash, cash equivalents and restricted Cash 749 (420 ) (729 ) Cash, cash equivalents and restricted cash at beginning of year 40,274 30,226 7,868 Cash, cash equivalents and restricted cash at end of year 30,226 7,868 14,921 To date, we have financed our operating and investing activities through cash generated by equity and equity-linked financing activities, including proceeds from our initial public offering, and borrowings from financial institutions.
Liquidity and Capital Resources The following table sets forth a summary of our cash flows for the periods presented: For the Year Ended December 31, 2021 2022 2023 US$ US$ US$ (in thousands) Net cash (used in)/generated from operating activities (21,738 ) 4,404 6,507 Net cash used in investing activities (935 ) (162 ) (240 ) Net cash generated from financing activities 735 3,540 2,509 (Decrease)/increase in cash, cash equivalents and restricted cash (21,938 ) 7,782 8,776 Effect of exchange rates on cash, cash equivalents and restricted Cash (420 ) (729 ) (326 ) Cash, cash equivalents and restricted cash at beginning of year 30,226 7,868 14,921 Cash, cash equivalents and restricted cash at end of year 7,868 14,921 23,371 113 To date, we have financed our operating and investing activities through cash generated by equity and equity-linked financing activities, including proceeds from our initial public offering, and borrowings from financial institutions.
We have the following borrowings: ● In January 2020, we obtained a one-year short-term bank borrowing of RMB4.7 million (US$0.7 million) from a commercial bank, bearing interest at a rate of 5.22% per annum. As of December 31, 2020, 2021 and 2022, the outstanding balance of this loan was RMB3.7 million (US$0.6 million), nil and nil, respectively.
We have the following borrowings: ● In January 2022, we obtained a one-year short-term bank borrowing of RMB6.0 million (US$1.0 million) from a commercial bank, bearing interest at a rate of 4.0% per annum. As of December 31, 2022 and 2023, the outstanding balance of this loan was RMB3.8 million (US$0.5 million) and nil, respectively.
For share options awarded to employees, directors and other consultants, we apply the Binominal option pricing model in determining the fair value of options granted under ASC 718.
For share options awarded to employees, directors and other consultants, we apply the Binominal option pricing model in determining the fair value of options granted under ASC 718. We have elected to account for forfeitures when they occur.
Shenzhen Ucloudlink Technology Limited and Shenzhen uCloudlink qualified as national high and new technology enterprises, or HNTE, in 2017, which are entitled to preferential tax rate to 15%. Their HNTE status is renewed and set to expire on December 11, 2023.
Shenzhen Ucloudlink Technology Limited and Shenzhen uCloudlink qualified as national high and new technology enterprises in 2017, which are entitled to preferential tax rate to 15%. Their high and new technology enterprises status is renewed and set to expire on October 16, 2025.
Capital expenditures Our capital expenditures are primarily incurred for purchases of intangible assets, property and equipment. Our capital expenditures were US$1.7 million, US$0.9 million and US$0.4 million in 2020, 2021 and 2022, respectively. The decrease in capital expenditure is primarily due to the accumulation of Roamingman devices to support efficient business operation.
Capital expenditures Our capital expenditures are primarily incurred for purchases of intangible assets, property and equipment. Our capital expenditures were US$0.9 million, US$0.4 million and US$2.1 million in 2021, 2022 and 2023, respectively. The increase in capital expenditure from 2022 to 2023 is primarily due to the increase of Roamingman terminals to support efficient business operation.
As of December 31, 2022, the outstanding balance of this loan was RMB5.0 million (US$0.7 million). ● In August 2022, we obtained a three-month short-term bank borrowing of RMB6.8 million (US$1.0 million) from a commercial bank, bearing interest at a rate of 5.55% per annum. As of December 31, 2022, the outstanding balance of this loan was nil.
As of December 31, 2022 and 2023, the outstanding balance of this loan was RMB5.0 million (US$0.7 million) and nil, respectively. We have fully repaid the loan. ● In November 2022, we obtained a three-month short-term bank borrowing of RMB7.0 million (US$1.0 million) from a commercial bank, bearing interest at a rate of 5.55% per annum.
As of December 31, 2022, 25.7% of our cash and cash equivalents were held in mainland China, and 13.1% were held by the former VIEs. We believe that our current cash and cash equivalents, together with anticipated cash flows, will be sufficient to meet our anticipated working capital requirements and capital expenditures for at least the next 12 months.
As of December 31, 2023, 48.0% of our cash and cash equivalents were held in mainland China. We believe that our current cash and cash equivalents, together with anticipated cash flows, will be sufficient to meet our anticipated working capital requirements and capital expenditures for at least the next 12 months.
Operating expenses The following table sets forth the principal components of our operating expenses by amounts and percentages of our total operating expenses for the periods presented: For the Year Ended December 31, 2020 2021 2022 US$ % US$ % US$ % (in thousands, except for percentages) Operating expenses: Research and development expenses (26,359 ) 28.9 (13,697 ) 20.2 (8,430 ) 16.3 Sales and marketing expenses (29,261 ) 32.1 (13,620 ) 20.1 (10,305 ) 19.9 General and administrative expenses (43,221 ) 47.3 (28,551 ) 42.2 (18,726 ) 36.2 Other income/(expense), net 7,554 (8.3 ) (11,876 ) 17.5 (14,265 ) 27.6 Total operating expenses (91,287 ) 100.0 (67,744 ) 100.0 (51,726 ) 100.0 Research and Development expenses .
Operating expenses The following table sets forth the principal components of our operating expenses by amounts and percentages of our total operating expenses for the periods presented: For the Year Ended December 31, 2021 2022 2023 US$ % US$ % US$ % (in thousands, except for percentages) Operating expenses: Research and development expenses (13,697 ) 20.2 (8,430 ) 16.3 (6,456 ) 16.4 Sales and marketing expenses (13,620 ) 20.1 (10,305 ) 19.9 (14,304 ) 36.3 General and administrative expenses (28,551 ) 42.2 (18,726 ) 36.2 (17,118 ) 43.5 Other expenses, net (11,876 ) 17.5 (14,265 ) 27.6 (1,500 ) 3.8 Total operating expenses (67,744 ) 100.0 (51,726 ) 100.0 (39,378 ) 100.0 Research and Development expenses .
As of December 31, 2022, the outstanding balance of this loan was RMB3.8 million (US$0.5 million). ● In January 2022, we obtained a one-year short-term bank borrowing of RMB4.0 million (US$0.6 million) from a commercial bank, bearing interest at a rate of 4.75% per annum.
As of December 31, 2023, the outstanding balance of this loan was RMB3.8 million (US$0.5 million). ● In October 2023, we obtained a one-year short-term bank borrowing of RMB6.0 million (US$0.8 million) from a commercial bank, bearing interest at a rate of 3.2% per annum.
We generate local data connectivity services revenues from (i) data service fees generated from sales of data connectivity services to business partners, and (ii) retail sales of data connectivity services that can be used with our GlocalMe portable Wi-Fi terminals, GlocalMe Inside and GlocalMe World Phones through online platforms. 108 In 2020, 2021 and 2022, we generated most of our data connectivity services revenues from our international data connectivity services under uCloudlink 1.0 model.
We generate local data connectivity services revenues from (i) data service fees generated from sales of data connectivity services to business partners, and (ii) retail sales of data connectivity services that can be used with our GlocalMe portable Wi-Fi terminals, GlocalMe Inside and GlocalMe World Phones through online platforms.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations 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 since January 1, 2024 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
This increase was primarily contributed to the expansion in the number of our business partners that use our PaaS and SaaS services to provide local data connectivity services. Sales of Products .
This increase was primarily due to the increase of our business partners that use our PaaS and SaaS services to provide international data connectivity services. Sales of Products .
According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2020, 2021 and 2022 were increases of 0.2%, 1.5% and 1.8%, respectively.
According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2021, 2022 and 2023 were an increase of 1.5%, an increase of 1.8% and a decrease of 0.3%, respectively.
Our accounts receivable represent primarily accounts receivable from customers and business partners to whom we rendered services or sold products. As of December 31, 2020, 2021 and 2022, our accounts receivable, net of allowance for doubtful accounts, were US$6.7 million, US$14.9 million and US$6.0 million, respectively.
In December 2023, we fully redeemed this investment and received US$1.3 million. Our accounts receivable represent primarily accounts receivable from customers and business partners to whom we rendered services or sold products. As of December 31, 2021, 2022 and 2023, our accounts receivable, net of allowance for doubtful accounts, were US$14.9 million, US$6.0 million and US$6.5 million, respectively.
As of December 31, 2020, 2021 and 2022, we do not believe that sufficient positive evidence exists to conclude that the recoverability of deferred tax assets is more likely than not to be realized. Consequently, we have provided full valuation allowance on the related deferred tax assets.
As of December 31, 2021, 2022 and 2023, we do not believe that sufficient positive evidence exists to conclude that the recoverability of deferred tax assets is more likely than not to be realized.
Year Ended December 31, 2020 2021 2022 US$ % US$ % US$ % (in thousands, except for percentages) Revenues Revenues from services 46,150 51.5 37,798 51.2 46,228 64.7 Sales of products 43,419 48.5 36,026 48.8 25,233 35.3 Total revenues 89,569 100.0 73,824 100.0 71,461 100.0 Cost of revenues Cost of services (26,392 ) (29.5 ) (21,556 ) (29.2 ) (20,346 ) (28.5 ) Cost of products sold (34,872 ) (38.9 ) (30,434 ) (41.2 ) (18,581 ) (26.0 ) Total cost of revenues (61,264 ) (68.4 ) (51,990 ) (70.4 ) (38,927 ) (54.5 ) Gross profit 28,305 31.6 21,834 29.6 32,534 45.5 Operating expenses: Research and development expenses (1) (26,359 ) (29.4 ) (13,697 ) (18.6 ) (8,430 ) (11.8 ) Sales and marketing expenses (1) (29,261 ) (32.7 ) (13,620 ) (18.4 ) (10,305 ) (14.4 ) General and administrative expenses (1) (43,221 ) (48.3 ) (28,551 ) (38.7 ) (18,726 ) (26.2 ) Other income/(expense), net 7,554 8.5 (11,876 ) (16.1 ) (14,265 ) (20.0 ) Loss from operations (62,982 ) (70.3 ) (45,910 ) (62.2 ) (19,192 ) (26.9 ) Interest income 37 0.0 14 0.0 18 0.0 Interest expense (285 ) (0.3 ) (188 ) (0.2 ) (441 ) (0.6 ) Amortization of beneficial conversion feature — — — — (149 ) (0.2 ) Loss before income tax (63,230 ) (70.6 ) (46,084 ) (62.4 ) (19,764 ) (27.7 ) Income tax expenses (185 ) (0.2 ) (244 ) (0.3 ) (161 ) (0.2 ) Share of profit in equity method investment, net of tax — — 287 0.3 72 0.1 Net loss (63,415 ) (70.8 ) (46,041 ) (62.4 ) (19,853 ) (27.8 ) Note: (1) Share-based compensation was US$50.6 million, US$8.8 million and US$3.1 million in 2020, 2021 and 2022, respectively.
For the Year Ended December 31, 2021 2022 2023 US$ % US$ % US$ % (in thousands, except for percentages) Revenues Revenues Revenues from services 37,798 51.2 46,228 64.7 58,570 68.4 Sales of products 36,026 48.8 25,233 35.3 27,006 31.6 Total revenues 73,824 100.0 71,461 100.0 85,576 100.0 Cost of revenues Cost of services (21,556 ) (29.2 ) (20,346 ) (28.5 ) (24,318 ) (28.4 ) Cost of products sold (30,434 ) (41.2 ) (18,581 ) (26.0 ) (19,293 ) (22.6 ) Total cost of revenues (51,990 ) (70.4 ) (38,927 ) (54.5 ) 43,611 (51.0 ) Gross profit 21,834 29.6 32,534 45.5 41,965 49.0 Operating expenses: Research and development expenses (1) (13,697 ) (18.6 ) (8,430 ) (11.8 ) (6,456 ) (7.5 ) Sales and marketing expenses (1) (13,620 ) (18.4 ) (10,305 ) (14.4 ) (14,304 ) (16.7 ) General and administrative expenses (1) (28,551 ) (38.7 ) (18,726 ) (26.2 ) (17,118 ) (20.0 ) Other expenses, net (11,876 ) (16.1 ) (14,265 ) (20.0 ) (1,500 ) (1.8 ) (Loss)/income from operations (45,910 ) (62.2 ) (19,192 ) (26.9 ) 2,587 3.0 Interest income 14 0.0 18 0.0 70 0.1 Interest expenses (188 ) (0.2 ) (441 ) (0.6 ) (133 ) (0.2 ) Amortization of beneficial conversion feature — — (149 ) (0.2 ) — — (Loss)/income before income tax (46,084 ) (62.4 ) (19,764 ) (27.7 ) 2,524 2.9 Income tax expenses (244 ) (0.3 ) (161 ) (0.2 ) (70 ) (0.1 ) Share of profit in equity method investment, net of tax 287 0.3 72 0.1 357 0.5 Net (loss)/income (46,041 ) (62.4 ) (19,853 ) (27.8 ) 2,811 3.3 Note: (1) Share-based compensation was US$8.8 million, US$3.1 million and US$3.3 million in 2021, 2022 and 2023, respectively.
According to the Circular of relevant governmental regulatory authorities of Taxation on Extending the Loss Carry-over Period of High-tech Enterprises and High-tech SMEs (Cai Shui [2018] No. 76), from January 1, 2018, the enterprises that have the qualifications of high-tech enterprises or high-tech SMEs will be able to make up for the losses that have not been completed in the previous five years before the qualification year.
Consequently, we have provided full valuation allowance on the related deferred tax assets. 120 According to the Circular on Extending the Loss Carry-over Period of High-tech Enterprises and High-tech SMEs (Cai Shui [2018] No. 76), from January 1, 2018, the enterprises that have the qualifications of high-tech enterprises or high-tech SMEs will be able to make up for the losses that have not been completed in the previous five years before the qualification year.
As of December 31, 2020, 2021 and 2022, the outstanding balance of this loan was RMB10.0 million (US$1.5 million), nil and nil, respectively. We have fully repaid the loan. ● In December 2020, we obtained a one-year short-term bank borrowing of RMB10.0 million (US$1.5 million) from a commercial bank, bearing interest at a rate of 5.22% per annum.
As of December 31, 2022 and 2023, the outstanding balance of this loan was RMB0.2 million (US$33.6 thousand) and nil, respectively. We have fully repaid the loan. ● In August 2022, we obtained a one-year short-term bank borrowing of RMB5.0 million (US$0.7 million) from a commercial bank, bearing interest at a rate of 5.0% per annum.
Specifically, our gross profits on services are US$19.8 million, US$16.2 million and US$25.9 million, corresponding to 42.8%, 43.0% and 56.0% gross margins relating to services, in 2020, 2021 and 2022, respectively.
Specifically, our gross profits on services are US$16.2 million, US$25.9 million and US$34.3 million, corresponding to 43.0%, 56.0% and 58.5% gross margins relating to services, in 2021, 2022 and 2023, respectively.
We do not have further performance obligations to the customers after the contract period. We also offer data connectivity services where users are charged service fee based on actual data usage, where revenue is recognized as the services are provided to customers. In providing data connectivity services to our customers, we procure SIM cards and data plans from various suppliers.
We also offer data connectivity services where users are charged service fee based on actual data usage, where revenue is recognized as the services are provided to customers. In providing data connectivity services to our customers, we procure SIM cards and data plans from various suppliers. Those SIM cards are activated and hosted on our cloud SIM platform.
Accordingly, we take inventory risk and obtains control of the SIM cards and data plans procured and direct the use of the data on its cloud SIM platform depending on customers’ demand. We account for the SIM cards and data plans procured as costs of revenue as data is being made available and consumed on its cloud SIM platform.
Accordingly, we take inventory risk and obtains control of the SIM cards and data plans procured and direct the use of the data on its cloud SIM platform depending on customers’ demand.
As of December 31, 2020, 2021 and 2022, the outstanding balance of this loans was JPY7.9 million (US$76.9 thousand), nil and nil, respectively. We have fully repaid the loan. ● In December 2020, we obtained a one-year short-term bank borrowing of RMB10.0 million (US$1.5 million) from a commercial bank, bearing interest at a rate of 3.85% per annum.
As of December 31, 2022 and 2023, the outstanding balance of this loan was RMB7.0 million (US$1.0 million) and nil, respectively. We have fully repaid the loan. ● In January 2023, we obtained an eleven-month short-term bank borrowing of RMB6.0 million (US$0.9 million) from a commercial bank, bearing interest at a rate of 3.85% per annum.
A subsidiary is an entity in which (i) we directly or indirectly control more than 50% of the voting power; or (ii) we have the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meeting of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.
The results of subsidiaries acquired or disposed of are recorded in the consolidated statements of comprehensive income/(loss) from the effective date of acquisition or up to the effective date of disposal, as appropriate. 110 A subsidiary is an entity in which (i) we directly or indirectly control more than 50% of the voting power; or (ii) we have the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meeting of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.

… 118 more changes not shown on this page.

Item 6. [Reserved]

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

54 edited+3 added−13 removed62 unchanged
Chen served as a R&D engineer in Guangdong Province Computer Co., Ltd from 1992 to 1994. Mr. Chen also serves as a director of Maya System, Inc., in which we made an equity investment. Mr.
Chen served as an R&D engineer in Guangdong Province Computer Co., Ltd from 1992 to 1994. Mr. Chen also serves as a director of Maya System, Inc., in which we made an equity investment. Mr.
In July 2019, our shareholders and board of directors adopted the Amended and Restated 2018 Stock Option Scheme, or 2018 Plan, which amends and restates the previously adopted 2018 Stock Option Scheme, pursuant to which we may grant awards to our directors, officers and employees.
In July 2019, our shareholders and board of directors adopted the Amended and Restated 2018 Stock Option Scheme, or the 2018 Plan, which amends and restates the previously adopted 2018 Stock Option Scheme, pursuant to which we may grant awards to our directors, officers and employees.
MediaPlay Limited is wholly owned by Brilliant Topaz Holding Limited, a British Virgin Islands company. Brilliant Topaz Holding Limited is wholly owned by Chen Family Evergreen Trust, a trust established for the benefit of Mr. Chaohui Chen and his family. Mr.
Chaohui Chen. MediaPlay Limited is wholly owned by Brilliant Topaz Holding Limited, a British Virgin Islands company. Brilliant Topaz Holding Limited is wholly owned by Chen Family Evergreen Trust, a trust established for the benefit of Mr. Chaohui Chen and his family. Mr.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; 133 ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
Kong is also the chairman of the World Alliance for Low Carbon Cities. Prof. Kong received his bachelor’s degree in physics from Peking University in 1982. He received a master’s degree in public administration from the Carleton University, Canada in 1994, where he also obtained a doctorate degree in economics in 2000. 128 Mr.
Kong is also the chairman of the World Alliance for Low Carbon Cities. Prof. Kong received his bachelor’s degree in physics from Peking University in 1982. He received a master’s degree in public administration from the Carleton University, Canada in 1994, where he also obtained a doctorate degree in economics in 2000. Mr.
In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. 134 Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs.
In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. Our board of directors has all the powers necessary for managing, and for directing and supervising, our business affairs.
Awards may not be transferred in any manner by the participant other than certain entities or persons related to the participant without the prior written approval of the plan administrator at its sole and absolute discretion. Termination and Amendment of the 2018 Plan .
Awards may not be transferred in any manner by the participant other than certain entities or persons related to the participant without the prior written approval of the plan administrator at its sole and absolute discretion. 123 Termination and Amendment of the 2018 Plan .
The executive officer may resign at any time with a 60-day advance written notice. 129 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.
The executive officer may resign at any time with a 60-day advance written notice. 122 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.
Eligibility . We may grant awards to our directors, officers and employees. Vesting Schedule . In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. 130 Exercise of Options . The plan administrator determines the exercise price for each award, which is stated in the relevant award agreement.
Eligibility . We may grant awards to our directors, officers and employees. Vesting Schedule . In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. Exercise of Options . The plan administrator determines the exercise price for each award, which is stated in the relevant award agreement.
In addition, our employees and consultants who hold share incentive awards under our share incentive plans, except those who signed the voting agreement, have granted an irrevocable voting proxy for the shares issuable to them pursuant to the awards to Mr. Chaohui Chen.
In addition, certain employees and consultants and an officer who hold share incentive awards under our share incentive plans, except those who signed the voting agreement, have granted an irrevocable voting proxy for the shares issuable to them pursuant to the awards to Mr. Chaohui Chen.
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. 126 Nominating and Corporate Governance Committee .
Share Ownership Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares on an as-converted basis as of February 28, 2023 by: ● each of our directors and executive officers; and ● each of our principal shareholders who beneficially own more than 5% 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 on an as-converted basis as of February 29, 2024 by: ● each of our directors and executive officers; and ● each of our principal shareholders who beneficially own more than 5% of our total outstanding shares.
Compensation Committee . Our compensation committee consists of Prof. Ying Kong, Mr. Onward Choi and Ms. Hope Ni. Prof. Ying Kong is the chairman of our compensation committee. We have determined that Prof. Ying Kong, Mr. Onward Choi and Ms. Hope Ni satisfy the “independence” requirements of Rule 5605 of the Nasdaq Stock Market Rules.
Compensation Committee . Our compensation committee consists of Prof. Ying Kong and Ms. Hope Ni. Prof. Ying Kong is the chairman of our compensation committee. We have determined that Prof. Ying Kong and Ms. Hope Ni satisfy the “independence” requirements of Rule 5605 of the Nasdaq Stock Market Rules.
Board Diversity Matrix (As of February 28, 2023) Country of Principal Executive Offices People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 5 Part I: Gender Identity Female Male Non-Binary Did Not Disclose Gender Directors 1 4 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 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.
Board Diversity Matrix (As of February 29, 2024) Country of Principal Executive Offices People’s Republic of China Foreign Private Issuer Yes Disclosure Prohibited Under Home Country Law No Total Number of Directors 4 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 3 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 125 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.
Nominating and Corporate Governance Committee . Our nominating and corporate governance committee consists of Ms. Hope Ni, Mr. Onward Choi and Prof. Ying Kong. Ms. Hope Ni is the chairperson of our nominating and corporate governance committee. Ms. Hope Ni, Mr. Onward Choi and Prof. Ying Kong satisfy the “independence” requirements of Rule 5605 of the Nasdaq Stock Market Rules.
Our nominating and corporate governance committee consists of Ms. Hope Ni and Prof. Ying Kong. Ms. Hope Ni is the chairperson of our nominating and corporate governance committee. Ms. Hope Ni and Prof. Ying Kong satisfy the “independence” requirements of Rule 5605 of the Nasdaq Stock Market Rules.
The abovementioned certain current and former employees and consultants have granted an irrevocable voting proxy for all shares beneficially owned by them to Mr. Chaohui Chen.
Certain current and former employees have granted an irrevocable voting proxy for all shares beneficially owned by them to Mr. Chaohui Chen.
Ying Kong satisfy the “independence” requirements of Rule 5605 of the Nasdaq Stock Market Rules and Rule 10A-3 under the Exchange Act. We have determined that Mr. Onward Choi qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
Ying Kong satisfy the “independence” requirements of Rule 5605 of the Nasdaq Stock Market Rules and Rule 10A-3 under the Exchange Act. We have determined that Ms. Hope Ni qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee . Our audit committee consists of Mr. Onward Choi, Ms. Hope Ni and Prof. Ying Kong. Mr. Onward Choi is the chairman of our audit committee. We have determined that Mr. Onward Choi, Ms. Hope Ni and Prof.
We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee . Our audit committee consists of Ms. Hope Ni and Prof. Ying Kong. Ms. Hope Ni is the chairperson of our audit committee. We have determined that Ms. Hope Ni and Prof.
We are required under the laws of mainland China to make contributions to employee social insurance 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. See “Item 3. Key Information—D.
We are required under the laws of mainland China to make contributions to employee social insurance 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.
A director is not required to hold any shares in our company by way of qualification. A director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with our company is required to declare the nature of his interest at a meeting of our directors.
A director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with our company is required to declare the nature of his interest at a meeting of our directors.
In addition, a director will cease to be a director if he (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found to be or becomes of unsound mind; (iii) resigns his office by notice in writing; (iv) without special leave of absence from our board, is absent from meetings of our board for three consecutive meetings and our board resolves that his office be vacated; or (v) is removed from office pursuant to any other provision of our articles of association.
In addition, a director will cease to be a director if he (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) dies or is found to be or becomes of unsound mind; (iii) resigns his office by notice in writing; (iv) without special leave of absence from our board, is absent from meetings of our board for three consecutive meetings and our board resolves that his office be vacated; or (v) is removed from office pursuant to any other provision of our articles of association. 127 Our officers are appointed by and serve at the discretion of the board of directors, and may be removed by our board of directors.
AlphaGo Robot Limited is wholly owned by Bright Topaz Holding Limited, a British Virgin Islands company. Bright Topaz Holding Limited is wholly owned by Harmony Peng Trust, a trust established for the benefit of Mr. Zhiping Peng and his family. Mr.
Zhiping Peng as lawful attorney-in-fact. AlphaGo Robot Limited is wholly owned by Bright Topaz Holding Limited, a British Virgin Islands company. Bright Topaz Holding Limited is wholly owned by Harmony Peng Trust, a trust established for the benefit of Mr. Zhiping Peng and his family. Mr.
The maximum aggregate number of ordinary shares that may be issued under 2018 Plan is 40,147,720 ordinary shares. As of February 28, 2023, options to purchase a total of 17,521,000 ordinary shares are outstanding under the 2018 Plan. The following paragraphs summarize the principal terms of the 2018 Plan. Type of Awards .
The maximum aggregate number of ordinary shares that may be issued under 2018 Plan is 40,147,720 ordinary shares. As of February 29, 2024, options to purchase a total of 16,882,180 ordinary shares are outstanding under the 2018 Plan. The following paragraphs summarize the principal terms of the 2018 Plan. Type of Awards .
The following table summarizes, as of February 28, 2023, the number of ordinary shares underlying outstanding options that we have granted to our directors and executive officers. 131 Name Ordinary Shares Underlying Options Exercise Price (US$/Share) Date of Grant Date of Expiration Chaohui Chen * 0.5000 April 27, 2020 April 27, 2031 Zhiping Peng * 0.5000 April 27, 2020 April 27, 2031 Zhigang Du * 0.8111 December 31, 2018 - April 27, 2020 December 31, 2025 - April 27, 2031 Hope Ni — — — — Onward Choi — — — — Ying Kong — — — — Yimeng Shi * 0.5000 December 31, 2018 - April 27, 2020 December 31, 2025 - April 27, 2031 Wen Gao — — — — Shubao Pei * 0.8111 December 31, 2018 December 31, 2025 Zhihui Gong * 0.5000 December 31, 2018 December 31, 2025 All directors and executive officers as a group 7,056,120 0.5000-0.8111 December 31, 2018 - April 27, 2020 December 31, 2025 - April 27, 2031 Note: * Less than 1% of our total ordinary shares on an as-converted basis outstanding as of the date of this annual report.
Name Ordinary Shares Underlying Options Exercise Price (US$/Share) Date of Grant Date of Expiration Chaohui Chen * 0.5000 April 27, 2020 April 27, 2031 Zhiping Peng * 0.5000 April 27, 2020 April 27, 2031 Hope Ni — — — — Ying Kong — — — — Yimeng Shi * 0.5000 December 31, 2018 – April 27, 2020 December 31, 2025 – April 27, 2031 Wen Gao — — — — Zhihui Gong * 0.5000 December 31, 2018 December 31, 2025 All directors and executive officers as a group 5,700,000 0.5000 December 31, 2018 – April 27, 2020 December 31, 2025 – April 27, 2031 Note: * Less than 1% of our total ordinary shares on an as-converted basis outstanding as of the date of this annual report. 124 The following table summarizes, as of February 29, 2024, the number of outstanding restricted share units that we have granted to our directors and executive officers.
Elite Magic Cosmos Limited is wholly owned by Mr. Zhigang Du. The registered address of Elite Magic Cosmos Limited is Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands. (4) Represents 11,889,820 Class A ordinary shares held by Talent Wits Limited, a British Virgin Islands company and (ii) 154,000 Class A ordinary shares held by Mr. Wen Gao.
Vision Technology Limited is wholly owned by Mr. Yimeng Shi. The registered address of Vision Technology Limited is Craigmuir Chambers, Road Town Tortola, VG 1110, British Virgin Islands. 129 (4) Represents 11,889,820 Class A ordinary shares held by Talent Wits Limited, a British Virgin Islands company, and (ii) 440,000 Class A ordinary shares held by Mr. Wen Gao.
We enter into standard labor contracts and confidentiality agreements with our employees. As required by regulations in mainland China, we participate in various employee social insurance plans that are organized by municipal and provincial governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing fund.
As required by regulations in mainland China, we participate in various employee social insurance plans that are organized by municipal and provincial governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing fund.
The calculations in the table below are based on 247,718,550 Class A ordinary shares and 122,072,980 Class B ordinary shares outstanding as of February 28, 2023. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
The calculations in the table below are based on 252,843,500 Class A ordinary shares and 122,072,980 Class B ordinary shares outstanding as of February 29, 2024. Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
Chaohui Chen has the right to acquire upon exercise of option within 60 days after February 28,2023; and (v) 8,534,460 Class A ordinary shares (including those in the form of ADSs) beneficially owned by certain of our current and former employees who have granted an irrevocable voting proxy for all shares beneficially owned by them to Mr. Chaohui Chen.
Chaohui Chen has the right to acquire upon exercise of options within 60 days after February 29, 2024, and (v) 11,219,210 Class A ordinary shares (including those in the form of ADSs) beneficially owned by certain of our current and former employees and consultants and an officer who have granted an irrevocable voting proxy for all or certain shares beneficially owned by them to Mr.
Name Ordinary Shares Underlying Restricted Share Unites Date of Grant Chaohui Chen * January 27, 2021 - January 1, 2023 Zhiping Peng * January 27, 2021 - January 1, 2023 Zhigang Du * January 27, 2021 - August 30, 2022 Hope Ni * January 27, 2021 - August 30, 2022 Onward Choi * January 27, 2021 - August 30, 2022 Ying Kong * July 1, 2021 - August 30, 2022 Yimeng Shi * January 27, 2021 - January 1, 2023 Wen Gao * January 27, 2021 - August 30, 2022 Shubao Pei * January 27, 2021 - August 30, 2022 Zhihui Gong * January 27, 2021 - August 30, 2022 All directors and executive officers as a group 6,456,150 January 27, 2021 - January 1, 2023 As of February 28, 2023, our employees and consultants other than our directors and executive officers as a group held outstanding options to purchase 10,604,880 ordinary shares, with exercise prices ranging from US$0.5 to US$0.8 per share.
Name Ordinary Shares Underlying Restricted Share Unites Date of Grant Chaohui Chen * January 27, 2021 – May 31, 2023 Zhiping Peng * January 27, 2021 – May 31, 2023 Hope Ni * January 27, 2021 – May 31, 2023 Ying Kong * July 1, 2021 – May 31, 2023 Yimeng Shi * January 27, 2021 – May 31, 2023 Wen Gao * January 27, 2021 – May 31, 2023 Zhihui Gong * January 27, 2021 – May 31, 2023 All directors and executive officers as a group 5,774,540 January 27, 2021 – May 31, 2023 As of February 29, 2024, our employees and consultants other than our directors and executive officers as a group held outstanding options to purchase 11,322,180 ordinary shares, with exercise prices ranging from US$0.5 to US$0.8 per share.
Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law.
Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis.
Gao received his bachelor’s degree and master’s degree in computer application from Wuhan Surveying and Mapping University of Science and Technology in China, which was later merged into Wuhan University. Mr. Shubao Pei has served as our chief R&D officer since 2014 and has served as our chief supply chain officer since January 2021. Prior to joining the company, Mr.
Gao received his bachelor’s degree and master’s degree in computer application from Wuhan Surveying and Mapping University of Science and Technology in China, which was later merged into Wuhan University. Mr. Zhihui Gong has served as our chief technology officer since 2015 and our cybersecurity officer since 2023. Prior to joining us, Mr.
As of February 28, 2023, the maximum number of issuable shares under the 2019 Plan was 26,353,926, while 140,000 options had been granted and outstanding under the 2019 Plan, and 8,210,870 restricted share units had been granted and outstanding under the 2019 Plan. The following paragraphs describe the principal terms of the 2019 Plan. Type of Awards .
As of February 29, 2024, the maximum number of issuable shares under the 2019 Plan was 32,912,001, while 140,000 options had been granted and outstanding under the 2019 Plan, and 7,565,920 restricted share units had been granted and outstanding under the 2019 Plan. The following paragraphs describe the principal terms of the 2019 Plan. Type of Awards .
We have granted, and plan to continue to grant, share-based incentive awards to our employees in the future to incentivize their contributions to our growth and development. 135 E.
Bonuses are generally discretionary and based in part on employee performance and in part on the overall performance of our business. We have granted, and plan to continue to grant, share-based incentive awards to our employees in the future to incentivize their contributions to our growth and development. E.
Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares % of Beneficial Ownership % of Aggregate Voting Power *** Number Number Number % % Directors and Executive Officers**: Chaohui Chen (1) 12,318,200 61,346,560 73,664,760 19.9 44.8 Zhiping Peng (2) 8,171,800 60,726,420 68,898,220 18.6 44.2 Zhigang Du (3) 4,109,660 — 4,109,660 1.1 0.2 Hope Ni * — * * * Onward Choi * — * * * Ying Kong * — * * * Yimeng Shi * — * * * Wen Gao (4) 12,043,820 — 12,043,820 3.3 0.6 Shubao Pei (5) 4,025,040 — 4,025,040 1.1 0.2 Zhihui Gong * — * * * All Directors and Executive Officers as a Group 45,159,910 122,072,980 167,232,890 44.5 90.0 Principal Shareholders: MediaPlay Limited (1) — 61,346,560 61,346,560 16.6 44.3 AlphaGo Robot Limited (2) — 60,726,420 60,726,420 16.4 43.8 Entities Affiliated with Haitong (6) 30,820,490 — 30,820,490 8.3 1.5 Entities affiliated with Cash Capital (7) 37,405,580 — 37,405,580 10.1 1.8 Notes: * Less than 1% of our total outstanding shares. ** Except as indicated otherwise, the business address of our directors and executive officers is Unit 2214-Rm1, 22/F, Mira Place Tower A, 132 Nathan Road, Tsim Sha Tsui, Kowloon, Hong Kong. *** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
These shares, however, are not included in the computation of the percentage ownership of any other person. 128 Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares % of Beneficial Ownership % of Aggregate Voting Power *** Number Number Number % % Directors and Executive Officers ** : Chaohui Chen (1) 15,838,570 61,346,560 77,185,130 20.5 44.9 Zhiping Peng (2) 8,935,920 60,726,420 69,662,340 18.5 44.1 Hope Ni * — * * * Ying Kong * — * * * Yimeng Shi (3) 3,949,260 — 3,949,260 1.0 0.2 Wen Gao (4) 12,329,820 — 12,329,820 3.3 0.6 Zhihui Gong * — * * * All Directors and Executive Officers as a Group (5) 41,183,570 122,072,980 163,256,550 42.9 89.6 Principal Shareholders: MediaPlay Limited (1) — 61,346,560 61,346,560 16.4 44.2 AlphaGo Robot Limited (2) — 60,726,420 60,726,420 16.2 43.7 Entities affiliated with Cash Capital (6) 37,405,580 — 37,405,580 10.0 1.8 Notes: * Less than 1% of our total outstanding shares. ** Except as indicated otherwise, the business address of our directors and executive officers is Unit 2214-Rm1, 22/F, Mira Place Tower A, 132 Nathan Road, Tsim Sha Tsui, Kowloon, Hong Kong. *** For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
The following table summarizes, as of February 28, 2023, the number of outstanding restricted share units that we have granted to our directors and executive officers.
The following table summarizes, as of February 29, 2024, the number of ordinary shares underlying outstanding options that we have granted to our directors and executive officers.
Directors and Executive Officers Age Position/Title Chaohui Chen 55 Director and Chief Executive Officer Zhiping Peng 55 Chairman of the Board of Directors Hope Ni 50 Independent Director Onward Choi 52 Independent Director Ying Kong 63 Independent Director Zhigang Du 57 Chief Operating Officer Yimeng Shi 50 Chief Financial Officer Wen Gao 53 Chief Strategy Officer Shubao Pei 51 Chief R&D Officer and Chief Supply Chain Officer Zhihui Gong 53 Chief Technology Officer Mr.
Directors and Executive Officers Age Position/Title Chaohui Chen 56 Director and Chief Executive Officer Zhiping Peng 56 Chairman of the Board of Directors Hope Ni 51 Independent Director Ying Kong 64 Independent Director Yimeng Shi 51 Chief Financial Officer Wen Gao 54 Chief Strategy Officer Zhihui Gong 54 Chief Technology Officer Mr.
Zhiping Peng, and (iv) 6,992,500 Class A ordinary shares held by two of our beneficial owners, who have granted an irrevocable voting proxy for 6,992,500 Class A ordinary shares beneficially owned by them to Mr. Zhiping Peng, and appointed Mr. Zhiping Peng as lawful attorney-in-fact.
Zhiping Peng has the right to acquire upon exercise of options within 60 days after February 29, 2024, and (iv) 6,992,500 Class A ordinary shares held by two of our beneficial owners, who have granted an irrevocable voting proxy for 6,992,500 Class A ordinary shares beneficially owned by them to Mr. Zhiping Peng, and appointed Mr.
Shi served as Accountant at Nortel Communication Equipment Co., Ltd. in Guangdong. Mr. Shi also serves as a director of Maya System, Inc., in which we made an equity investment. Mr. Shi received his master’s degree of law from Jinan University in Guangzhou, China.
Shi also serves as a director of Maya System, Inc., in which we made an equity investment. Mr. Shi received his master’s degree of law from Jinan University in Guangzhou, China. He also received his bachelor’s degree of Business Study in Accountancy from University of Massey in New Zealand. Mr.
The average age of our employees is below 35 and 74.5% of our employees have obtained bachelor’s degrees. We believe we offer our employees competitive compensation packages and an environment that encourages self-development and, as a result, have generally been able to attract and retain qualified personnel and maintain a stable core management team.
We believe we offer our employees competitive compensation packages and an environment that encourages self-development and, as a result, have generally been able to attract and retain qualified personnel and maintain a stable core management team. We enter into standard labor contracts and confidentiality agreements with our employees.
Zhihui Gong has served as our chief technology officer since 2015. Prior to joining us, Mr. Gong worked at Shenzhen Liming Network Co., Ltd. from 1997 to 2015, performing IT planning, architecture, top design of enterprise system and cloud service platform, software development management, company’s technology management and planning. Mr.
Gong worked at Shenzhen Liming Network Co., Ltd. from 1997 to 2015, performing IT planning, architecture, top design of enterprise system and cloud service platform, software development management, company’s technology management and planning. Mr. Gong received his doctor’s degree from Huazhong University of Science and Technology in China. Mr.
Du received his bachelor’s degree of meteorology and his master’s degree of business administration from Lanzhou University in China. Mr. Yimeng Shi has served as our chief financial officer since 2014. Previously, Mr. Shi worked at Huawei from 2005 to 2014, where he performed finance management in Huawei UK & Ireland, Huawei North Latin America. From 2004 to 2005, Mr.
Yimeng Shi has served as our chief financial officer since 2014. Previously, Mr. Shi worked at Huawei from 2005 to 2014, where he performed finance management in Huawei UK & Ireland, Huawei North Latin America. From 2004 to 2005, Mr. Shi served as Accountant at Nortel Communication Equipment Co., Ltd. in Guangdong. Mr.
Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis. 136 (1) Represents (i) 61,346,560 Class B ordinary shares held by MediaPlay Limited, a British Virgin Islands company, (ii) 2,565,940 Class A ordinary shares, in the form of ADSs, held by Mr.
(1) Represents (i) 61,346,560 Class B ordinary shares held by MediaPlay Limited, a British Virgin Islands company, (ii) 2,565,940 Class A ordinary shares, in the form of ADSs, held by Mr. Chaohui Chen, (iii) 1,150,920 Class A ordinary shares held by Mr. Chaohui Chen, (iv) 902,500 Class A ordinary shares Mr.
The registered office of AI Global Investment SPC is at Harneys Services (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street, PO Box 10240, Grand Cayman KY1-1002, Cayman Islands. 137 (7) Represents (i) 26,309,700 Class A ordinary shares held by Beijing Cash Capital Venture Partners, a PRC limited liability partnership, and (ii) 11,095,880 Class A ordinary shares held by Xizang Guoke Dingyi Investment Center(Limited Partnership), a PRC limited partnership, based on the Schedule 13G filed on February 11, 2021.
(6) Represents (i) 26,309,700 Class A ordinary shares held by Beijing Cash Capital Venture Partners, a PRC limited liability partnership, and (ii) 11,095,880 Class A ordinary shares held by Xizang Guoke Dingyi Investment Center (Limited Partnership), a PRC limited partnership, based on the Schedule 13G filed on February 11, 2021.
Ni received a J.D. degree from University of Pennsylvania Law School in 1998 and a bachelor’s degree in applied economics and business management from Cornell University in 1994. Mr. Onward Choi has served as our independent director since June 2020. Mr. Choi was the acting chief financial officer of NetEase, Inc., a Nasdaq-listed company, from July 2007 to June 2017.
Ni received a J.D. degree from University of Pennsylvania Law School in 1998 and a bachelor’s degree in applied economics and business management from Cornell University in 1994. 121 Prof. Ying Kong has served as our independent director since June 2021. Prof.
(2) Represents (i) 60,726,420 Class B ordinary shares held by AlphaGo Robot Limited, a British Virgin Islands company, (ii) 760,000 Class A ordinary shares Mr. Zhiping Peng has the right to acquire upon exercise of option within 60 days after February 28,2023, and (iii) 419,300 Class A ordinary shares held by Mr.
(3) Represents 585,340 Class A ordinary shares held by Vision Technology Limited, a British Virgin Islands company, (ii) 768,920 Class A ordinary shares held by Mr. Yimeng Shi, and (iii) 2,595,000 Class A ordinary shares Mr. Yimeng Shi has the right to acquire upon exercise of options within 60 days after February 29, 2024.
To our knowledge, as of February 28, 2023, a total of 157,361,680 Class A ordinary shares were held by one record holder in the United States, representing approximately 42.6% of our total outstanding shares. The holder is The Bank of New York Mellon, the depositary of our ADS program.
The holder is The Bank of New York Mellon, the depositary of our ADS program. None of our outstanding Class B ordinary shares are held by record holders in the United States.
None of our outstanding Class B ordinary shares are held by record holders in the United States. 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.
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. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. F.
He also received his bachelor’s degree of Business Study in Accountancy from University of Massey in New Zealand. Mr. Wen Gao has served as our chief strategy officer since September 2020 and served as our chief sales officer from 2014 to September 2020. Prior to joining us, Mr.
Shi is a licensed Certified Public Accountant in the State of Michigan of the United States. Mr. Wen Gao has served as our chief strategy officer since September 2020 and served as our chief sales officer from 2014 to September 2020. Prior to joining us, Mr.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2022. Function Number of Employees Research and Development 141 Business Development, Sales and Marketing 125 Administration and Management 64 Total 330 Our success depends on our ability to attract, motivate, train and retain qualified personnel.
Function Number of Employees Research and Development 146 Business Development, Sales and Marketing 176 Administration and Management 71 Total 393 Our success depends on our ability to attract, motivate, train and retain qualified personnel. The average age of our employees is below 35 and 72.3% of our employees have obtained bachelor’s degrees.
Our officers are appointed by and serve at the discretion of the board of directors, and may be removed by our board of directors. D. Employees We had a total of 578, 491 and 330 employees as of December 31, 2020, 2021 and 2022, respectively.
D. Employees We had a total of 491, 330 and 393 employees as of December 31, 2021, 2022 and 2023, respectively. The following table sets forth the numbers of our employees categorized by function as of December 31, 2023.
As of February 28, 2023, our employees and consultants other than our directors and executive officers as a group held outstanding restricted share unit to turn into 1,754,720 ordinary shares with nil exercise prices. 132 C. Board Practices Board of Directors Our board of directors consists of five directors.
As of February 29, 2024, our employees and consultants other than our directors and executive officers as a group held outstanding restricted share units equivalent to 1,791,380 ordinary shares. C. Board Practices Board of Directors Our board of directors consists of four directors. A director is not required to hold any shares in our company by way of qualification.
Talent Wits Limited is wholly owned by Mr. Wen Gao. The registered address of Talent Wits Limited is Craigmuir Chambers, Road Town Tortola, VG 1110, British Virgin Islands. (5) Represents (i) 3,170,620 Class A ordinary shares held by Fair Technology Limited, a British Virgin Islands company, and (ii) 616,420 Class A ordinary shares Mr.
Talent Wits Limited is wholly owned by Mr. Wen Gao. The registered address of Talent Wits Limited is Craigmuir Chambers, Road Town Tortola, VG 1110, British Virgin Islands. (5) As mentioned above, an officer has granted an irrevocable voting proxy for certain shares beneficially owned by him to Mr. Chaohui Chen.
Gong received his doctor’s degree from Huazhong University of Science and Technology in China. B. Compensation Compensation of Directors and Executive Officers In 2022, we paid an aggregate of US$1.4 million in cash to our executive officers, and paid US$170 thousand in cash to our non-executive directors.
Gong is a Certified Information Systems Security Professional and a member of the International Information Systems Security Certification Consortium. B. Compensation Compensation of Directors and Executive Officers In 2023, we paid an aggregate of US$2.1 million in cash to our executive officers, and paid US$140 thousand in cash to our non-executive directors.
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.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.
Removed
Mr. Choi currently serves as an independent director and the chairman of the audit committee of Smart Share Global Limited and Tuniu Corporation, both are Nasdaq-listed companies. Mr.
Added
(2) Represents (i) 60,726,420 Class B ordinary shares held by AlphaGo Robot Limited, a British Virgin Islands company, (ii) 1,040,920 Class A ordinary shares held by Mr. Zhiping Peng, (iii) 902,500 Class A ordinary shares Mr.
Removed
Choi also serves as an independent non-executive director and the chairman/member of the audit committee of Beijing Jingkelong Company Limited, Tongdao Liepin Group and Infinities Technology International (Cayman) Holding Limited, all of which are listed on the Hong Kong Stock Exchange. Mr.
Added
These shares are not double counted when calculating the shares of all directors and executive officers as a group.
Removed
Choi is a fellow member of the Association of Chartered Certified Accountants, CPA Australia and the Hong Kong Institute of Certified Public Accountants. Mr. Choi received a bachelor of arts degree in accountancy with honors from the Hong Kong Polytechnic University. Prof. Ying Kong has served as our independent director since June 2021. Prof.
Added
To our knowledge, as of February 29, 2024, a total of 163,129,920 Class A ordinary shares (including the 578,960 Class A ordinary shares issued to the depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under our share incentive plans) were held by one record holder in the United States, representing approximately 43.5% of our total outstanding shares.
Removed
Zhigang Du has served as our chief operating officer since 2014. Prior to joining us, Mr. Du served as Vice President in charge of operations at Hytera Communications Corporation Limited from 2012 to 2014. From 2009 to 2012, Mr. Du worked as an independent consultant providing management consulting services. Prior to that, Mr.
Removed
Du worked at Huawei from 1997 to 2009, where he served as Assistant President of East Africa Region, Director of Technical Service of China Region, and Deputy Director of Testing Department. Mr. Du served as Environmental Engineer and Project Manager at Lanzhou Coal Mining Design and Research Institute from 1988 to 1994. Mr.
Removed
Pei worked at Huawei from 1997 to 2014, where he served as the Director of New Product Introduction in Supply Chain, Director of OSS and Service Development Department. Mr. Pei received his bachelor’s degree in computer engineering and his master’s degree in mechanical engineering, both from Xi’an Jiaotong University in China. Mr.
Removed
Risk Factors—Risks Related to Doing Business in China—The enforcement of the PRC Labor Contract Law and other labor-related regulations in mainland China may adversely affect our business and results of operations.” Bonuses are generally discretionary and based in part on employee performance and in part on the overall performance of our business.
Removed
These shares, however, are not included in the computation of the percentage ownership of any other person.
Removed
Chaohui Chen, (iii) 457,800 Class A ordinary shares held by Mr. Chaohui Chen; and (iv) 760,000 Class A ordinary shares Mr.
Removed
(3) Represents (i) 3,170,620 Class A ordinary shares held by Elite Magic Cosmos Limited, a British Virgin Islands company, (ii) 715,040 Class A ordinary shares Mr. Zhigang Du has the right to acquire upon exercise of option within 60 days after February 28,2023, and (iii) 224,000 Class A ordinary shares held by Mr. Zhigang Du.
Removed
Shubao Pei has the right to acquire upon exercise of option within 60 days after February 28,2023, and (iii) 238,000 Class A ordinary shares held by Mr. Shubao Pei. Fair Technology Limited is wholly owned by Mr. Shubao Pei. The registered address of Fair Technology Limited is Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands.
Removed
(6) Represents (i) 625,462 ADSs, which represent 6,254,620 Class A ordinary shares held by AI Global Investment SPC (acting on behalf and for the account of Haitong Momentum Investment Fund I S.P.), a Cayman Islands exempted segregated portfolio company with limited liability, (ii) 306,171 ADSs, which represent 3,061,710 Class A ordinary shares, held by AI Global Investment SPC (acting on behalf and for the account of Haitong-Harvest Global Technology Fund S.P.), and (iii) 2,150,416 ADSs, which represent 21,504,160 Class A ordinary shares, held by AI Global Investment SPC (acting on behalf and for the account of AI Investment Fund S.P.), based on the Schedule 13G/A filed on February 13, 2023.
Removed
The investment manager of AI Global Investment SPC is Haitong International Asset Management (HK) Limited. Mr. Shengzu Wang is the chief investment officer and managing director of Haitong International Asset Management (HK) Limited.

Item 7. Management's Discussion & Analysis

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

12 edited+0 added−0 removed7 unchanged
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. Related Party Transactions Contractual Arrangements with The Former VIEs and Their Respective Shareholders See “Item 4. Information on the Company—C. Organizational Structure.” Transactions with our Founders and Related Entities Transactions with Maya.
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. Related Party Transactions Contractual Arrangements with The Former VIEs and Their Respective Shareholders See “Item 4. Information on the Company—C. Organizational Structure.” 130 Transactions with our Founders and Related Entities Transactions with Maya.
If a holder decides not to include all or any of its registrable securities in such registration by us, such holder shall nevertheless continue to have the right to include any registrable securities in any subsequent registration statement or registration statements as may be filed by us. Expenses of Registration .
If a holder decides not to include all or any of its registrable securities in such registration by us, such holder shall nevertheless continue to have the right to include any registrable securities in any subsequent registration statement or registration statements as may be filed by us. 131 Expenses of Registration .
In October 2018, we made an equity investment in a privately-held company, Maya System, Inc., or Maya, which provides cloud SIM related services in Japan, including sale of products and maintenance. We have significant influence over Maya.
In October 2018, we made an equity investment in a privately-held company, Maya System, Inc., which provides cloud SIM related services in Japan, including sale of products and maintenance. We have significant influence over this company.
Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B. Compensation.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B. Compensation.” C. Interests of Experts and Counsel Not applicable.
Compensation.” Share Incentive Plans See “Item 6. Directors, Senior Management and Employees—B. Compensation.” C. Interests of Experts and Counsel Not applicable.
The shareholders agreement provides for certain shareholders’ rights, including information and inspection rights, right of participation, right of first refusal and co-sale rights, and contains provisions governing our board of directors and other corporate governance matters. The special rights, as well as the corporate governance provisions, automatically terminated upon the completion of our initial public offering. Registration Rights.
The shareholders agreement provides for certain shareholders’ rights, including information and inspection rights, right of participation, right of first refusal and co-sale rights, and contains provisions governing our board of directors and other corporate governance matters. The special rights, as well as the corporate governance provisions, were terminated. Registration Rights.
In 2021 and 2022, we recognized US$1.0 million and US$0.3 million, respectively, of revenue from provision of sales of terminals and PaaS and SaaS services to Huaxiang. In 2021 and 2022, we purchased US$87 thousand and US$6 thousand, respectively, of data connectivity service from Huaxiang.
In 2021, 2022 and 2023, we recognized US$1.0 million, US$0.3 million and US$36 thousand, respectively, of revenue from provision of sales of terminals and PaaS and SaaS services to this company. In 2021, 2022 and 2023, we purchased US$87 thousand, US$6 thousand, and nil, respectively, of data connectivity service from this company.
As of December 31, 2021 and 2022, we owed US$18 thousand and US$20 thousand to Huaxiang. As of December 31, 2021 and 2022, we had US$45 thousand and US$14 thousand due from Huaxiang.
As of December 31, 2021, 2022 and 2023, we owed US$18 thousand, US$20 thousand and US$20 thousand to this company. As of December 31, 2021, 2022 and 2023, we had US$45 thousand, US$14 thousand and US$2 thousand due from this company.
In 2020, 2021 and 2022, we recognized US$8.0 million, US$9.4 million and US$6.2 million of revenue from provision of data connectivity services, sales of terminals, sales of data related products and other services and products to Maya, respectively. In 2021 and 2022, we purchased US$26 thousand and US$4 thousand, respectively, of data connectivity service from Maya.
In 2021, 2022 and 2023, we recognized US$9.4 million, US$6.2 million and US$10.8 million of revenue from provision of data connectivity services, sales of terminals, sales of data related products and other services and products to this company, respectively.
At any time after the earlier of (i) January 1, 2017, or (ii) the date that is 12 months after the closing of our initial public offering, holders of at least 50% of the registrable securities (including preferred shares and ordinary shares issued upon conversion of preferred shares) then outstanding have the right to demand that we file a registration statement of all registrable securities that the holders request to be registered and included in such registration by written notice.
Holders of at least 50% of the registrable securities (including preferred shares and ordinary shares issued upon conversion of preferred shares) then outstanding have the right to demand that we file a registration statement of all registrable securities that the holders request to be registered and included in such registration by written notice.
Our shareholders’ registration rights will terminate on the earlier of (i) the date that is five years after the date of closing of the initial public offering, or (ii) with respect to any holder, the date on which such holder may sell all of such holder’s registrable securities under Rule 144 of the Securities Act in any 90-day period.
Our shareholders’ registration rights will terminate on the earlier of (i) June 13, 2025, or (ii) with respect to any holder, the date on which such holder may sell all of such holder’s registrable securities under Rule 144 of the Securities Act in any 90-day period. Employment Agreements and Indemnification Agreements See “Item 6. Directors, Senior Management and Employees—B.
In April 2019 and September 2020, the Company made an equity investment in a privately-held company, Beijing Huaxianglianxin Technology Company, or Huaxiang, which is an MVNO in mainland China. We have significant influence over Huaxiang.
As of December 31, 2021, 2022 and 2023, we had US$1.1 million, US$0.7 million and US$2.9 million due from this company, respectively. Transactions with Huaxiang . In April 2019 and September 2020, we made an equity investment in a privately-held company, Beijing Huaxianglianxin Technology Company, which is an MVNO in mainland China. We have significant influence over this company.
As of December 31, 2020, 2021 and 2022, we owed US$1.5 million, US$1.4 million and US$1.5 million, respectively, to Maya, consisting of accounts payable, deposits and advances. As of December 31, 2020, 2021 and 2022, we had US$2.3 million, US$1.1 million and US$0.7 million due from Maya, respectively. 138 Transactions with Huaxiang .
In 2021, 2022 and 2023, we purchased US$26 thousand, US$4 thousand and US$2 thousand, respectively, of data connectivity service from this company. As of December 31, 2021, 2022 and 2023, we owed US$1.4 million, US$1.5 million and US$1.2 million, respectively, to this company, consisting of accounts payable, deposits and advances.

Other UCL 10-K year-over-year comparisons