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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 — 2023 vs 2024

Top changes in uCloudlink Group Inc.'s 2024 20-F

684 paragraphs added · 611 removed · 537 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

210 edited+74 added−34 removed657 unchanged
As of the date of this annual report, apart from the approval of the China Securities Regulatory Commission, or the CSRC, Cyberspace Administration of China, or other PRC government authorities that may be required in connection with the former VIE structure and our offshore offerings under the laws of mainland China, we have not received any requirement from PRC governmental authorities to obtain other permissions for our material operations in mainland China and issuance of securities to foreign investors.
As of the date of this annual report, apart from the approval of the China Securities Regulatory Commission, or the CSRC, the Cyberspace Administration of China, or other PRC government authorities that may be required in connection with the former VIE structure and our offshore offerings under the laws of mainland China, we have not received any requirement from PRC governmental authorities to obtain other permissions for our material operations in mainland China and issuance of securities to foreign investors.
Risk Factors—Risks Related to Doing Business in China—The approval and/or other requirements of the CSRC, the Cyberspace Administration of China, or other PRC governmental authorities may be required in connection with an offering under the rules, regulations or policies of mainland China, and, if required, we cannot predict whether or how soon we will be able to obtain such approval, and, even if we obtain such approval, the approval could be rescinded.
Risk Factors—Risks Related to Doing Business in China—The approval and/or other requirements of the CSRC, the Cyberspace Administration of China, or other PRC governmental authorities may be required in connection with an offering under the rules, regulations or policies of mainland China, and, if required, we cannot predict whether or how soon we will be able to obtain such approval, and, even if we obtain such approval, the approval could be rescinded.
As we continued to evaluate our business plan, we have decided to adjust our business model in mainland China, and we believe the license for value-added telecommunications services is no longer required. We terminated the contractual arrangements in 2022. The license previously held by Shenzhen uCloudlink Network Technology Co. Ltd. was also terminated during the Restructuring.
As we continued to evaluate our business plan, we have decided to adjust our business model in mainland China, and we believe the license for value-added telecommunications services is no longer required. We terminated the contractual arrangements in 2022, and the license previously held by Shenzhen uCloudlink Network Technology Co. Ltd. was also terminated during the Restructuring.
Risk Factors—Risks Related to Doing Business in China—The approval and/or other requirements of the CSRC, the Cyberspace Administration of China, or other PRC governmental authorities may be required in connection with an offering under the rules, regulations or policies of mainland China, and, if required, we cannot predict whether or how soon we will be able to obtain such approval, and, even if we obtain such approval, the approval could be rescinded.
Risk Factors—Risks Related to Doing Business in China—The approval and/or other requirements of the CSRC, the Cyberspace Administration of China, or other PRC governmental authorities may be required in connection with an offering under the rules, regulations or policies of mainland China, and, if required, we cannot predict whether or how soon we will be able to obtain such approval, and, even if we obtain such approval, the approval could be rescinded.
Risk Factors—Risks Related to Doing Business in China—The approval and/or other requirements of the CSRC, the Cyberspace Administration of China, or other PRC governmental authorities may be required in connection with an offering under the rules, regulations or policies of mainland China, and, if required, we cannot predict whether or how soon we will be able to obtain such approval, and, even if we obtain such approval, the approval could be rescinded.
Risk Factors—Risks Related to Doing Business in China—The approval and/or other requirements of the CSRC, the Cyberspace Administration of China, or other PRC governmental authorities may be required in connection with an offering under the rules, regulations or policies of mainland China, and, if required, we cannot predict whether or how soon we will be able to obtain such approval, and, even if we obtain such approval, the approval could be rescinded.
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.
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 February 24, 2023, the CSRC jointly with other governmental authorities, promulgated the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises, which took effect on March 31, 2023.
On February 24, 2023, the CSRC jointly with other governmental authorities, promulgated the Provisions on Strengthening the Confidentiality and Archives Administration Related to the Overseas Securities Offering and Listing by Domestic Enterprises, which took effect on March 31, 2023.
According to these provisions, domestic companies, whether offering and listing securities overseas directly or indirectly, must strictly abide the applicable laws and regulations when providing or publicly disclosing, either directly or through their overseas listed entities, documents and materials to securities services providers such as securities companies and accounting firms or overseas regulators in the process of their overseas offering and listing.
According to these provisions, domestic companies, whether offering and listing securities overseas directly or indirectly, must strictly abide the applicable laws and regulations when providing or publicly disclosing, either directly or through their overseas listed entities, documents and materials to securities services providers such as securities companies and accounting firms or overseas regulators in the process of their overseas offering and listing.
If such documents or materials contain any state secrets or government authorities work secrets, domestic companies must obtain the approval from competent governmental authorities according to the applicable laws, and file with the secrecy administrative department at the same level with the approving governmental authority.
If such documents or materials contain any state secrets or government authorities work secrets, domestic companies must obtain the approval from competent governmental authorities according to the applicable laws, and file with the secrecy administrative department at the same level with the approving governmental authority.
Furthermore, these provisions provide that securities companies and securities service providers shall fulfill the applicable legal procedures when providing overseas regulatory institutions and other institutions and individuals with documents or materials containing any state secrets or government authorities work secrets or other documents or materials that, if divulged, will jeopardize national security or public interest.
Furthermore, these provisions provide that securities companies and securities service providers shall fulfill the applicable legal procedures when providing overseas regulatory institutions and other institutions and individuals with documents or materials containing any state secrets or government authorities work secrets or other documents or materials that, if divulged, will jeopardize national security or public interest.
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.
Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
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.
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.
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; ● 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.
We face a number of risks associated with expanding our business internationally that could negatively impact our results of operations, including: ● compliance with foreign laws, including more stringent laws in foreign jurisdictions relating to the privacy and protection of third-party data; ● regulatory requirements governing the provision of communication services in foreign jurisdictions; ● competition from companies with international operations, including large international competitors and entrenched local companies; ● to the extent we choose to make acquisitions to enable our international expansion efforts, the identification of suitable acquisition targets in the markets into which we want to expand; ● difficulties in protecting intellectual property rights in international jurisdictions; ● political and economic instability in some overseas markets; ● difficulties in recruiting and managing local employees in overseas operations with different cultural backgrounds; ● currency fluctuations and exchange rates; ● tariffs, quotas, customs, import or export restrictions and other trade barriers, trade sanctions or anti-dumping measures; and ● potentially adverse tax consequences or an inability to realize tax benefits.
We face a number of risks associated with expanding our business internationally that could negatively impact our results of operations, including: ● compliance with foreign laws, including more stringent laws in foreign jurisdictions relating to the privacy and protection of third-party data; ● regulatory requirements governing the provision of communication services in foreign jurisdictions; ● competition from companies with international operations, including large international competitors and entrenched local companies; ● to the extent we choose to make acquisitions to enable our international expansion efforts, the identification of suitable acquisition targets in the markets into which we want to expand; ● difficulties in protecting intellectual property rights in international jurisdictions; ● political and economic instability in some overseas markets; 30 ● difficulties in recruiting and managing local employees in overseas operations with different cultural backgrounds; ● currency fluctuations and exchange rates; ● tariffs, quotas, customs, import or export restrictions and other trade barriers, trade sanctions or anti-dumping measures; and ● potentially adverse tax consequences or an inability to realize tax benefits.
Some of these risks and uncertainties relate to our ability to: ● maintain our market share; ● successfully expand into new businesses and explore additional monetization opportunities, such as mobile data connectivity services for local users such as GlocalMe Inside ; ● offer attractive, useful and innovative products and services to attract and retain a larger user base; ● upgrade our technology to support increased traffic and expanded product and service offerings; ● further enhance our brand; ● respond to competitive market conditions; ● respond to evolving user preferences or industry changes; ● respond to changes in the regulatory environment and manage legal risks, including those associated with intellectual property rights; ● maintain effective control of our costs and expenses; ● execute our strategic investments and acquisitions and post-acquisition integrations effectively; and ● build profitable operations in new markets we have entered into.
Some of these risks and uncertainties relate to our ability to: ● maintain our market share; ● successfully expand into new businesses and explore additional monetization opportunities, such as mobile data connectivity services for local users such as GlocalMe Inside ; ● offer attractive, useful and innovative products and services to attract and retain a larger user base; ● upgrade our technology to support increased traffic and expanded product and service offerings; ● further enhance our brand; ● respond to competitive market conditions; 32 ● respond to evolving user preferences or industry changes; ● respond to changes in the regulatory environment and manage legal risks, including those associated with intellectual property rights; ● maintain effective control of our costs and expenses; ● execute our strategic investments and acquisitions and post-acquisition integrations effectively; and ● build profitable operations in new markets we have entered into.
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.
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.” 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 Business and Industry—If our expansions into new businesses do not achieve the expected results, our future results of operations and growth prospects may be materially and adversely affected.” Risks Related to Our Corporate Structure We and the former VIEs face risks and uncertainties related to the former corporate structure, including, but not limited to, the following: ● 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.
Risk Factors—Risks Related to Our Business and Industry—If our expansions into new businesses do not achieve the expected results, our future results of operations and growth prospects may be materially and adversely affected.” 12 Risks Related to Our Corporate Structure We and the former VIEs face risks and uncertainties related to the former corporate structure, including, but not limited to, the following: ● 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.
In 2020, mainland China also tightened the enforcement of certain telecommunication regulations such as real-name authentication for SIM card users and restrictions on the use of machine-to-machine data SIM cards. 17 On May 17, 2013, the Ministry of Industry and Information Technology announced the Mobile Telecommunication Resale Service Pilot Scheme to encourage private investment in the telecommunications industry, which represented the official approval of the MVNO business.
In 2020, mainland China also tightened the enforcement of certain telecommunication regulations such as real-name authentication for SIM card users and restrictions on the use of machine-to-machine data SIM cards. 15 On May 17, 2013, the Ministry of Industry and Information Technology announced the Mobile Telecommunication Resale Service Pilot Scheme to encourage private investment in the telecommunications industry, which represented the official approval of the MVNO business.
Business Overview—Regulation—Mainland China—Regulations Related to Foreign Exchange—Regulations on Stock Incentive Plans.” The State Administration of Taxation has issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees working in mainland China who exercise or transfer share options or are granted restricted shares will be subject to mainland China’s individual income tax.
Business Overview—Regulation—Mainland China—Regulations Related to Foreign Exchange—Regulations on Stock Incentive Plans.” 49 The State Administration of Taxation has issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees working in mainland China who exercise or transfer share options or are granted restricted shares will be subject to mainland China’s individual income tax.
The maximum potential penalty we may be subject to is RMB100,000 for our failure to register a service store or pick-up point as a branch company if the government authorities determine that such branch company registrations are required. Risks Related to The ADSs The trading price of the ADSs may be volatile, which could result in substantial losses to you.
The maximum potential penalty we may be subject to is RMB100,000 for our failure to register a service store or pick-up point as a branch company if the government authorities determine that such branch company registrations are required. 52 Risks Related to The ADSs The trading price of the ADSs may be volatile, which could result in substantial losses to you.
If we do not succeed in attracting additional highly skilled personnel or retaining or motivating our existing personnel, we may be unable to grow effectively. If our employees commit fraud or other misconduct, including non-compliance with regulatory standards, our business may experience serious adverse consequences. We are exposed to the risk of employee fraud or other misconduct.
If we do not succeed in attracting additional highly skilled personnel or retaining or motivating our existing personnel, we may be unable to grow effectively. 36 If our employees commit fraud or other misconduct, including non-compliance with regulatory standards, our business may experience serious adverse consequences. We are exposed to the risk of employee fraud or other misconduct.
Our PRC counsel, has advised us that, based on its understanding of the current laws and regulations of mainland China, we will not be required to submit an application to the CSRC for the approval under the M&A Rules for an offering because (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether our offerings are subject to this regulation; and (ii) we did not acquire any equity interests or assets of a “domestic company” as such terms are defined under the M&A Rules. 42 However, our PRC counsel has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering, and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules.
Our PRC counsel, has advised us that, based on its understanding of the current laws and regulations of mainland China, we will not be required to submit an application to the CSRC for the approval under the M&A Rules for an offering because (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether our offerings are subject to this regulation; and (ii) we did not acquire any equity interests or assets of a “domestic company” as such terms are defined under the M&A Rules. 41 However, our PRC counsel has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering, and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules.
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.
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.
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.
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. 46 Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.
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.
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.
There have also been concerns about the relationship between China and other countries which may potentially have economic effects. In particular, there is significant uncertainty about the future relationship between the United States and China with respect to a wide range of issues including trade policies, treaties, government regulations and tariffs.
There have also been concerns about the relationship between China and other countries which may have economic effects. In particular, there is significant uncertainty about the future relationship between the United States and China with respect to a wide range of issues including trade policies, treaties, government regulations and tariffs.
In summary, up to the end of September 2023, all the above cases have been closed and do not involve any issue of compensation for damages. 24 We reached a global settlement with SIMO Holdings Inc. for the series of cases held in both the United States and mainland China.
In summary, up to the end of September 2023, all the above cases have been closed and do not involve any issue of compensation for damages. We reached a global settlement with SIMO Holdings Inc. for the series of cases held in both the United States and mainland China.
Substantial uncertainties still exist with respect to the interpretation and implementation of such provisions and how they will affect us. On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, which became effective on March 31, 2023.
Substantial uncertainties still exist with respect to the interpretation and implementation of such provisions and how they will affect us. 42 On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises, which became effective on March 31, 2023.
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).
In addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting. 55 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).
Any of the foregoing could disrupt the distribution and sale of our products and services and harm our business. If we are unable to take advantage of technological developments on a timely basis, we may experience a decline in demand for our products and services or face challenges in implementing or evolving our business strategy.
Any of the foregoing could disrupt the distribution and sale of our products and services and harm our business. 35 If we are unable to take advantage of technological developments on a timely basis, we may experience a decline in demand for our products and services or face challenges in implementing or evolving our business strategy.
As we continue to expand internationally, we could reduce the degree to which we are subject to seasonality in specific markets. Any inability to renew our leases on favorable terms could negatively impact our financial results. We lease office space, warehouses, server rooms, data centers and counters.
As we continue to expand internationally, we could reduce the degree to which we are subject to seasonality in specific markets. 38 Any inability to renew our leases on favorable terms could negatively impact our financial results. We lease office space, warehouses, server rooms, data centers and counters.
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.
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 the former VIEs in mainland China.
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.
The cash flows that occurred between our subsidiaries and the former VIEs in 2022 are summarized as the following: For the year ended December 31, 2022 (US$ in millions) Cash paid by former VIEs to subsidiaries for purchase of data plans and raw materials 0.9 Cash paid by former VIEs to subsidiaries for marketing and software licensing services 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 27.7 Intercompany advances from subsidiaries to former VIEs 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.
If these new business models are more attractive to users than the business models we currently use, our users may switch to our competitors’ services, and we may lose market share. 23 Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brand.
If these new business models are more attractive to users than the business models we currently use, our users may switch to our competitors’ services, and we may lose market share. Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our products, services, and brand.
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.
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.
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.
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.
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.
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.
Controls and Procedures—Management’s Annual Report on Internal Control over Financial Reporting.” However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting, and we cannot conclude that they have been fully remediated.
Controls and Procedures—Management’s Annual Report on Internal Control over Financial Reporting.” 19 However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting, and we cannot conclude that they have been fully remediated.
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.
If our new business initiatives do not achieve the level of success we expected, our operating results and growth prospect can be adversely affected. 22 We generate a substantial portion of our revenues from provision of international mobile data connectivity services.
Risk Factors—Risks R elated to The ADSs—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.” 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.
Risk Factors—Risks Related to The ADSs—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.” 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.
Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations and the enforcement of these laws, regulations and rules involves uncertainties. 45 In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general.
Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations and the enforcement of these laws, regulations and rules involves uncertainties. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general.
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.
Any such tax may reduce the returns on your investment in the ADSs. 50 We face uncertainty with respect to indirect transfer of equity interests in mainland China resident enterprises by their non-resident holding companies.
We earn revenue denominated in local currencies of our markets in mainland China, Japan, Hong Kong, Taiwan, North America, Southeast Asia and Europe, among other currencies, while some of our costs and expenses are paid in other foreign currencies.
We earn revenue denominated in local currencies of our markets in mainland China, Japan, Hong Kong, Taiwan, North America, Southeast Asia and Europe, among other currencies, while some of our costs and expenses are paid in other currencies.
However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely our current auditor, we and investors in our ADSs would be deprived of the benefits of such PCAOB inspections again, which could cause investors and potential investors in the ADSs to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. 44 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.
However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely our current auditor, we and investors in our ADSs would be deprived of the benefits of such PCAOB inspections again, which could cause investors and potential investors in the ADSs to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. 43 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.
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.
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, 2022.
As of the date of this annual report, no detailed rules or implementation rules have been issued by any authority and we have not been informed that we are a critical information infrastructure operator by any government authorities. 26 On August 17, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, which became effective on September 1, 2021.
As of the date of this annual report, no detailed rules or implementation rules have been issued by any authority and we have not been informed that we are a critical information infrastructure operator by any government authorities. 25 On August 17, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, which became effective on September 1, 2021.
Although the aforementioned remediation measures were implemented, these measures will require validation and testing of the operating effectiveness of internal controls over a sustained period of financial reporting cycles. As a result, the previously identified material weaknesses still existed as of December 31, 2023. We plan to continue to implement measures to remedy the identified material weaknesses. See “Item 15.
Although the aforementioned remediation measures were implemented, these measures will require validation and testing of the operating effectiveness of internal controls over a sustained period of financial reporting cycles. As a result, the previously identified material weaknesses still existed as of December 31, 2024. We plan to continue to implement measures to remedy the identified material weaknesses. See “Item 15.
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.” 8 Financial Information Related to the Consolidated Former Variable Interest Entities Set forth below are the condensed consolidating schedule showing the financial position, results of operations and cash flows for the parent company, the WFOE, subsidiaries, and the former VIEs, elimination and consolidated total (in thousands of US$) as of and for the years ended December 31, 2021 and 2022.
Risk Factors—Risks Related to Doing Business in China—Mainland China’s regulation of loans to and direct investment in mainland China entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of any financing outside mainland China to make loans to or make additional capital contributions to our mainland China subsidiaries and the former VIEs, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” Financial Information Related to the Consolidated Former Variable Interest Entities Set forth below are the condensed consolidating schedule showing the financial position, results of operations and cash flows for the parent company, the WFOE, subsidiaries, and the former VIEs, elimination and consolidated total (in thousands of US$) as of and for the year ended December 31, 2022.
Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from Nasdaq listing standards. For example, neither the Companies’ Act of the Cayman Islands nor our memorandum and articles of association requires us to hold an annual general meeting, and we did not hold an annual general meeting in 2023.
Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from Nasdaq listing standards. For example, neither the Companies’ Act of the Cayman Islands nor our memorandum and articles of association requires us to hold an annual general meeting, and we did not hold an annual general meeting in 2024.
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.
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, mainland China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors.
The Measures for Cybersecurity Review, the draft Regulations on the Network Data Security and the Measures on Security Assessment of Cross-border Data Transfer remain unclear on whether the requirements will be applicable to further equity or debt offerings by companies that have completed the initial public offering in the United States.
The Measures for Cybersecurity Review, the Regulations on Network Data Security Administration and the Measures on Security Assessment of Cross-Border Data Transfer remain unclear on whether the requirements will be applicable to further equity or debt offerings by companies that have completed the initial public offering in the United States.
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.
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 year ended December 31, 2022 included in this annual report.
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.
As a result, our shares and/or ADSs may decline in value or become worthless. 40 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.
We cannot predict the impact of the Measures for Cybersecurity Review, the draft Regulations on the Network Data Security and the Measures on Security Assessment of Cross-border Data Transfer, if any, at this stage, and we will closely monitor and assess the statutory developments in this regard. See “Item 3. Key Information—D.
We cannot predict the impact of the Measures for Cybersecurity Review, the Regulations on Network Data Security Administration and the Measures on Security Assessment of Cross-Border Data Transfer, if any, at this stage, and we will closely monitor and assess the statutory developments in this regard. See “Item 3. Key Information—D.
Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations.” and “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.”
Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations.” and “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Rules.” 60
Although we recorded income from operations of US$2.6 million in 2023, and generated net cash from operating activities of US$4.4 million and US$6.5 million in 2022 and 2023, respectively, we cannot assure you that we will be able to maintain profitability and positive cash flow from operations in the future.
Although we recorded income from operations of US$2.6 million and US$4.4 million in 2023 and 2024, respectively, and generated net cash from operating activities of US$4.4 million and US$6.5 million and US$9.2 million in 2022, 2023 and 2024, respectively, we cannot assure you that we will be able to maintain profitability and positive cash flow from operations in the future.
For these reasons, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2022 and do not expect to be so identified after we file this annual report on Form 20-F for the fiscal year ended December 31, 2023.
For these reasons, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2023 and do not expect to be so identified after we file this annual report on Form 20-F for the fiscal year ended December 31, 2024.
For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2022 and do not expect to be so identified after we file this annual report on Form 20-F for the fiscal year ended December 31, 2023.
For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2023 and do not expect to be so identified after we file this annual report on Form 20-F for the fiscal year ended December 31, 2024.
According to the 2021 Negative List, the proportion of foreign investments in an entity engages in value-added telecommunications business (except for e-commerce, domestic multi-party communications, storage-forwarding and call centers) shall not exceed 50%.
According to the 2024 Negative List, the proportion of foreign investments in an entity engages in value-added telecommunications business (except for e-commerce, domestic multi-party communications, storage-forwarding and call centers) shall not exceed 50%.
For a discussion of significant differences between the provisions of the Companies Act of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Item 10. Additional Information—B.
For a discussion of significant differences between the provisions of the Companies Act (As Revised) of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Item 10. Additional Information—B.
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.
GAAP, the financial statements of the former VIEs are consolidated as part of our financial statements for the year ended December 31, 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.
Our ordinary shares consist of Class A ordinary shares and Class B ordinary shares. In respect of matters requiring the votes of shareholders, holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to 15 votes per share based on our dual class share structure.
In respect of matters requiring the votes of shareholders, holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to 15 votes per share based on our dual class share structure.
As part of our growth strategy, we enter into new markets, such as mobile data connectivity services for local users, develop new businesses, find new applications for our technologies, such as GlocalMe Life accessories and Internet-of-Things (IoT) modules, and explore new monetization opportunities, such as payment services.
As part of our growth strategy, we enter into new markets, such as mobile data connectivity services for local users, develop new businesses, find new applications for our technologies, such as GlocalMe Life accessories and Internet-of-Things modules, which we refer to as IoT modules, and explore new monetization opportunities, such as payment services.
For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid in mainland China and Hong Kong, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: Hypothetical pre-tax earnings (1) 100.00 Tax on earnings at statutory rate of 25% at Beijing uCloudlink level (25.00 ) Amount to be distributed as dividend from Beijing uCloudlink to Hong Kong subsidiary (2) 75.00 Withholding tax at tax treaty rate of 5% (3.75 ) Amount to be distributed as dividend at Hong Kong subsidiary level and net distribution to uCloudlink 71.25 Notes: (1) For purposes of this example, the tax calculation has been simplified.
We have no current intention to pay dividends to shareholders. 7 For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid in mainland China and Hong Kong, assuming that: (i) we have taxable earnings, and (ii) we determine to pay a dividend in the future: Hypothetical pre-tax earnings (1) 100.00 Tax on earnings at statutory rate of 25% at Beijing uCloudlink level (25.00 ) Amount to be distributed as dividend from Beijing uCloudlink to Hong Kong subsidiary (2) 75.00 Withholding tax at tax treaty rate of 5% (3.75 ) Amount to be distributed as dividend at Hong Kong subsidiary level and net distribution to uCloudlink 71.25 Notes: (1) For purposes of this example, the tax calculation has been simplified.
Risk Factors.” 13 Risks Relating to Our Business and Industry We and the former VIEs are subject to risks and uncertainties related to our business and industry, including, but not limited to, the fo llowing: ● 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.
Risk Factors.” Risks Relating to Our Business and Industry We and the former VIEs are subject to risks and uncertainties related to our business and industry, including, but not limited to, the following: ● 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.
The Russia-Ukraine conflict, the Hamas-Israel conflict and attacks on shipping in the Red Sea have heightened geopolitical tensions across the world. The impact of the Russia-Ukraine conflict on Ukraine food exports has contributed to increases in food prices and thus to inflation more generally.
The Russia-Ukraine conflict, the Hamas-Israel conflict, attacks on shipping in the Red Sea and the instability in Southeast Asia have heightened geopolitical tensions across the world. The impact of the Russia-Ukraine conflict on Ukraine food exports has contributed to increases in food prices and thus to inflation more generally.
However, our mobile data connectivity services do not contain physical SIM cards or phone numbers. Based on the above understanding, our PRC legal counsel, Han Kun Law Offices, is of the opinion that the service we provide in mainland China is not mobile telecommunication resale service stipulated definitely under the laws and regulations of mainland China.
However, our mobile data connectivity services do not contain phone numbers or provide voice services. Based on the above understanding, our PRC legal counsel, Han Kun Law Offices, is of the opinion that the service we provide in mainland China is not mobile telecommunication resale service stipulated definitely under the laws and regulations of mainland China.
Recent legal developments in the EU have created complexity and uncertainty regarding transfers of personal information from the EU to “third countries,” especially the United States. For example, last year the Court of Justice of the EU invalidated the EU-U.S.
Recent legal developments in the EU have created complexity and uncertainty regarding transfers of personal information from the EU to “third countries,” especially the United States. For example, in 2020, the Court of Justice of the EU invalidated the EU-U.S.
Because of these contractual arrangements, we were the primary beneficiary of the former VIEs in mainland China for accounting purposes for the effective period of these contractual arrangements. Accordingly, under U.S. 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.
Because of these contractual arrangements, we were the primary beneficiary of the former VIEs in mainland China for accounting purposes for the effective period of these contractual arrangements. Accordingly, under U.S. GAAP, the financial statements of the former VIEs are consolidated as part of our financial statements for the year ended December 31, 2022 in this annual report.
According to this circular, an offshore incorporated enterprise controlled by a mainland China enterprise or a mainland China enterprise group will be regarded as a mainland China tax resident by virtue of having its “de facto management body” in mainland China and will be subject to mainland China’s enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in mainland China; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in mainland China; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in mainland China; and (iv) at least 50% of voting board members or senior executives habitually reside in mainland China. 51 We believe none of our entities outside of mainland China is a mainland China resident enterprise for tax purposes.
According to this circular, an offshore incorporated enterprise controlled by a mainland China enterprise or a mainland China enterprise group will be regarded as a mainland China tax resident by virtue of having its “de facto management body” in mainland China and will be subject to mainland China’s enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in mainland China; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in mainland China; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in mainland China; and (iv) at least 50% of voting board members or senior executives habitually reside in mainland China.
There were contractual arrangements among our mainland China subsidiaries, the former VIEs and their nominee shareholders, which were terminated in 2022 as we continued to adjust our business model in mainland China and proceed the Restructuring. Revenues contributed by the former VIEs accounted for 5% and 2% of our total revenues for the years of 2021 and 2022, respectively.
There were contractual arrangements among our mainland China subsidiaries, the former VIEs and their nominee shareholders, which were terminated in 2022 as we continued to adjust our business model in mainland China and proceed the Restructuring. Revenues contributed by the former VIEs accounted for 2% of our total revenues for 2022.
With respect to roaming, Regulation (EU) 2015/2120 of November 25, 2015 (also known as the Telecoms Single Market package, or TSM), which aims, in particular, to eliminate surcharges for international roaming within the European Union, and Regulation (EU) 2017/920 of May 17, 2017, which lays down the rules for wholesale roaming markets to: (i) impose, in the context of fair usage, the alignment of international roaming retail prices with national prices for intra-European communications (voice, SMS and data) from June 15, 2017; (ii) expand, for users using their cell phones outside the EU, pricing transparency requirements and bill shock prevention measures for European operators; and (iii) grant a regulated right of access to European mobile data connectivity services for MVNOs and resellers, and sets new caps on wholesale markets.
With respect to roaming, Regulation (EU) 2015/2120 of November 25, 2015 (also known as the Telecoms Single Market package, or TSM), which aims, in particular, to eliminate surcharges for international roaming within the European Union, and Regulation (EU) 2017/920 of May 17, 2017, which lays down the rules for wholesale roaming markets to: (i) impose, in the context of fair usage, the alignment of international roaming retail prices with national prices for intra-European communications (voice, SMS and data) from June 15, 2017; (ii) expand, for users using their cell phones outside the EU, pricing transparency requirements and bill shock prevention measures for European operators; and (iii) grant a regulated right of access to European mobile data connectivity services for MVNOs and resellers, and sets new caps on wholesale markets. 17 The EU announced the Directive on Security of Network and Information Systems, or the NIS Directive, on July 6, 2016.
In June 2020, we made an investment of US$15 million in an investment fund representing ownership interest in an entity for which the underlying assets were comprised of debt and equity securities. The fair value of this investment was US$7.6 million as of December 31, 2023.
In June 2020, we made an investment of US$15 million in an investment fund representing ownership interest in an entity for which the underlying assets were comprised of debt and equity securities. The fair value of this investment was US$8.7 million as of December 31, 2024.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (save for our memorandum and articles of association, our register of mortgages and charges and special resolutions of our shareholders) or to obtain copies of lists of shareholders of these companies.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect or to obtain copies of corporate records or register of members of these companies (save for our memorandum and articles of association, our register of mortgages and charges and special resolutions passed by our shareholders).
(6) The fund transfer within the group of the company between subsidiaries, the WFOE and the former VIEs included the following: ● With respect to the fund transfer from the parent company to subsidiaries, subsidiaries received cash from the parent company amounted to US$3.0 million and nil for the year ended December 31, 2021 and 2022, respectively. ● With respect to the fund transfer between the former VIEs and the WFOE, the former VIEs repaid cash to the WFOE amounted to nil and nil for the year ended December 31, 2021 and 2022, respectively. ● With respect to the fund transfer between the former VIEs and subsidiaries, the former VIE received cash from subsidiaries amounted to US$4.4 million and US$1.5 million for the year ended December 31, 2021 and 2022, respectively; the former VIE paid cash to subsidiaries amounted to nil and US$1.8 million for the year ended December 31, 2021 and 2022, respectively. ● With respect to the fund transfer between the WFOE and subsidiaries, the WFOE repaid cash to subsidiaries amounted to nil and nil for the year ended December 31, 2021 and 2022, respectively.
(6) The fund transfer within the group of the company between subsidiaries, the WFOE and the former VIEs included the following: ● With respect to the fund transfer from the parent company to subsidiaries, subsidiaries received cash from the parent company amounted to nil for the year ended December 31, 2022. ● With respect to the fund transfer between the former VIEs and the WFOE, the former VIEs repaid cash to the WFOE amounted to nil for the year ended December 31, 2022. ● With respect to the fund transfer between the former VIEs and subsidiaries, the former VIE received cash from subsidiaries amounted to US$1.5 million for the year ended December 31, 2022; the former VIE paid cash to subsidiaries amounted to US$1.8 million for the year ended December 31, 2022. ● With respect to the fund transfer between the WFOE and subsidiaries, the WFOE repaid cash to subsidiaries amounted to nil for the year ended December 31, 2022.
The vesting of the share options granted by us was conditional upon completion of our initial public offering, and upon the completion of such offering in 2020, we began to recognize a substantial amount of share-based compensation expense. We recognized share-based compensation expenses of US$8.8 million in 2021, US$3.1 million in 2022 and US$3.3 million in 2023, respectively.
The vesting of the share options granted by us was conditional upon completion of our initial public offering, and upon the completion of such offering in 2020, we began to recognize a substantial amount of share-based compensation expense. We recognized share-based compensation expenses of US$3.1 million in 2022, US$3.3 million in 2023 and US$1.2 million in 2024.
On March 29, 2022, the Decision of the State Council on Revising and Repealing Certain Administrative Regulations, which took effect on May 1, 2022, was promulgated to amend certain provisions of regulations, including the Provisions on the Regulations for the Administration of Foreign-Invested Telecommunications Enterprises (2016 Revision), the requirement for major foreign investor to demonstrate a good track record and experience in operating value-added telecommunications businesses is deleted. 40 The Special Administrative Measures (Negative List) for Access of Foreign Investment (2021 Version), or the 2021 Negative List, were jointly promulgated by the National Development and Reform Commission of the PRC, or the NDRC, and the Ministry of Commerce of the PRC on December 27, 2021 and effective on January 1, 2022.
On March 29, 2022, the Decision of the State Council on Revising and Repealing Certain Administrative Regulations, which took effect on May 1, 2022, was promulgated to amend certain provisions of regulations, including the Provisions on the Regulations for the Administration of Foreign-Invested Telecommunications Enterprises (2016 Revision), the requirement for major foreign investor to demonstrate a good track record and experience in operating value-added telecommunications businesses is deleted. 39 The Special Administrative Measures (Negative List) for Access of Foreign Investment (2024 Version), or the 2024 Negative List, were jointly promulgated by the National Development and Reform Commission of the PRC, or the NDRC, and the Ministry of Commerce of the PRC on September 6, 2024 and effective on November 1, 2024.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Risk Factors—Risks Related to Doing Business in China—The M&A Rules and certain other mainland China’s regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in mainland China.” Regulations on Anti-Monopoly The Anti-Monopoly Law promulgated by the Standing Committee of the National People’s Congress on August 30, 2007, which was last amended on June 24, 2022 and became effective on August 1, 2022, and the Provisions on the Review of Concentrations of Undertakings promulgated by the State Administration for Market Regulation on March 10, 2023, which became effective on April 15, 2023, require that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the State Administration for Market Regulation before they can be completed.
Risk Factors—Risks Related to Doing Business in China—The M&A Rules and certain other mainland China’s regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in mainland China.” 92 Regulations on Anti-Monopoly The Anti-Monopoly Law promulgated by the Standing Committee of the National People’s Congress on August 30, 2007, which was last amended on June 24, 2022 and became effective on August 1, 2022, and the Provisions on the Review of Concentrations of Undertakings promulgated by the State Administration for Market Regulation on March 10, 2023, which became effective on April 15, 2023, require that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by the State Administration for Market Regulation before they can be completed.
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.
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, 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 (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. ● A “Class 3 service” is a non-facility based public telecommunications service.
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.
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 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.
We provide the firmware upgrade to third parties without additional hardware cost to enable global mobile data connectivity services on these terminals, such as smartphones, GlocalMe World Phones, mobile Wi-Fi, and smart speakers. 71 Our GlocalMe Inside implementation for smartphones was done via a series of technological collaborations between us, mobile terminal brands and major chipset brands.
We provide the firmware upgrade to third parties without additional hardware cost to enable global mobile data connectivity services on these terminals, such as smartphones, GlocalMe World Phones, mobile Wi-Fi, and smart speakers. Our GlocalMe Inside implementation for smartphones was done via a series of technological collaborations between us, mobile terminal brands and major chipset brands.
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.
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. 62 We have developed proprietary algorithms to analyze historical data usage patterns and predict future data traffic demand.
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.
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. Cooperation with Business Partners We have collaborated with business partners to provide access to our portable Wi-Fi solutions in other countries.
We are developing additional customization features so that users may personalize and purchase data plans based on their needs. Such flexibility will enable more reasonable cost for users and increase our network operation efficiency. Manufacturing and Supply of Components To produce our hardware terminals that incorporate our mobile data connectivity services, we rely on our manufacturing partners.
We are developing additional customization features so that users may personalize and purchase data plans based on their needs. Such flexibility will enable more reasonable cost for users and increase our network operation efficiency. 72 Manufacturing and Supply of Components To produce our hardware terminals that incorporate our mobile data connectivity services, we rely on our manufacturing partners.
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.
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.
If an internet information service provider violates these measures, the Ministry of Public Security and the local security bureaus may revoke its operating license and shut down its websites. (ii) Decision on Strengthening Network Information Protection PRC government authorities have enacted laws and regulations on internet use to protect personal information from any unauthorized disclosure.
If an internet information service provider violates these measures, the Ministry of Public Security and the local security bureaus may revoke its operating license and shut down its websites. 81 (ii) Decision on Strengthening Network Information Protection PRC government authorities have enacted laws and regulations on internet use to protect personal information from any unauthorized disclosure.
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.
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.
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.
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. Cloud Infrastructure . We have built a robust technology infrastructure to support the delivery of mobile data connectivity solutions globally.
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.
The price of the daily service fee depends on the countries and regions the users plan to visit. 68 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.
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.
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. D.
Local SIM banks can also host a large number of data SIM cards, which can be physical SIM cards, e-SIM or soft SIM cards, and may be managed by our business partners directly. For example, a MNO or MVNO from whom we procure data may operate a local SIM bank and manage the data plans and SIM cards more efficiently.
Local SIM banks can also host a large number of data SIM cards, which can be physical SIM cards or e-SIM, and may be managed by our business partners directly. For example, a MNO or MVNO from whom we procure data may operate a local SIM bank and manage the data plans and SIM cards more efficiently.
In September 2019, we began this model whereby we purchase handsets from our business partners, then implement GlocalMe Inside , and sell the handsets to wholesalers. Platform-as-a-Service (PaaS) / Software-as-a-Service (SaaS) and Other Services We offer uCloudlink cloud SIM platform as a service to our business partners with a service charge.
In September 2019, we began this model whereby we purchase handsets from our business partners, then implement GlocalMe Inside , and sell the handsets to wholesalers. 70 Platform-as-a-Service (PaaS) / Software-as-a-Service (SaaS) and Other Services We offer uCloudlink cloud SIM platform as a service to our business partners with a service charge.
Under the current tax regime, starting from the year of assessment 2018/2019 onwards the following two-tiered rates of profits tax shall apply: 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. 98 C.
Under the current tax regime, starting from the year of assessment 2018/2019 onwards the following two-tiered rates of profits tax shall apply: 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. C.
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.
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. 63 We have expanded the business scope of our local data connectivity service.
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.
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. 97 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.
We generate revenue primarily from our mobile data connectivity services and hardware terminals that incorporate the services. 64 Evolution of Our Business Our uCloudlink cloud SIM platform is designed for shared mobile data connectivity services by allocating the SIM cards remotely and dynamically to users.
We generate revenue primarily from our mobile data connectivity services and hardware terminals that incorporate the services. Evolution of Our Business Our uCloudlink cloud SIM platform is designed for shared mobile data connectivity services by allocating the SIM cards remotely and dynamically to users.
Besides GlocalMe Connect app, we also offer GlocalMe app that can be downloaded from app stores to manage portable Wi-Fi terminals, and GlocalMe Call app to manage voice calls and text messages that are remotely hosted on SIM boxes.
Besides the GlocalMe Connect app, we also offer the GlocalMe app that can be downloaded from app stores to manage portable Wi-Fi terminals, and the GlocalMe Call app to manage voice calls and text messages that are remotely hosted on SIM boxes.
Our PaaS and SaaS offering consists of modules such as customer relationship management, operations support system, business support system, and SIM card enterprise resource planning and management, which enable our PaaS and SaaS customers to become over-the-top (OTT) operators.
Our PaaS and SaaS offering consists of modules such as customer relationship management, operations support system, business support system, and SIM card enterprise resource planning and management, which enable our PaaS and SaaS customers to become over-the-top operators.
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.
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.
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.
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 391 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.
Pursuant to such draft provisions, there shall be a three-year interim period from July 1, 2024 to June 30, 2027 for the existing companies to adjust their periods of capital contribution.
Pursuant to such provisions, there shall be a three-year interim period from July 1, 2024 to June 30, 2027 for the existing companies to adjust their periods of capital contribution.
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 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 purpose for which the goods are being bought, and correspond with the descriptions provided by the seller and/or the samples.
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 .
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 .
According to these measures, foreign investors or foreign-invested enterprises shall report their investment-related information to the competent local counterparts of the Ministry of Commerce through the National Enterprise Registration System and National Enterprise Credit Information Notification System. The 2022 Encouraged Industry Catalog, along with the 2021 Negative List, governs investment activities in mainland China by foreign investors.
According to these measures, foreign investors or foreign-invested enterprises shall report their investment-related information to the competent local counterparts of the Ministry of Commerce through the National Enterprise Registration System and National Enterprise Credit Information Notification System. The 2022 Encouraged Industry Catalog, along with the 2024 Negative List, governs investment activities in mainland China by foreign investors.
HONG KONG UCLOUDLINK NETWORK TECHNOLOGY LIMITED, our subsidiary established in Hong Kong, has obtained a Radio Dealers License. The current Radio Dealers License was issued by Communications Authority in Hong Kong on May 29, 2018 and will remain effective until May 31, 2022. Currently, we are preparing an application to the Communications Authority for a Services-Based Operator.
HONG KONG UCLOUDLINK NETWORK TECHNOLOGY LIMITED, our subsidiary established in Hong Kong, has obtained a Radio Dealers license. The current Radio Dealers license was issued by Communications Authority in Hong Kong on May 29, 2018 and will remain effective until May 31, 2025. Currently, we are preparing an application to the Communications Authority for a Services-Based Operator license.
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.
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 163 countries and regions we cover.
In addition, the NDRC and the Ministry of Commerce promulgated the Encouraged Industry Catalogue for Foreign Investment (2022 version), which came into effect on January 1, 2023. Industries not listed in the 2021 Negative List and industries listed in the catalogue are generally open for foreign investments unless specifically restricted by other laws of mainland China.
In addition, the NDRC and the Ministry of Commerce promulgated the Encouraged Industry Catalogue for Foreign Investment (2022 version), which came into effect on January 1, 2023. Industries not listed in the 2024 Negative List and industries listed in the catalogue are generally open for foreign investments unless specifically restricted by other laws of mainland China.
Our operation under uCloudlink 2.0 model involves the purchase and use of local data, and some local regulator require additional telecommunication licenses and permits. We make efforts to obtain the requisite licenses and permits by collaborating with or forming joint venture with local business partners who possess such licenses and permits or by applying by ourselves.
Our operation under uCloudlink 2.0 model involves the purchase and use of local data, and some local regulators require additional telecommunication licenses and permits. We make efforts to obtain the requisite licenses and permits by collaborating with or forming joint venture with local business partners who possess such licenses and permits or by applying by ourselves.
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 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 163 countries and regions, including those countries traditionally renowned for high roaming cost.
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.
GAAP, the financial statements of the former VIEs are consolidated as part of our financial statements for the years ended December 31, 2022 in this annual report. As we continued to evaluate our business plan, we have decided to adjust our business model in mainland China.
As our service maximizes network utilization, simplifies the cooperation among MNOs, improves network coverage and service quality of MNOs and fully utilizes network capacity, especially 5G, MNOs are more willing to offer us leftover data with low price.
As our AI-Powered service maximizes network utilization, simplifies the cooperation among MNOs, improves network coverage and service quality of MNOs and fully utilizes network capacity, especially 5G, MNOs are more willing to offer us leftover data with low price.
Industries not listed in the 2021 Negative List and industries listed in the 2022 Encouraged Industry Catalogue are generally deemed as falling into the “permitted” or “encouraged” category, unless specifically restricted by other laws and regulations of mainland China.
Industries not listed in the 2024 Negative List and industries listed in the 2022 Encouraged Industry Catalogue are generally deemed as falling into the “permitted” or “encouraged” category, unless specifically restricted by other laws and regulations of mainland China.
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 have a dedicated team of data procurement personnel to purchase global mobile data from various sources. Our data purchasing team covers 163 countries and regions, divided by geographic regions and languages. 71 We ask for quotations from MNOs and resellers in a region and specify our technical requirements to support cloud SIM technology.
We also generate revenue when users purchase additional data package through our products. Users may purchase our terminals on online e-commerce platforms such as Amazon and T-mall.
We also generate revenue when users purchase additional data package through our products. Users may purchase our terminals on online e-commerce platforms such as Amazon, TikTok, JD and T-mall.
In addition, as SIM cards purchased by us and those hosted by various business partners are incorporated in the architecture as an integrated SIM card pool, mobile data connectivity service providers such as MNO and MVNO business partners can not only offer their own data connectivity service on our platform, but also easily obtain access to data connectivity services from other service providers via our PaaS and SaaS platform.
In addition, as SIM cards purchased by us and those hosted by various business partners are incorporated in the architecture as an integrated SIM card pool, mobile data connectivity service providers such as MNO and MVNO business partners can not only offer their own data connectivity service on our platform, but also easily obtain access to data connectivity services from other service providers via our PaaS and SaaS platform powered by artificial intelligence (AI).
Empowered by our cloud SIM architecture, Roamingman provides global data connection through using our terminals. Users may obtain our portable Wi-Fi through multiple channels, including multiple Roamingman e-commerce platforms, online travel agencies such as Ctrip and Fliggy, airlines and other travel related companies.
Empowered by our cloud SIM architecture, Roamingman provides global data connection through using our terminals. Users may obtain our portable Wi-Fi through multiple channels, including multiple Roamingman e-commerce platforms, online travel agencies such as Trip.com and Fliggy, airlines and other travel related companies.
We have employed internal policies, confidentiality agreements, encryptions and data security measures to protect our proprietary rights. However, there can be no assurance that our efforts will be successful. Even if our efforts are successful, we may incur significant costs in defending our rights.
We intend to protect our technology and proprietary rights vigorously. We have employed internal policies, confidentiality agreements, encryptions and data security measures to protect our proprietary rights. However, there can be no assurance that our efforts will be successful. Even if our efforts are successful, we may incur significant costs in defending our rights.
Regulations Related to Privacy Protection The PRC Constitution states that PRC law protects the freedom and privacy of communications of citizens and prohibits infringement of these rights. In recent years, PRC government authorities have enacted legislation on internet use to protect personal information from any unauthorized disclosure.
Regulations Related to Privacy Protection The PRC Constitution states that PRC law protects the freedom and privacy of communications of citizens and prohibits infringement of these rights. PRC government authorities have enacted legislation on internet use to protect personal information from any unauthorized disclosure.
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.
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 391 MNOs in 163 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.
As of December 31, 2023, our technology team had a total of approximately 146 engineers, primarily focusing on the development of cloud SIM technology and our architecture, firmware and software development, big data analysis and hardware development. 75 Data Privacy and Security We are committed to protecting information security of all users and business partners within our cloud SIM architecture.
As of December 31, 2024, our technology team had a total of approximately 160 engineers, primarily focusing on the development of cloud SIM technology and our architecture, firmware and software development, big data analysis and hardware development. Data Privacy and Security We are committed to protecting information security of all users and business partners within our cloud SIM architecture.
We also face potential competition from other companies with such technologies in data connectivity services.
We also face potential competition from other companies with such technologies in data connectivity and location services.
The Inland Revenue Ordinance provides, among others, that persons, which include corporations, carrying on any trade, profession or business in Hong Kong are chargeable to tax all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business.
The Inland Revenue Ordinance provides, among others, that persons, which include corporations, carrying on any trade, profession or business in Hong Kong are chargeable to tax all profits (excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from such trade, profession or business. 96 Our profits arising in or derived from Hong Kong are subject to the profits tax regime under the Inland Revenue Ordinance.
Total data consumed through our platform were approximately 163,000, 176,500 and 180,000 terabytes in 2021, 2022 and 2023, respectively, including data consumed by users who contributed to our revenues from data connectivity services, which we procured, and data consumed by users who did not contribute to our revenues from data connectivity services, which our business partners procured.
Total data consumed through our platform were approximately 176,500, 180,000 and 172,900 terabytes in 2022, 2023 and 2024, respectively, including data consumed by users who contributed to our revenues from data connectivity services, which we procured, and data consumed by users who did not contribute to our revenues from data connectivity services, which our business partners procured.
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.
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. 91 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 1/2 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.
As of December 31, 2023, we owned 146 patents relating to the cloud SIM technology in mainland China, Japan, United States and other jurisdictions, and had 38 pending patent applications. Our patents cover our key technologies, including cloud SIM architecture and supporting terminals, design patents, hardware antenna and hardware configuration.
As of December 31, 2024, we owned 165 patents relating to the cloud SIM technology in mainland China, Japan, United States and other jurisdictions, and had 20 pending patent applications. Our patents cover our key technologies, including cloud SIM architecture and supporting terminals, design patents, hardware antenna and hardware configuration.
Regulation on the Internet Security Supervision and Inspection by Public Security Organs Pursuant to the Regulation on the Internet Security Supervision and Inspection by Public Security Organs, which was promulgated by the Ministry of Public Security on September 15, 2018 and became effective on November 1, 2018, the public security departments are authorized to carry out internet security supervision and inspection of the internet service providers from the following aspects, among others: (i) whether the internet service providers have completed the recordation formalities for online entities, and filed the basic information on and the changes of the accessing entities and users; (ii) whether they have established and implemented the cybersecurity management system and protocols, and appointed the persons responsible for cybersecurity; (iii) whether the technical measures for recording and retaining users’ registration information and weblog data are in place according to the law; (iv) whether they have taken technical measures to prevent computer viruses, network attacks and network intrusion; (v) whether they have adopted preventive measures to tackle the information that is prohibited to be issued or transmitted by the laws and administrative regulations in the public information services; (vi) whether they provide technical support and assistance as required by laws to public security departments to safeguard national security and prevent and investigate on terrorist activities and criminal activities; and (vii) whether they have fulfilled the obligations of the grade-based cybersecurity protection and other obligations prescribed by the laws and administrative regulations.
The security assessment of a cross-border data transfer shall focus on assessing the risks that may be brought about by the cross-border data transfer concerning national security, public interests, or the lawful rights and interests of individuals or organizations. 83 Regulation on the Internet Security Supervision and Inspection by Public Security Organs Pursuant to the Regulation on the Internet Security Supervision and Inspection by Public Security Organs, which was promulgated by the Ministry of Public Security on September 15, 2018 and became effective on November 1, 2018, the public security departments are authorized to carry out internet security supervision and inspection of the internet service providers from the following aspects, among others: (i) whether the internet service providers have completed the recordation formalities for online entities, and filed the basic information on and the changes of the accessing entities and users; (ii) whether they have established and implemented the cybersecurity management system and protocols, and appointed the persons responsible for cybersecurity; (iii) whether the technical measures for recording and retaining users’ registration information and weblog data are in place according to the law; (iv) whether they have taken technical measures to prevent computer viruses, network attacks and network intrusion; (v) whether they have adopted preventive measures to tackle the information that is prohibited to be issued or transmitted by the laws and administrative regulations in the public information services; (vi) whether they provide technical support and assistance as required by laws to public security departments to safeguard national security and prevent and investigate on terrorist activities and criminal activities; and (vii) whether they have fulfilled the obligations of the grade-based cybersecurity protection and other obligations prescribed by the laws and administrative regulations.
Our business partners can also management their business via our PaaS and SaaS platform to provide better services to their end-users, including connectivity management, terminal management, terminal rental and sales, customer service systems (CRM), and big data analysis. Big Data and Advanced Algorithms .
Our business partners can also management their business via our PaaS and SaaS platform to provide better AI-driven PaaS/SaaS solutions to their end-users, including connectivity management, terminal management, terminal rental and sales, customer service systems (CRM), and big data analysis. 66 Big Data and Advanced Algorithms .
In 2023, average daily active terminals connected to our platform exceeded 316,000 and each of our active terminals on average used over 1,600 megabytes of mobile data per day.
In 2024, average daily active terminals connected to our platform exceeded 316,600 and each of our active terminals on average used over 1,564 megabytes of mobile data per day.
According to the Consumer Rights and Interests Protection Law, unless otherwise provided by this law, a business that provides products or services shall, in any of the following circumstances, bear civil liability in accordance with the Product Quality Law and other laws and regulations: (i) where a defect exists in a product; (ii) where a commodity does not possess functions it is supposed to possess, and it is not declared when the product is sold; (iii) where the product standards indicated on a product or on the package of such product are not met; (iv) where the quality condition indicated by way of product description or physical sample, etc. is not met; (v) where products pronounced obsolete by formal State decrees are produced or have expired, or deteriorated commodities are sold; (vi) where a sold product is not adequate in quantity; (vii) where the service items and charges are in violation of an agreement; (viii) where demands by a consumer for repair, redoing, replacement, return, making up the quantity of a product, refund of a product purchase price or service fee or claims for compensation have been delayed deliberately or rejected without reason; or (ix) in other circumstances whereby the rights and interests of consumers, as provided by the laws and regulations of mainland China, are harmed. 87 The PRC Civil Code was promulgated on May 28, 2020 and came into force on January 1, 2021 to clarify tort liability, and to prevent and punish tortious conduct.
According to the Consumer Rights and Interests Protection Law, unless otherwise provided by this law, a business that provides products or services shall, in any of the following circumstances, bear civil liability in accordance with the Product Quality Law and other laws and regulations: (i) where a defect exists in a product; (ii) where a commodity does not possess functions it is supposed to possess, and it is not declared when the product is sold; (iii) where the product standards indicated on a product or on the package of such product are not met; (iv) where the quality condition indicated by way of product description or physical sample, etc. is not met; (v) where products pronounced obsolete by formal State decrees are produced or have expired, or deteriorated commodities are sold; (vi) where a sold product is not adequate in quantity; (vii) where the service items and charges are in violation of an agreement; (viii) where demands by a consumer for repair, redoing, replacement, return, making up the quantity of a product, refund of a product purchase price or service fee or claims for compensation have been delayed deliberately or rejected without reason; or (ix) in other circumstances whereby the rights and interests of consumers, as provided by the laws and regulations of mainland China, are harmed.
Data allowance originally purchased by us, which was primarily used by users who contributed to our revenues from data connectivity services, increased from approximately 19,000 terabytes in 2021 to approximately 21,000 terabytes in 2022, and further increased to approximately 24,000 terabytes in 2023, while data originally purchased by our business partners, which was primarily used by users who did not contribute to our revenues from data connectivity services, increased from approximately 143,800 terabytes in 2021 to approximately 155,800 terabytes in 2022, and to approximately 156,500 terabytes in 2023.
Data allowance originally purchased by us, which was primarily used by users who contributed to our revenues from data connectivity services, increased from approximately 21,000 terabytes in 2022 to approximately 24,000 terabytes in 2023, and further increased to approximately 25,000 terabytes in 2024, while data originally purchased by our business partners, which was primarily used by users who did not contribute to our revenues from data connectivity services, increased from approximately 155,800 terabytes in 2022 to approximately 156,500 terabytes in 2023, and decreased to approximately 148,000 terabytes in 2024.
Our business partners can rely on our PaaS and SaaS platform for SIM and connectivity management, and focus on sales and marketing, as well as procure customized ODM (Original Design Manufacture) hardware and data packages from their proprietary sources to fully exploit their edge in their local markets. Such specialization enables us and our business partners to operate more efficiently.
Our business partners can rely on our PaaS and SaaS platform for SIM and connectivity management, and focus on sales and marketing, as well as procure customized ODM (Original Design Manufacture) hardware and data packages from their proprietary sources to fully exploit their edge in their local markets.
Our cloud SIM technology and hyper-connectivity technology, including the smart multi-network reselection technology, is compatible with and brings unique advantages to various IoT applications scenarios such as Internet of Vehicles, augmented reality, virtual reality, autopilot, cargos, logistics and other car equipment. We are cooperating with business partners in various aspects of IoT applications.
Our cloud SIM technology and hyper-connectivity technology, including the smart multi-network reselection technology, is compatible with and brings unique advantages to various IoT applications scenarios such as Internet of Vehicles, augmented reality, virtual reality, autopilot, cargos, logistics and other car equipment.
We communicate with chipset manufacturers or their agents periodically regarding their production plans. We also apply our own monthly demand prediction for the following three months to purchase and store components. We engage our manufacturing partners for component inventory storage as well.
We communicate with chipset manufacturers or their agents periodically regarding their production plans. We also apply our own monthly demand prediction for the following three months to purchase and store components. We engage our manufacturing partners for component inventory storage as well. We also outsourced the logistics service to third-party courier companies.
The main hardware terminals we offer include portable Wi-Fi terminals, smartphones and smart-hardware products for international and local mobile data connectivity services. We also provide business solutions using multiple types of terminals to enterprise customers, as well as other value-added services to our business partners. Since October 2019, our cloud SIM platform is ready to support traffic from 5G networks.
The main hardware terminals we offer include portable Wi-Fi terminals, smartphones and smart-hardware products for international and local mobile data connectivity services. We also provide business solutions using multiple types of terminals to enterprise customers, as well as other value-added services to our business partners. 67 Our cloud SIM platform readily supports traffic from 5G networks.
Under the Circular of the State Administration of Taxation on Issues Concerning Individual Income Tax in Relation to Equity Incentives promulgated by the State Administration of Taxation and effective from August 24, 2009, overseas listed companies and their mainland China subsidiaries shall, according to the individual income tax calculation methods for “wage and salary income” and stock option income, lawfully withhold and pay individual income tax on such income. 92 In addition, the State Administration of Taxation has issued certain circulars concerning employee stock options and restricted shares.
Under the Circular of the State Administration of Taxation on Issues Concerning Individual Income Tax in Relation to Equity Incentives promulgated by the State Administration of Taxation and effective from August 24, 2009, overseas listed companies and their mainland China subsidiaries shall, according to the individual income tax calculation methods for “wage and salary income” and stock option income, lawfully withhold and pay individual income tax on such income.
These reserves are not distributable as cash dividends. 91 Regulations on Foreign Exchange Registration of Overseas Investment by Mainland China Residents On October 21, 2005, SAFE promulgated the Circular Concerning Relevant Issues on the Foreign Exchange Administration of Raising Funds through Overseas Special Purpose Vehicle and Investing Back in China by Domestic Residents, which became effective on November 1, 2005, or SAFE Circular 75.
Regulations on Foreign Exchange Registration of Overseas Investment by Mainland China Residents On October 21, 2005, SAFE promulgated the Circular Concerning Relevant Issues on the Foreign Exchange Administration of Raising Funds through Overseas Special Purpose Vehicle and Investing Back in China by Domestic Residents, which became effective on November 1, 2005, or SAFE Circular 75.
We believe that the success of our uCloudlink 1.0 and uCloudlink 2.0 models will pave the path for the introduction of our uCloudlink 3.0 model. 65 To support our business evolution from the 1.0 model to the 3.0 model, we have strategized our cloud SIM business model in three key stages to fully capitalize the value of our cloud SIM technology and architecture: ● Stage 1 - B2C Retail : We started our business primarily by selling or leasing GlocalMe hardware and data packages directly to retail consumers in order to gain market recognition and to prove our cloud SIM technology and architecture, as well as the scalability and profitability of our business model.
To support our business evolution from the 1.0 model to the 3.0 model, we have strategized our cloud SIM business model in three key stages to fully capitalize the value of our cloud SIM technology and architecture: ● Stage 1 - B2C Retail : We started our business primarily by selling or leasing GlocalMe hardware and data packages directly to retail consumers in order to gain market recognition and to prove our cloud SIM technology and architecture, as well as the scalability and profitability of our business model.
Enterprises shall file with SAFE in its capital item information system after entering into the cross-border financing contracts and prior to three business day before drawing any money from the foreign debts. 93 Based on the foregoing, if we provide funding to our wholly foreign-owned subsidiaries through shareholder loans, the balance of such loans shall not exceed the total investment and the registered capital of the foreign invested enterprise and we will need to register such loans with SAFE or its local branches in the event that the currently valid foreign debt management mechanism applies, or the balance of such loans shall be subject to the risk-weighted approach and the upper limit of risk-weighted outstanding cross-border financing for enterprises and we will need to file the loans with SAFE in its information system in the event that the Notice No. 9 foreign debt mechanism applies.
Based on the foregoing, if we provide funding to our wholly foreign-owned subsidiaries through shareholder loans, the balance of such loans shall not exceed the total investment and the registered capital of the foreign invested enterprise and we will need to register such loans with SAFE or its local branches in the event that the currently valid foreign debt management mechanism applies, or the balance of such loans shall be subject to the risk-weighted approach and the upper limit of risk-weighted outstanding cross-border financing for enterprises and we will need to file the loans with SAFE in its information system in the event that the Notice No. 9 foreign debt mechanism applies.
As required by the Telecom Regulations, a commercial telecommunications service provider in mainland China shall obtain an operating license from the Ministry of Industry and Information Technology, or its counterparts at provincial level prior to its commencement of operations.
As required by the Telecom Regulations, a commercial telecommunications service provider in mainland China shall obtain an operating license from the Ministry of Industry and Information Technology, or its counterparts at provincial level prior to its commencement of operations. The Telecom Regulations categorize all telecommunication businesses in mainland China as either basic telecommunication services or value-added telecommunications services.
Domain name registrations are handled through domain name service agencies established under the regulations, and the applicants become domain name holders upon successful registration. 89 Regulations Related to Employment and Social Welfare Labor Law of the PRC The Labor Law of the PRC, promulgated by the Standing Committee of the National People’s Congress on July 5, 1994, effective on January 1, 1995 and amended on August 27, 2009 and December 29, 2018 respectively, provides that an employer must develop and improve its internal policies and protocols to protect the rights of its workers, such as by developing and improving its labor safety and health system, stringently implementing national protocols and standards on labor safety and health, conducting labor safety and health education for workers, guarding against labor accidents and reducing occupational hazards.
Regulations Related to Employment and Social Welfare Labor Law of the PRC The Labor Law of the PRC, promulgated by the Standing Committee of the National People’s Congress on July 5, 1994, effective on January 1, 1995 and amended on August 27, 2009 and December 29, 2018 respectively, provides that an employer must develop and improve its internal policies and protocols to protect the rights of its workers, such as by developing and improving its labor safety and health system, stringently implementing national protocols and standards on labor safety and health, conducting labor safety and health education for workers, guarding against labor accidents and reducing occupational hazards.
The Telecom Regulations categorize all telecommunication businesses in mainland China as either basic telecommunication services or value-added telecommunications services. 79 Catalog of Telecommunications Business The Catalog of Telecommunications Business, which was issued as an attachment to the Telecom Regulations of the PRC and updated on February 21, 2003, December 28, 2015 and June 6, 2019, categorizes value-added telecommunication services into two classes: class I value-added telecommunication services and class II value-added telecommunication services.
Catalog of Telecommunications Business The Catalog of Telecommunications Business, which was issued as an attachment to the Telecom Regulations of the PRC and updated on February 21, 2003, December 28, 2015 and June 6, 2019, categorizes value-added telecommunication services into two classes: class I value-added telecommunication services and class II value-added telecommunication services.
On June 9, 2020, the ADSs representing our Class A ordinary shares commenced trading on Nasdaq under the symbol “UCL.” We raised from our initial public offering US$27.6 million in net proceeds after deducting underwriting commissions and discounts and the offering expenses payable by us.
GAAP for the year ended December 31, 2022 in this annual report. 61 On June 9, 2020, the ADSs representing our Class A ordinary shares commenced trading on Nasdaq under the symbol “UCL.” We raised from our initial public offering US$27.6 million in net proceeds after deducting underwriting commissions and discounts and the offering expenses payable by us.
IoT modules are primarily targeting enterprise customers seeking for cost-effective and reliable data connectivity with low network latency in their products, to be used locally and internationally. For example, we plan to provide data network solutions for industrial routers and security cameras. We expect to generate revenue from IoT modules by selling hardware and data packages.
IoT modules are primarily targeting enterprise customers seeking for cost-effective and reliable data connectivity with low network latency in their products, to be used locally and internationally. For example, we provide data network solutions for several leading manufacturers in security camera, dashboard camera and related sectors. We expect to generate revenue from IoT modules by selling hardware and data packages.
Regulations Related to Online Sales Guiding Opinions of the Ministry of Commerce on Online Transactions (Provisional) The Guiding Opinions of the Ministry of Commerce on Online Transactions (Provisional), which were promulgated and implemented on March 6, 2007, aim to regulate online transactions, assist and encourage participants to carry out online transactions, alert and prevent transaction risks, and provide guiding requirements on the basic principles for online transactions, the entering into of contracts by participants of online transactions, and the use of electronic signatures, online payments and advertising.
Regulations Related to Online Sales Guiding Opinions of the Ministry of Commerce on Online Transactions (Provisional) The Guiding Opinions of the Ministry of Commerce on Online Transactions (Provisional), which were promulgated and implemented on March 6, 2007, aim to regulate online transactions, assist and encourage participants to carry out online transactions, alert and prevent transaction risks, and provide guiding requirements on the basic principles for online transactions, the entering into of contracts by participants of online transactions, and the use of electronic signatures, online payments and advertising. 86 Measures for the Supervision and Administration of Online Transactions On March 15, 2021, the State Administration for Market Regulation promulgated the Measures for the Supervision and Administration of Online Transactions, which took into effect on May 1, 2021.
Foreign investors’ investment, earnings and other rights and interests within the territory of mainland China shall be protected in accordance with the law, and all national policies on supporting the development of enterprises shall equally apply to foreign-invested enterprises.
The Foreign Investment Law does not mention the concept and regulatory regime of the former VIE structures. Foreign investors’ investment, earnings and other rights and interests within the territory of mainland China shall be protected in accordance with the law, and all national policies on supporting the development of enterprises shall equally apply to foreign-invested enterprises.
All foreign investment projects are classified into four categories: (1) encouraged projects, (2) permitted projects, (3) restricted projects, and (4) prohibited projects. On December 27, 2021, the NDRC, and the Ministry of Commerce of the PRC, promulgated the 2021 Negative List, which came into effect on January 1, 2022.
All foreign investment projects are classified into four categories: (1) encouraged projects, (2) permitted projects, (3) restricted projects, and (4) prohibited projects. On September 6, 2024, the NDRC, and the Ministry of Commerce of the PRC, promulgated the 2024 Negative List, which came into effect on November 1, 2024.
Wholly foreign-owned companies may, at their discretion, allocate a portion of their after-tax profits based on mainland China’s accounting standards to staff welfare and bonus funds.
Wholly foreign-owned companies may, at their discretion, allocate a portion of their after-tax profits based on mainland China’s accounting standards to staff welfare and bonus funds. These reserves are not distributable as cash dividends.
On March 29, 2022, the Decision of the State Council on Revising and Repealing Certain Administrative Regulations, which took effect on May 1, 2022, was promulgated to amend certain provisions of regulations including the Provisions on the Regulations for the Administration of Foreign-Invested Telecommunications Enterprises (2016 Revision), the requirement for major foreign investor to demonstrate a good track record and experience in operating value-added telecommunications businesses is deleted. 80 On July 13, 2006, the predecessor of the Ministry of Industry and Information Technology, the Ministry of Information Industry, released the Circular on Strengthening the Administration of Foreign Investment in the Operation of Value-added Telecommunications Business.
On March 29, 2022, the Decision of the State Council on Revising and Repealing Certain Administrative Regulations, which took effect on May 1, 2022, was promulgated to amend certain provisions of regulations including the Provisions on the Regulations for the Administration of Foreign-Invested Telecommunications Enterprises (2016 Revision), the requirement for major foreign investor to demonstrate a good track record and experience in operating value-added telecommunications businesses is deleted.
GlocalMe SIM is backed by our patented cloud SIM technology and allows our users and customers to freely purchase and use multiple global data plans as needed without having to change SIM card. It currently covers 10 major travel destinations, including Japan, the United States and Australia.
In July 2023, we launched GlocalMe SIM, an OTA SIM card. GlocalMe SIM is backed by our patented cloud SIM technology and allows our users and customers to freely purchase and use multiple global data plans as needed without having to change SIM card. It currently covers more than 100 travel destinations, including Japan, the United States and Australia.
Location Space Use Lease Term (m 2 ) Hong Kong 130 Office and other premises 1 year Mainland China 4,987 Office, sales counter and warehouse 1 year to 3 years Overseas 532 Office, sales counter and warehouse 0.5 year to 4 years
Location Space Use Lease Term (m 2 ) Hong Kong 130 Office and other premises 1 year to 2 years Mainland China 4,987 Office, sales counter and warehouse 1 year to 3 years Overseas 500 Office, sales counter and warehouse 1 year to 5 years Item 4A. Unresolved Staff Comments None .
In addition, according the procedural guideline as attached to SAFE Circular 37, the principle of review has been changed to “the domestic individual resident is only required to register the SPV directly established or controlled (first level).” At the same time, SAFE has issued the Operation Guidance for the Issues Concerning Foreign Exchange Administration over Round-trip Investment with respect to the procedures for SAFE registration under SAFE Circular 37, which became effective on July 4, 2014 as an attachment to SAFE Circular 37.
In addition, according the procedural guideline as attached to SAFE Circular 37, the principle of review has been changed to “the domestic individual resident is only required to register the SPV directly established or controlled (first level).” At the same time, SAFE has issued the Operation Guidance for the Issues Concerning Foreign Exchange Administration over Round-trip Investment with respect to the procedures for SAFE registration under SAFE Circular 37, which became effective on July 4, 2014 as an attachment to SAFE Circular 37. 90 On February 13, 2015, SAFE promulgated the Notice on Simplifying and Improving the Foreign Currency Management Policy on Direct Investment effective from June 1, 2015, which eliminates the administrative approval requirement of foreign exchange registration of direct domestic investment and direct overseas investment.
A data user who contravenes an enforcement notice commits an offense which may lead to a fine and if appropriate, prevent any recurrence of the contravention. Any person contravening an enforcement notice shall be liable to a fine of HK$50,000 and imprisonment for two years on a first conviction.
A data user who contravenes an enforcement notice commits an offense which may lead to a fine and/or imprisonment. Any person contravening an enforcement notice shall be liable to a fine of HK$50,000 and imprisonment for two years with a daily penalty of HK$1,000 on a first conviction.
If a shareholder transfers the equity interest held by it, it shall notify the company in writing to request the company (i) to change the register of shareholders and (ii) to register the change with the competent enterprise registration authority. If the company refuses or fails to respond, the transferee and transferor may file a lawsuit with the competent court.
If a shareholder transfers the equity interest held by it, it shall notify the company in writing to request the company (i) to change the register of shareholders and (ii) to register the change with the competent enterprise registration authority.
(iii) Cybersecurity Law of the PRC On November 7, 2016, the Standing Committee of the National People’s Congress published Cybersecurity Law of the PRC, which took effect on June 1, 2017 and requires network operators to perform certain functions related to cyber security protection and the strengthening of network information management.
Network data processing activities refer to the collection, retention, use, processing, transmission, provision, disclosure, deletion, and other activities of network data. 82 (iii) Cybersecurity Law of the PRC On November 7, 2016, the Standing Committee of the National People’s Congress published Cybersecurity Law of the PRC, which took effect on June 1, 2017 and requires network operators to perform certain functions related to cyber security protection and the strengthening of network information management.
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.
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.
Average daily active terminals connected to our platform increased by 20.5% from over 241,000 in 2021 to over 290,500 in 2022, and further increased by 8.8% to over 316,000 in 2023.
Average daily active terminals connected to our platform increased by 8.8% from over 290,500 in 2022 to over 316,000 in 2023, and further increased by 0.2% to over 316,600 in 2024.
On February 6, 2024, the State Administration for Market Regulation issued a draft of the Provisions of the State Council on Implementing the Registered Capital Registration and Management System under the PRC Company Law for public comments until March 5, 2024, which further specify the detailed requirements and measures of the registration and management of registered capital under the amended PRC Company Law.
On July 1, 2024, the State Administration for Market Regulation issued the Provisions of the State Council on Implementing the Registered Capital Registration and Management System under the PRC Company Law, which further specify the detailed requirements and measures of the registration and management of registered capital under the amended PRC Company Law.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

107 edited+12 added−15 removed114 unchanged
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.
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. As of December 31, 2023, the outstanding balance of this loan was nil.
Investing Activities Net cash used in investing activities in 2023 was US$0.2 million, primarily due to the purchase of property and equipment of US$2.1 million, which was partially offset by the redeemed investment amount of US$1.3 million, proceeds from disposal of property and equipment of US$0.2 million, decrease in short-term deposit of US$0.2 million, and dividends received from long-term investment of US$0.1 million.
Net cash used in investing activities in 2023 was US$0.2 million, primarily due to the purchase of property and equipment of US$2.1 million, which was partially offset by the redeemed investment amount of US$1.3 million, proceeds from disposal of property and equipment of US$0.2 million, decrease in short-term deposit of US$0.2 million, and dividends received from long-term investment of US$0.1 million.
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.
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.
This increase was primarily attributable to (i) the increase in revenues from international data connectivity services from US$28.1 million in 2022to US$37.9 million in 2023, as the recovery of international travel accelerated, and (ii) the increase in revenues from local data connectivity services from US$7.4 million in 2022to US$8.8 million in 2023, as we continued to expand our local data connectivity services business. 107 ● Our revenues from PaaS and SaaS services increased by 6.2% from US$9.8 million in 2022 to US$10.4 million in 2023.
This increase was primarily attributable to (i) the increase in revenues from international data connectivity services from US$28.1 million in 2022to US$37.9 million in 2023, as the recovery of international travel accelerated, and (ii) the increase in revenues from local data connectivity services from US$7.4 million in 2022to US$8.8 million in 2023, as we continued to expand our local data connectivity services business. ● Our revenues from PaaS and SaaS services increased by 6.2% from US$9.8 million in 2022 to US$10.4 million in 2023.
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 .
We generate revenues from selling hardware terminals, including GlocalMe portable Wi-Fi terminals, IoT modules, and other smart devices with GlocalMe 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 .
As of December 31, 2023, the outstanding balance of this loan was nil. We have fully repaid the loan. ● In February 2023, we obtained a three-month short-term bank borrowing of RMB5.6 million (US$0.8 million) from a commercial bank, bearing interest at a rate of 5.55% per annum.
We have fully repaid the loan. 111 ● In February 2023, we obtained a three-month short-term bank borrowing of RMB5.6 million (US$0.8 million) from a commercial bank, bearing interest at a rate of 5.55% per annum. As of December 31, 2023, the outstanding balance of this loan was nil.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. Holding Company Structure UCLOUDLINK GROUP INC. is a holding company with no material operations of its own.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. 115 Holding Company Structure UCLOUDLINK GROUP INC. is a holding company with no material operations of its own.
For revenue related to the data connectivity service, revenue is recognized ratably on a straight-line basis over relevant contract period. PaaS or SaaS services PaaS or SaaS mainly consist of fees generated from providing cloud SIM platform as a service to business partners and other ancillary platform services.
For revenue related to the data connectivity service, revenue is recognized ratably on a straight-line basis over relevant contract period. 109 PaaS or SaaS services PaaS or SaaS mainly consist of fees generated from providing cloud SIM platform as a service to business partners and other ancillary platform services.
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.
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. 99 Innovative monetization models offering mobile data connectivity services We create and develop various monetization models as our company evolves.
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.
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.” 104 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.
Accounts payable turnover days for a given period are equal to average accounts payable balances at the beginning and the end of the period divided by total cost of revenues during the period and multiplied by the number of days during the period. 115 In utilizing the proceeds we received from our initial public offering, we may make additional capital contributions to our mainland China subsidiaries, establish new subsidiaries in mainland China and make capital contributions to these new mainland China subsidiaries, make loans to our mainland China subsidiaries, or acquire offshore entities with operations in mainland China in offshore transactions.
Accounts payable turnover days for a given period are equal to average accounts payable balances at the beginning and the end of the period divided by total cost of revenues during the period and multiplied by the number of days during the period. 113 In utilizing the proceeds we received from our initial public offering, we may make additional capital contributions to our mainland China subsidiaries, establish new subsidiaries in mainland China and make capital contributions to these new mainland China subsidiaries, make loans to our mainland China subsidiaries, or acquire offshore entities with operations in mainland China in offshore transactions.
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.
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, 2025 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.
General and administrative expenses consist primarily of salaries, bonuses and benefits for employees and share-based compensation, depreciation of property and equipment, amortization of intangible assets, legal and other professional services fees, rental and other general corporate related expenses. 105 Taxation Cayman Islands The Cayman Islands currently levies no taxes on corporations based upon profits, income, gains or appreciation.
General and administrative expenses consist primarily of salaries, bonuses and benefits for employees and share-based compensation, depreciation of property and equipment, amortization of intangible assets, legal and other professional services fees, rental and other general corporate related expenses. 103 Taxation Cayman Islands The Cayman Islands currently levies no taxes on corporations based upon profits, income, gains or appreciation.
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.
We have provided a full valuation allowance for the deferred tax assets as of December 31, 2022, 2023 and 2024, 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.
In 2021, 2022 and 2023, we generated most of our data connectivity services revenues from our international data connectivity services under uCloudlink 1.0 model. PaaS and SaaS services . Revenues from PaaS and SaaS services mainly consist of fees generated from providing cloud SIM platform as a service to business partners and other ancillary platform services.
In 2022, 2023 and 2024, we generated most of our data connectivity services revenues from our international data connectivity services under uCloudlink 1.0 model. PaaS and SaaS services . Revenues from PaaS and SaaS services mainly consist of fees generated from providing cloud SIM platform as a service to business partners and other ancillary platform services.
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.
Cash Requirements Our material cash requirements as of December 31, 2024 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.
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 mainland China, which may effectively help us grow our user base and data usage among travelers and cross-sell our other products and services.
As of December 31, 2023, the outstanding balance of this loan was nil. We have fully repaid the loan. ● In April 2023, we obtained an eleven-month short-term bank borrowing of RMB5.0 million (US$0.7 million) from a commercial bank, bearing interest at a rate of 4.12% per annum.
We have fully repaid the loan. ● In April 2023, we obtained an eleven-month short-term bank borrowing of RMB5.0 million (US$0.7 million) from a commercial bank, bearing interest at a rate of 4.12% per annum. As of December 31, 2023 and 2024, the outstanding balance of this loan was RMB5.0 million (US$0.7 million) and nil, respectively.
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.
Capital expenditures Our capital expenditures are primarily incurred for purchases of intangible assets, property and equipment. Our capital expenditures were US$0.4 million, US$2.1 million and US$4.0 million in 2022, 2023 and 2024, respectively. The increase in capital expenditure from 2022 to 2023 and 2024 is primarily due to the increase of Roamingman terminals to support efficient business operation.
Our accounts receivable turnover days decreased from 53.6 days in 2021 to 53.3 days in 2022, and decreased to 26.6 days in 2023, which was primarily because we changed payment terms and adopted a “pay first, ship later” policy for terminal sales to more enterprise customers.
Our accounts receivable turnover days decreased from 53.3 days in 2022 to 26.6 days in 2023, and 28.6 days in 2024, which was primarily because we changed payment terms and adopted a “pay first, ship later” policy for terminal sales to more enterprise customers.
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 fair value of this investment was US$7.1 million, US$7.6 million and US$8.7 million as of December 31, 2022, 2023 and 2024, 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.
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.
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, 2022, 2023 and 2024, our accounts receivable, net of allowance for doubtful accounts, were US$6.0 million, US$6.5 million and US$7.9 million, 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 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.
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 2024 was US$9.2 million.
Our expanding products, including our proprietary terminals and third-party devices integrated with GlocalMe Inside , enable our customers to enjoy our services anytime and anywhere. 102 Our ability to improve operational efficiency Our ability to achieve and maintain profitability is dependent on our ability to improve our operational efficiency and reduce the total operating expenses as a percentage of our revenues.
Our expanding products, including our proprietary terminals and third-party devices integrated with GlocalMe Inside , enable a growing number of our customers to enjoy our services anytime and anywhere. 100 Our ability to improve operational efficiency Our ability to achieve and maintain profitability is dependent on our ability to improve our operational efficiency and reduce the total operating expenses as a percentage of our revenues.
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.
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, 2022, 2023 and 2024, we had US$11.7 million, US$7.6 million and US$8.7 million other investments, respectively.
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.
As of December 31, 2024, 48.9% 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.
(ii) Expected dividend yield is assumed to be 0% as the Company has no history or expectation of paying dividend on its ordinary shares. (iii) Expected volatility is assumed based on the historical volatility of the Company’s comparable companies in the period equal to the expected life of each grant.
(2) Expected dividend yield is assumed to be 0% as the Company has no history or expectation of paying dividend on its ordinary shares. (3) Expected volatility is assumed based on the historical volatility of the Company’s comparable companies in the period equal to the expected life of each grant.
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.
The statutory rate of 15% to 25%, depending on which entity, was applied when calculating deferred tax assets. As of December 31, 2022, 2023 and 2024, we had net operating loss carryforwards of approximately US$134.9 million, US$129.7 million and US$130.5 million, respectively, which arose from the subsidiaries and former VIE established in Hong Kong and mainland China.
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.
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. In addition, Shenzhen Ucloudlink Technology Limited and Shenzhen uCloudlink enjoy other tax preferences.
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.
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. C. Research and Development, Patents and Licenses, etc.
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.
Assumptions used to determine the fair value of share options granted during the years ended December 31, 2022, 2023 and 2024 is summarized in the following table: Years ended December 31, (In thousands) 2022 2023 2024 Risk-free interest rate (i) 0.91%–1.67% N/A N/A Expected dividend yield (ii) 0.00% N/A N/A Expected volatility (iii) 29.44%–34.81% N/A N/A Grant date fair value $0.000–$0.0044 N/A N/A Notes: (1) 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 increase was mainly attributable to the gradual recovery of international travels. Our costs incurred from data procurement accounted for 39.4%, 49.4% and 47.9% of our total cost of revenues in 2021, 2022 and 2023, respectively. Our data sources include MNOs and their sales channels, MVNOs, and other SIM-card trading companies, covering mobile data markets in 157 countries and regions.
The increase was mainly attributable to the gradual recovery of international travels. Our costs incurred from data procurement accounted for 49.4%, 47.9% and 42.7% of our total cost of revenues in 2022, 2023 and 2024, respectively. Our data sources include MNOs and their sales channels, MVNOs, and other SIM-card trading companies, covering mobile data markets in 163 countries and regions.
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.
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 16.3%, 16.4% and 15.5% of our total operating expenses in 2022, 2023 and 2024, respectively.
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.
The longest carry-over period is extended from 5 years to 10 years. As of December 31, 2024, the net operating loss carry forwards arose from Shenzhen Ucloudlink Technology Limited and Shenzhen uCloudlink will expire during the period from 2025 to 2034, if unused. 118
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 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 45.8% in 2022 to 51.0% in 2023, and further to 52.9% in 2024.
Financing Activities Net cash generated from financing activities in 2023 was US$2.5 million, primarily due to the proceeds from bank borrowings and other borrowings of US$7.9 million, which was partially offset by repayment of bank borrowings and other borrowings of US$5.4 million.
Financing Activities Net cash generated from financing activities in 2024 was US$1.7 million, primarily due to proceeds from bank borrowings of US$7.0 million, which was partially offset by repayment of bank borrowings and other borrowings of US$5.3 million. 114 Net cash generated from financing activities in 2023 was US$2.5 million, primarily due to the proceeds from bank borrowings and other borrowings of US$7.9 million, which was partially offset by repayment of bank borrowings and other borrowings of US$5.4 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 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.
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 3%, 39%, 6%, 1%, 38%, 7% and 5% in 2022, respectively, contributed 13.0%, 43.4%, 1.9%, 1.0%, 28.1%, 5.4% and 4.9% of our total revenues in 2023, respectively, and contributed 24.0%, 47.4%, 2.2%, 1.7%, 13.8%, 4.9% and 4.5% in 2024, respectively.
The efficiency of data procurement will continually impact our cost of revenues and overall business performance. The mix of our product and service offerings Our gross margin is mainly affected by the mix of services and products. Our gross margin increased from 29.6% in 2021 to 45.5% in 2022, and increased to 49.0% in 2023.
The efficiency of data procurement will continually impact our cost of revenues and overall business performance. The mix of our product and service offerings Our gross margin is mainly affected by the mix of services and products. Our gross margin increased from 45.5% in 2022 to 49.0% in 2023, and decreased from 49.0% in 2023 to 48.4% in 2024.
As of December 31, 2023, the outstanding balance of this loan was RMB5.0 million (US$0.7 million). ● In September 2023, 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 3.55% per annum.
We have fully repaid the loan. ● In September 2023, 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 3.55% per annum. As of December 31, 2023 and 2024, the outstanding balance of this loan was RMB5.0 million (US$0.7 million) and nil, respectively.
As of December 31, 2023, we had cash and cash equivalents of US$23.4 million and short-term investments of US$7.6 million. We may decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and finance funding. The issuance and sale of additional equity would result in further dilution to our shareholders.
As of December 31, 2024, we had cash and cash equivalents of US$30.1 million and short-term investments of US$8.7 million. We may decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and finance funding. The issuance and sale of additional equity would result in further dilution to our shareholders.
Share-based compensation in 2021, 2022 and 2023 mainly includes restricted share units and share options granted to our employees, directors, and other consultants. As of December 31, 2023, there was US$1.5 million of unrecognized share-based compensation expense related to granted restricted share units and share options.
Share-based compensation in 2022, 2023 and 2024 mainly includes restricted share units and share options granted to our employees, directors, and other consultants. As of December 31, 2024, there was US$0.8 million of unrecognized share-based compensation expense related to granted restricted share units and share options.
Our services had a gross margin of 43.0%, 56.0% and 58.5% in 2021, 2022 and 2023, respectively, while our sales of products had a gross margin of 15.5%, 26.4% and 28.6% in the same periods, respectively. Our ability to increase our gross margin depends on our ability to expand services by developing innovative monetization models.
Our services had a gross margin of 56.0%, 58.5% and 60.8% in 2022, 2023 and 2024, respectively, while our sales of products had a gross margin of 26.4%, 28.6% and 24.9% in the same periods, respectively. Our ability to increase our gross margin depends on our ability to expand services by developing innovative monetization models.
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.
We have the following borrowings: ● In January 2023, we obtained an eleven-month short-term bank borrowing of RMB6.0 million (US$0.9 million) from a commercial bank, bearing interest at a rate of 3.85% per annum. As of December 31, 2023, the outstanding balance of this loan was nil.
Cost of revenues The following table sets forth the components of our cost of revenues by amounts and percentages of cost of revenues for the periods presented: For the Year Ended December 31, 2021 2022 2023 US$ % 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.
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, 2022 2023 2024 US$ % US$ % US$ % (in thousands, except percentages) Cost of revenues: Cost of services (20,346 ) 52.3 (24,318 ) 55.8 (23,503 ) 49.7 Cost of products sold (18,581 ) 47.7 (19,293 ) 44.2 (23,771 ) 50.3 Total cost of revenues (38,927 ) 100.0 (43,611 ) 100.0 (47,274 ) 100.0 102 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.
Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business Overview—Research and Development” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D.
See “Item 4. Information on the Company—B. Business Overview—Research and Development” and “Item 4. Information on the Company—B. Business Overview—Intellectual Property.” D.
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.
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, 2022 2023 2024 US$ US$ US$ (in thousands) Net cash generated from operating activities 4,404 6,507 9,186 Net cash used in investing activities (162 ) (240 ) (3,758 ) Net cash generated from financing activities 3,540 2,509 1,732 Increase in cash, cash equivalents 7,782 8,776 7,160 Effect of exchange rates on cash and cash equivalents (729 ) (326 ) (474 ) Cash and cash equivalents at beginning of year 7,868 14,921 23,371 Cash and cash equivalents at end of year 14,921 23,371 30,057 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.
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.
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.
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.
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.
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.
As of December 31, 2023 and 2024, the outstanding balance of this loan was RMB8.0 million (US$1.1 million) and nil, respectively. We have fully repaid the loan. ● In January 2024, we obtained a one-year short-term bank borrowing of RMB2.0 million (US$0.3 million) from a commercial bank, bearing interest at a rate of 3.1% 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 have fully repaid the loan. ● In October 2023, 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 3.2% per annum. As of December 31, 2023 and 2024, the outstanding balance of this loan was RMB3.8 million (US$0.5 million) and nil, respectively.
As of December 31, 2023, the outstanding balance of this loan was RMB10.0 million (US$1.4 million). ● In December 2023, we obtained a one-year short-term borrowing of RMB8.0 million (US$1.1 million) from a third-party financial institute, with a patent pledged by us, bearing interest at a rate of 4.96% per annum.
We have fully repaid the loan. ● In December 2023, we obtained a one-year short-term borrowing of RMB8.0 million (US$1.1 million) from a third-party financial institute, with a patent pledged by us, bearing interest at a rate of 4.96% per annum.
As of December 31, 2023, the outstanding balance of this loan was RMB5.8 million (US$0.8 million). ● In December 2023, we obtained a one-year short-term borrowing of RMB10.0 million (US$1.4 million) from a third-party financial institute, with patents pledged by us, bearing interest at a rate of 4.9% per annum.
We have fully repaid the loan. ● In December 2023, we obtained a one-year short-term borrowing of RMB10.0 million (US$1.4 million) from a third-party financial institute, with patents pledged by us, bearing interest at a rate of 4.9% per annum.
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.
Specifically, our gross profits on services are US$25.9 million, US$34.3 million and US$36.5 million, corresponding to 56.0%, 58.5% and 60.8% gross margins relating to services, in 2022, 2023 and 2024, respectively.
As of December 31, 2023, the outstanding balance of this loan was RMB8.0 million (US$1.1 million). As of December 31, 2021, 2022 and 2023, our cash and cash equivalents were US$7.9 million, US$14.9 million and US$23.4 million, respectively.
As of December 31, 2024, the outstanding balance of this loan was RMB7.3 million (US$1.0 million). 112 As of December 31, 2022, 2023 and 2024, our cash and cash equivalents were US$14.9 million, US$23.4 million and US$30.1 million, respectively.
The decrease was primarily due to decreases of US$2.1 million in provision for bad debts, as a result of our efforts to improve our accounts receivable management, and US$0.3 million in operating lease expenses, which were partially offset by an increase of US$1.0 million in staff costs.
The decrease was primarily due to decreases of US$2.1 million in provision for bad debts, as a result of our efforts to improve our accounts receivable management, and US$0.3 million in operating lease expenses, which were partially offset by an increase of US$1.0 million in staff costs. 107 Income/(loss) from operations As a result of the foregoing, we had income from operations of US$2.6 million in 2023, compared to loss from operations of US$19.2 million in 2022.
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.
We have fully repaid the loan. ● 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. As of December 31, 2023 and 2024, the outstanding balance of this loan was RMB5.8 million (US$0.8 million) and nil, respectively.
Operating expenses The following table sets forth the principal components of our operating expenses by amounts and percentages of our total operating expenses for the periods presented: For the Year Ended December 31, 2021 2022 2023 US$ % 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 .
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, 2022 2023 2024 US$ % US$ % US$ % (in thousands, except for percentages) Operating expenses: Research and development expenses (8,430 ) 16.3 (6,456 ) 16.4 (6,198 ) 15.5 Sales and marketing expenses (10,305 ) 19.9 (14,304 ) 36.3 (19,926 ) 49.8 General and administrative expenses (18,726 ) 36.2 (17,118 ) 43.5 (15,947 ) 39.9 Other (expense)/income, net (14,265 ) 27.6 (1,500 ) 3.8 2,095 (5.2 ) Total operating expenses (51,726 ) 100.0 (39,378 ) 100.0 (39,976 ) 100.0 Research and Development expenses .
As of December 31, 2023, the outstanding balance of this loan was RMB5.0 million (US$0.7 million). ● In October 2023, 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 3.2% per annum.
As of December 31, 2024, the outstanding balance of this loan was RMB10.0 million (US$1.4 million). ● In December 2024, we obtained a one-year short-term bank borrowing of RMB10.0 million (US$1.4 million) from a commercial bank, bearing interest at a rate of 3.0% per annum.
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.
As of December 31, 2022, 2023 and 2024, 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.
We classify the share-based awards granted to employees, certain senior management, directors and other consultants as equity award, and have elected to recognize compensation expense on share-based awards with service condition on a graded vesting basis over the requisite service period, which is generally the vesting period.
We classify the share-based awards granted to employees, certain senior management, directors and other consultants as equity award, and have elected to recognize compensation expense on share-based awards with service condition on a graded vesting basis over the requisite service period, which is generally the vesting period. 110 We entered into a share restriction agreement with certain senior management and their respective wholly owned companies, which directly hold our equity interest.
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 difference between net cash generated from operating activities and net income of US$4.6 million in the same period was primarily due to (i) the increase of US$2.2 million in accrued expenses, accounts payable and other liabilities, (ii) US$2.2 million of depreciation of property and equipment, (iii) US$1.2 million of share-based compensation expenses, (iv) the decrease of US$1.0 million in amounts due from related parties, and (v) the decrease of US$0.8 million in inventories, partially offset by (i) the increase of US$1.8 in accounts receivable, (ii) the decrease of US$1.2 in amounts due to related parties, and (iii) US$1.1 million of gains of fair value on other investments.
Gross profit and gross margin Our overall gross profits are US$21.8 million, US$32.5 million and US$42.0 million, representing overall gross margins of 29.6%, 45.5% and 49.0% in 2021, 2022 and 2023, respectively.
Gross profit and gross margin Our overall gross profits are US$32.5 million, US$42.0 million and US$44.4 million, representing overall gross margins of 45.5%, 49.0% and 48.4% in 2022, 2023 and 2024, respectively.
For the Year Ended December 31, 2021 2022 2023 US$ % 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$3.3 million in 2021, 2022 and 2023, respectively.
For the Year Ended December 31, 2022 2023 2024 US$ % US$ % US$ % (in thousands, except for percentages) Revenues Revenues from services 46,228 64.7 58,570 68.4 60,002 65.5 Sales of products 25,233 35.3 27,006 31.6 31,633 34.5 Total revenues 71,461 100.0 85,576 100.0 91,635 100.0 Cost of revenues Cost of services (20,346 ) (28.5 ) (24,318 ) (28.4 ) (23,503 ) (25.7 ) Cost of products sold (18,581 ) (26.0 ) (19,293 ) (22.6 ) (23,771 ) (25.9 ) Total cost of revenues (38,927 ) (54.5 ) 43,611 (51.0 ) (47,274 ) (51.6 ) Gross profit 32,534 45.5 41,965 49.0 44,361 48.4 Operating expenses: Research and development expenses (1) (8,430 ) (11.8 ) (6,456 ) (7.5 ) (6,198 ) (6.8 ) Sales and marketing expenses (1) (10,305 ) (14.4 ) (14,304 ) (16.7 ) (19,926 ) (21.7 ) General and administrative expenses (1) (18,726 ) (26.2 ) (17,118 ) (20.0 ) (15,947 ) (17.4 ) Other (expense)/income, net (14,265 ) (20.0 ) (1,500 ) (1.8 ) 2,095 2.3 (Loss)/income from operations (19,192 ) (26.9 ) 2,587 3.0 4,385 4.8 Interest income 18 0.0 70 0.1 227 0.2 Interest expenses (441 ) (0.6 ) (133 ) (0.2 ) (196 ) (0.2 ) Amortization of beneficial conversion feature (149 ) (0.2 ) — — — — (Loss)/income before income tax (19,764 ) (27.7 ) 2,524 2.9 4,416 4.8 Income tax expenses (161 ) (0.2 ) (70 ) (0.1 ) (68 ) (0.0 ) Share of profit in equity method investment, net of tax 72 0.1 357 0.5 210 0.2 Net (loss)/income (19,853 ) (27.8 ) 2,811 3.3 4,558 5.0 Note: (1) Share-based compensation was US$3.1 million, US$3.3 million and US$1.2 million in 2022, 2023 and 2024, respectively.
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.
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.
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.
We recognize revenue in accordance with ASC 606 “Revenue from Contracts with Customers” for all years presented with full retrospective method. 108 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 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.
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.
Interest expenses We had interest expenses of US$0.4 million and US$0.1 million in 2022 and 2023. 108 Net income/(loss) As a result of the foregoing, we had net income of US$2.8 million in 2023, compared to net loss of US$19.9 million in 2022.
Interest expenses We had interest expenses of US$0.4 million and US$0.1 million in 2022 and 2023. Net income/(loss) As a result of the foregoing, we had net income of US$2.8 million in 2023, compared to net loss of US$19.9 million in 2022. Critical Accounting Policies We prepare our financial statements in conformity with U.S.
The following table sets forth the components of our revenues by amounts and percentages of our total revenues for the periods presented: For the Year Ended December 31, 2021 2022 2023 US$ % US$ % US$ % (in thousands, except for percentages) Revenues: Revenues from services —Data connectivity services 26,430 35.8 35,483 49.7 46,745 54.6 International data connectivity services 21,672 29.4 28,085 39.3 37,928 44.3 Local data connectivity services 4,758 6.4 7,398 10.4 8,817 10.3 —PaaS and SaaS services 10,770 14.6 9,819 13.7 10,425 12.2 —Others 598 0.8 926 1.3 1,400 1.6 Revenues from services 37,798 51.2 46,228 64.7 58,570 68.4 Sales of products —Sales of terminals 27,408 37.1 21,748 30.4 24,369 28.5 —Sales of data related products 5,843 7.9 3,230 4.5 2,150 2.5 —Others 2,775 3.8 255 0.4 487 0.6 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 Revenues from services Our revenues from services mainly consist of data connectivity services, including international data connectivity services and local data connectivity services, and PaaS and SaaS services. 103 Data connectivity services .
The following table sets forth the components of our revenues by amounts and percentages of our total revenues for the periods presented: For the Year Ended December 31, 2022 2023 2024 US$ % US$ % US$ % (in thousands, except for percentages) Revenues: Revenues from services —Data connectivity services 35,483 49.7 46,745 54.6 47,639 52.0 International data connectivity services 28,085 39.3 37,928 44.3 39,513 43.1 Local data connectivity services 7,398 10.4 8,817 10.3 8,126 8.9 —PaaS and SaaS services 9,819 13.7 10,425 12.2 11,293 12.3 —Others 926 1.3 1,400 1.6 1,070 1.2 Revenues from services 46,228 64.7 58,570 68.4 60,002 65.5 Sales of products —Sales of terminals 21,748 30.4 24,369 28.5 22,246 24.3 —Sales of data related products 3,230 4.5 2,150 2.5 8,417 9.2 —Others 255 0.4 487 0.6 970 1.0 Sales of products 25,233 35.3 27,006 31.6 31,633 34.5 Total revenues 71,461 100.0 85,576 100.0 91,635 100.0 Revenues from services Our revenues from services mainly consist of data connectivity services, including international data connectivity services and local data connectivity services, and PaaS and SaaS services. 101 Data connectivity services .
The decrease in research and development expenses was mainly due to the decrease in staff costs related to cost control measures. Our cloud SIM architecture and platform have been designed and built to power our growth as we scale to meet demands from our expanding customer base.
The decrease in research and development expenses was mainly due to the decrease in staff costs. Our cloud SIM architecture and platform have been designed and built to power our growth as we scale to meet demands from our expanding customer base. In addition, our ability to improve operational efficiency depends on our ability to optimize sales and marketing efforts.
We believe our global opportunity is significant, and we will continue to expand our data connectivity services in selected local markets by collaborating with local business partners under uCloudlink 2.0 model. We have experienced negative impact from the COVID-19 pandemic in the sales of our services and products in international markets.
We believe our global opportunity is significant, and we will continue to expand our data connectivity services in selected local markets by collaborating with local business partners under uCloudlink 2.0 model. Key Components of Results of Operations Revenues We generate revenues from services and sales of products.
All grants of share-based awards to employees, certain senior management and directors classified as equity awards are recognized in the financial statements based on their grant date fair values which are calculated using an option pricing model.
All grants of share-based awards to employees, certain senior management and directors classified as equity awards are recognized in the financial statements based on their grant date fair values which are calculated using an option pricing model. 116 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.
Income/(loss) from operations As a result of the foregoing, we had income from operations of US$2.6 million in 2023, compared to loss from operations of US$19.2 million in 2022.
Income from operations As a result of the foregoing, we had income from operations of US$4.4 million in 2024, compared to US$2.6 million in 2023. Interest expenses We had interest expenses of US$0.2 million in 2024, compared to US$0.1 million in 2023.
Year ended December 31, 2023 compared to year ended December 31, 2022 Revenues Our revenues increased by 19.8% from US$71.4 million in 2022 to US$85.6 million in 2023. Revenues from Services .
Year ended December 31, 2024 compared to year ended December 31, 2023 Revenues Our revenues increased by 7.1% from US$85.6 million in 2023 to US$91.6 million in 2024. Revenues from Services .
However, due to the impact of COVID-19, we incurred loss from operations of US$45.9 million and US$19.2 million for the years ended December 31, 2021 and 2022, respectively.
However, due to the impact of COVID-19, we incurred loss from operations of US$19.2 million for the years ended December 31, 2022, respectively. We had net cash generated from operating activities of US$4.4 million, US$6.5 million and US$9.2 million for the years ended December 31, 2022, 2023 and 2024, 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.
As of December 31, 2024, the outstanding balance of this loan was RMB12.7 million (US$1.8 million). ● In November 2024, we obtained a one-year short-term bank borrowing of RMB10.0 million (US$1.4 million) from a commercial bank, bearing interest at a rate of 3.1% per annum.
Under the 2024-2025 Budget announced by the Financial Secretary of Hong Kong on February 28, 2024, tax reduction measures were proposed. These measures include, without limitation, a one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2023/2024 by 100%, subject to a ceiling of HK$3,000 per case.
These measures include, without limitation, a one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2024/2025 by 100%, subject to a ceiling of HK$1,500 per case.
Deferred taxes are also recognized on the undistributed earnings of subsidiaries, which are presumed to be transferred to the parent company and are subject to withholding taxes, unless there is sufficient evidence to show that the subsidiary has invested or will invest the undistributed earnings indefinitely or that the earnings will be remitted in a tax-free manner. 112 We adopt ASC 740 “Income Taxes” which prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
Deferred taxes are also recognized on the undistributed earnings of subsidiaries, which are presumed to be transferred to the parent company and are subject to withholding taxes, unless there is sufficient evidence to show that the subsidiary has invested or will invest the undistributed earnings indefinitely or that the earnings will be remitted in a tax-free manner.
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.
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 have therefore estimated, with assistance from an independent external valuer, the fair value of our ordinary shares at certain dates for the periods presented to determine the fair value of our ordinary shares as of the issuance date of our convertible notes and the grant date of share-based compensation awards related to share options under the 2018 Stock Option Scheme as one of the inputs into determining the fair value of the awards as of the grant date. 119 Date of Grant Fair value per Ordinary Share Discount for Lack of Marketability Discount Rate Type of Valuation April 21, 2017 US$ 1.99 25.00 % 18.35 % Contemporaneous December 31, 2018 US$ 3.64 13.63 % 18.13 % Contemporaneous August 12, 2019 US$ 3.48 12.31 % 16.22 % Contemporaneous April 27, 2020 US$ 1.93 Contemporaneous In April 2020, we granted 4,963,017 share options to our employees under the 2018 Plan, with a weighted average exercise price of US$0.55.
Date of Grant Fair value per Ordinary Share Discount for Lack of Marketability Discount Rate Type of Valuation April 21, 2017 US$ 1.99 25.00 % 18.35 % Contemporaneous December 31, 2018 US$ 3.64 13.63 % 18.13 % Contemporaneous August 12, 2019 US$ 3.48 12.31 % 16.22 % Contemporaneous April 27, 2020 US$ 1.93 Contemporaneous 117 In April 2020, we granted 4,963,017 share options to our employees under the 2018 Plan, with a weighted average exercise price of US$0.55.
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.
Our accounts payable represent primarily accounts payable to hardware suppliers and mobile data allowance providers. As of December 31, 2022, 2023 and 2024, our accounts payable were US$6.8 million, US$5.3 million and US$7.4 million, respectively. The decrease from 2022 to 2023 and the increase from 2023 to 2024 were primarily due to our payment arrangement with suppliers in 2023.

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Item 6. [Reserved]

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

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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.
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.
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.
Shi is a licensed Certified Public Accountant in the State of Michigan of the United States. 119 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.
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 .
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 .
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.
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. Prof. Ying Kong has served as our independent director since June 2021. Prof.
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 .
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. 124 Nominating and Corporate Governance Committee .
Awards may not be transferred in any manner by the recipient other than in accordance with the exceptions provided in the 2019 Plan, such as transfers by will or the laws of descent and distribution. Termination and Amendment of the 2019 Plan . Unless terminated earlier, the 2019 Plan has a term of 15 years.
Awards may not be transferred in any manner by the recipient other than in accordance with the exceptions provided in the 2019 Plan, such as transfers by will or the laws of descent and distribution. Termination and Amendment of the 2019 Plan . Unless terminated earlier, the 2019 Plan has a term of 20 years.
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. 128
Options that are vested and exercisable will terminate if they are not exercised prior to the time as the plan administrator determines at the time of grant. However, the maximum exercisable term is six years from the date that the granted options are exercisable. Transfer Restrictions .
Options that are vested and exercisable will terminate if they are not exercised prior to the time as the plan administrator determines at the time of grant. In general, the maximum exercisable term is six years from the date that the granted options are exercisable. Transfer Restrictions .
Name Ordinary Shares Underlying Options Exercise Price (US$/Share) Date of Grant Date of Expiration Chaohui Chen * 0.5000 April 27, 2020 April 27, 2031 Zhiping Peng * 0.5000 April 27, 2020 April 27, 2031 Hope Ni — — — — Ying Kong — — — — Yimeng Shi * 0.5000 December 31, 2018 – April 27, 2020 December 31, 2025 – April 27, 2031 Wen Gao — — — — Zhihui Gong * 0.5000 December 31, 2018 December 31, 2025 All directors and executive officers as a group 5,700,000 0.5000 December 31, 2018 – April 27, 2020 December 31, 2025 – April 27, 2031 Note: * Less than 1% of our total ordinary shares on an as-converted basis outstanding as of the date of this annual report. 124 The following table summarizes, as of February 29, 2024, the number of outstanding restricted share units that we have granted to our directors and executive officers.
Name Ordinary Shares Underlying Options Exercise Price (US$/Share) Date of Grant Date of Expiration Chaohui Chen * 0.5000 April 27, 2020 April 27, 2027 – April 27, 2031 Zhiping Peng * 0.5000 April 27, 2020 April 27, 2027 – April 27, 2031 Hope Ni — — — — Ying Kong — — — — Yimeng Shi * 0.5000 December 31, 2018 – April 27, 2020 April 27, 2027 – December 31, 2031 Wen Gao — — — — Zhihui Gong * 0.5000 December 31, 2018 December 31, 2030 All directors and executive officers as a group 5,700,000 0.5000 December 31, 2018 – April 27, 2020 April 27, 2027 –December 31, 2031 Note: * Less than 1% of our total ordinary shares on an as-converted basis outstanding as of the date of this annual report. 122 The following table summarizes, as of February 28, 2025, the number of outstanding restricted share units that we have granted to our directors and executive officers.
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.
Board Diversity Matrix (As of February 28, 2025) 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 4 123 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 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.
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.
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, 2025 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.
Ni currently serves as an independent director of Zhihu Inc. (Nasdaq: ZH), Digital China Holdings Limited (HKEX: 0861), Acotec Scientific Holdings Limited (HKEX: 6669) and ATA Creativity Global (Nasdaq: AACG) and prior to that, she served as an executive director from 2015 to 2020. Previously, Ms.
Ni currently serves as an independent director of Zhihu Inc. (Nasdaq: ZH), Acotec Scientific Holdings Limited (HKEX: 6669), and ATA Creativity Global (Nasdaq: AACG). Prior to that, she served as an executive director of Ingdan, Inc. from 2015 to 2020, and independent director of Digital China Holdings Limited (HKEX: 0861) from 2010 to June 2014. Previously, Ms.
Amended and Restated 2019 Share Incentive Plan In July 2019, our shareholders and board of directors approved the 2019 Share Incentive Plan, amended in 2021, or the 2019 Plan, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants.
Amended and Restated 2019 Share Incentive Plan In July 2019, our shareholders and board of directors approved the 2019 Share Incentive Plan, as amended in 2021, or the 2019 Plan, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants. The 2019 Share Plan was amended from time to time.
Specifically, each executive officer has agreed not to (i) solicit from any customer doing business with us during the effective term of the employment agreement business of the same or of a similar nature to our business; (ii) solicit from any of our known potential customer business of the same or of a similar nature to that which has been the subject of our known written or oral bid, offer or proposal, or of substantial preparation with a view to making such a bid, proposal or offer; (iii) solicit the employment or services of, or hire or engage, any person who is known to be employed or engaged by us; or (iv) otherwise interfere with our business or accounts, including, but not limited to, with respect to any relationship or agreement between any vendor or supplier and us.
Specifically, each executive officer has agreed not to (i) solicit from any customer doing business with us during the effective term of the employment agreement business of the same or of a similar nature to our business; (ii) solicit from any of our known potential customer business of the same or of a similar nature to that which has been the subject of our known written or oral bid, offer or proposal, or of substantial preparation with a view to making such a bid, proposal or offer; (iii) solicit the employment or services of, or hire or engage, any person who is known to be employed or engaged by us; or (iv) otherwise interfere with our business or accounts, including, but not limited to, with respect to any relationship or agreement between any vendor or supplier and us. 120 We have also entered into indemnification agreements with each of our directors and executive officers.
We may also terminate an executive officer’s employment without cause upon 60-day advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as may be agreed between the executive officer and us.
We may also terminate an executive officer’s employment without cause upon 60-day advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as may be agreed between the executive officer and us. The executive officer may resign at any time with a 60-day advance written notice.
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.
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.
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.
The following table summarizes, as of February 28, 2025, the number of ordinary shares underlying outstanding options that we have granted to our directors and executive officers.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.
Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.
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.
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.
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.
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 2024, we paid an aggregate of US$1.8 million in cash to our executive officers, and paid US$110 thousand in cash to our non-executive 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.
As of February 28, 2025, our employees and consultants other than our directors and executive officers as a group held outstanding restricted share units equivalent to 1,038,300 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.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of shares in our company, including the registration of such shares in our share register.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual and extraordinary general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of shares in our company, including the registration of such shares in our share register. 125 Terms of Directors and Officers Our directors may be elected by an ordinary resolution of our shareholders.
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.
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.
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.
Name Ordinary Shares Underlying Restricted Share Unites Date of Grant Chaohui Chen * January 27, 2021 – January 31, 2025 Zhiping Peng * January 27, 2021 – January 31, 2025 Hope Ni * January 27, 2021 – May 31, 2024 Ying Kong * July 1, 2021 – May 31, 2024 Yimeng Shi * January 27, 2021 – January 31, 2025 Wen Gao * January 27, 2021 – January 31, 2025 Zhihui Gong * January 27, 2021 – January 31, 2025 All directors and executive officers as a group 6,872,870 January 27, 2021 – January 31, 2025 As of February 28, 2025, our employees and consultants other than our directors and executive officers as a group held outstanding options to purchase 11,154,060 ordinary shares, with exercise prices ranging from US$0.5 to US$0.8 per share.
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 maximum aggregate number of ordinary shares that may be issued under 2018 Plan is 40,147,720 ordinary shares. As of February 28, 2025, options to purchase a total of 16,714,060 ordinary shares are outstanding under the 2018 Plan. The following paragraphs summarize the principal terms of the 2018 Plan. Type of Awards .
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.
Directors and Executive Officers Age Position/Title Chaohui Chen 57 Director and Chief Executive Officer Zhiping Peng 57 Chairman of the Board of Directors Hope Ni 52 Independent Director Ying Kong 65 Independent Director Yimeng Shi 52 Chief Financial Officer Wen Gao 55 Chief Strategy Officer Zhihui Gong 55 Chief Technology Officer Mr.
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.
In July 2019, our shareholders and board of directors further restated and amended the 2018 Stock Option Scheme and adopted the Amended and Restated 2018 Stock Option Scheme, or the 2018 Plan, pursuant to which we may grant awards to our directors, officers and employees. The 2018 Plan was amended from time to time.
(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.
(2) Represents (i) 60,726,420 Class B ordinary shares held by AlphaGo Robot Limited, a British Virgin Islands company, (ii) 1,765,580 Class A ordinary shares held by Mr. Zhiping Peng, (iii) 950,000 Class A ordinary shares Mr.
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.
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.
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.
The calculations in the table below are based on 254,253,460 Class A ordinary shares and 122,072,980 Class B ordinary shares outstanding as of February 28, 2025. 126 Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
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.
To our knowledge, as of February 28, 2025, a total of 203,742,840 Class A ordinary shares (including the 3,169,000 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 54% of our total outstanding shares.
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.
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) 14,970,240 61,346,560 76,316,800 20.2 44.8 Zhiping Peng (2) 11,432,350 60,726,420 72,158,770 19.1 44.2 Hope Ni * — * * * Ying Kong * — * * * Yimeng Shi (3) 4,552,070 — 4,552,070 1.2 0.2 Wen Gao (4) 12,677,420 — 12,677,420 3.4 0.6 Zhihui Gong * — * * * All Directors and Executive Officers as a Group (5) 43,842,080 122,072,980 165,915,060 43.4 89.7 Principal Shareholders: MediaPlay Limited (1) — 61,346,560 61,346,560 16.3 44.1 AlphaGo Robot Limited (2) — 60,726,420 60,726,420 16.1 43.7 Entities affiliated with Cash Capital (6) 37,405,580 — 37,405,580 9.9 1.8 Entities affiliated with China International Capital Corporation Limited (7) 19,662,570 — 19,662,570 5.2 0.9 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.
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 .
As of February 28, 2025, the maximum number of issuable shares under the 2019 Plan was 36,656,858, while 140,000 options had been granted and outstanding under the 2019 Plan, and 7,911,170 restricted share units had been granted and outstanding under the 2019 Plan. 121 The following paragraphs describe the principal terms of the 2019 Plan. Type of Awards .
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.
Chaohui Chen, and (v) 8,576,820 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. Chaohui Chen.
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.
The average age of our employees is around 35 and 75.2% 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.
(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.
(1) Represents (i) 61,346,560 Class B ordinary shares held by MediaPlay Limited, a British Virgin Islands company, (ii) 1,962,480 Class A ordinary shares held by Mr. Chaohui Chen, (iii) 950,000 Class A ordinary shares Mr.
Zhiping Peng is the settlor and investment advisor of Harmony Peng Trust, and has the power to direct the disposition and voting of the shares held by Harmony Peng Trust. The registered address of AlphaGo Robot Limited is Ritter House, Wickhams Cay II, Road Town, Tortola, British Virgin Islands.
Zhiping Peng is the settlor and investment advisor of Harmony Peng Trust, and has the power to direct the disposition and voting of the shares held by Harmony Peng Trust.
(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.
The registered address of AlphaGo Robot Limited is Ritter House, Wickhams Cay II, Road Town, Tortola, British Virgin Islands. 127 (3) Represents (i) 1,852,070 Class A ordinary shares held by Mr. Yimeng Shi, and (ii) 2,700,000 Class A ordinary shares Mr. Yimeng Shi has the right to acquire upon exercise of options within 60 days after February 28, 2025.
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.
Zhiping Peng, and (vi) 4,931,500 Class A ordinary shares held by one of our beneficial owners, who have granted an irrevocable voting proxy for 4,931,500 Class A ordinary shares beneficially owned by them to Mr. Zhiping Peng, and appointed Mr. Zhiping Peng as lawful attorney-in-fact.
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.
The address of Mr. Yimeng Shi is Unit 2214-Rm1, 22/F, Mira Place Tower A, 132 Nathan Road, Tsim Sha Tsui, Kowloon, Hong Kong. (4) Represents (i) 11,889,820 Class A ordinary shares held by Talent Wits Limited, a British Virgin Islands company, and (ii) 787,600 Class A ordinary shares held by Mr. Wen Gao.
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.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2024. Function Number of Employees Research and Development 160 Business Development, Sales and Marketing 169 Administration and Management 75 Total 404 Our success depends on our ability to attract, motivate, train and retain qualified personnel.
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.
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 330, 393 and 404 employees as of December 31, 2022, 2023 and 2024, respectively.
Removed
Terms of Directors and Officers Our directors may be elected by an ordinary resolution of our shareholders.
Added
These shares, however, are not included in the computation of the percentage ownership of any other person.
Added
Chaohui Chen has the right to acquire upon exercise of options within 60 days after February 28, 2025, (iv) 348,094 ADSs, representing 3,480,940 Class A ordinary shares directly held by Mr.
Added
Zhiping Peng has the right to acquire upon exercise of options within 60 days after February 28, 2025, (iv) 378,527 ADSs, representing 3,785,270 Class A ordinary shares directly held by Mr.
Added
(7) Represents 19,662,570 Class A ordinary shares beneficially owned by China International Capital Corporation Limited, a PRC company, over which China International Capital Corporation Limited has shared dispositive power as of April 15, 2024, in the form of 1,966,257 ADSs held by CICC Financial Trading Limited, a Hong Kong company.
Added
CICC Financial Trading Limited is wholly owned by CICC Financial Holdings Limited, a British Virgin Islands company, which is wholly owned by China International Capital Corporation (International) Limited, a Hong Kong company. China International Capital Corporation (International) Limited is, in turn, wholly owned by China International Capital Corporation Limited.
Added
The principal business address of China International Capital Corporation Limited is 9th Floor China World Tower 2, No.1 Jian Guo Men Wai Avenue, Beijing 100004, People’s Republic of China. The principal business address of each of China International Capital Corporation (International) Limited, CICC Financial Holdings Limited and CICC Financial Trading Limited is 29/F, One International Finance Centre, 1.
Added
Harbour View Street, Central, Hong Kong. The calculation of China International Capital Corporation Limited’s voting power is based on 19,662,570 Class A ordinary shares, over which China International Capital Corporation Limited has shared voting power, as of April 15, 2024. The above information is based on the Schedule 13G filed by China International Capital Corporation Limited on April 25, 2024.
Added
The percentage of beneficial ownership and the percentage of aggregate voting power for China International Capital Corporation Limited are calculated based on the number of our company’s total outstanding shares as of February 28, 2025 and assuming China International Capital Corporation Limited’s shareholding has not change since April 15, 2024.

Item 7. Management's Discussion & Analysis

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

8 edited+1 added−0 removed11 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.” 130 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.” 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. 131 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. Expenses of Registration .
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.
In 2022, 2023 and 2024, we recognized US$0.3 million, US$36 thousand and US$16 thousand, respectively, of revenue from provision of sales of terminals and PaaS and SaaS services to this company. In 2022, 2023 and 2024, we purchased US$6 thousand, nil and nil, respectively, of data connectivity service from this company.
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.
In 2022, 2023 and 2024, we recognized US$6.2 million, US$10.8 million and US$5.9 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. In 2022, 2023 and 2024, we purchased US$4 thousand, US$2 thousand and nil, respectively, of data connectivity service from this company.
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.
As of December 31, 2022, 2023 and 2024, we owed US$20 thousand, US$20 thousand and nil to this company. As of December 31, 2022, 2023 and 2024, we had US$14 thousand, US$2 thousand and US$2 thousand due from this company.
However, we cannot exercise the deferral right more than once in any twelve-month period. We are obligated to effect no more than two demand registrations, other than demand registration to be effected pursuant to registration statement on Form F-3, for which an unlimited number of demand registrations shall be permitted so long as certain condition is met.
We are obligated to effect no more than two demand registrations, other than demand registration to be effected pursuant to registration statement on Form F-3, for which an unlimited number of demand registrations shall be permitted so long as certain condition is met. 129 Piggyback Registration Rights .
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.
As of December 31, 2022, 2023 and 2024, we owed US$1.5 million, US$1.2 million and US$49 thousand, respectively, to this company, consisting of accounts payable, deposits and advances. As of December 31, 2022, 2023 and 2024, we had US$0.7 million, US$2.9 million and US$2.0 million due from this company, respectively. Transactions with 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.
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.
Added
However, we cannot exercise the deferral right more than once in any twelve-month period.

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