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Ucommune International Ltd

Ucommune International LtdUK财报

Nasdaq · 工业 · 其他商业服务

Ucommune International Ltd., formerly known as UrWork, is a Beijing-based co-working space provider founded in 2015 by Mao Daqing. It is now the second-largest co-working space provider after WeWork, with properties in three dozen cities around the world, including Shanghai, Singapore, Hong Kong and New York City. The company was valued at 1.8 billion US dollars in August 2018, making it the first domestic unicorn in the Chinese co-working space, but by November 2018, Ucommune had completed i...

What changed in Ucommune International Ltd's 20-F — 2023 vs 2024

Top changes in Ucommune International Ltd's 2024 20-F

723 paragraphs added · 705 removed · 539 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

233 edited+125 added−29 removed540 unchanged
Risk Factors — Risks Relating to Doing Business in China — Any lack of requisite approvals, licenses or permits applicable to our business may materially and adversely affect our business, financial condition and results of operations.” On December 28, 2021, the Cyberspace Administration of China (the “CAC”) and other 12 PRC regulatory authorities jointly issued an amendment to the Measures for Cybersecurity Review (the “Cybersecurity Review Measures”), which took effect on February 15, 2022.
Risk Factors — Risks Relating to Doing Business in China — Any lack of requisite approvals, licenses or permits applicable to our business may materially and adversely affect our business, financial condition and results of operations.” 15 On December 28, 2021, the Cyberspace Administration of China (the “CAC”) and other 12 PRC regulatory authorities jointly issued an amendment to the Measures for Cybersecurity Review (the “Cybersecurity Review Measures”), which took effect on February 15, 2022.
In August 2022, the PCAOB, the CSRC and the Ministry of Finance of the PRC signed the Statement of Protocol, which establishes a specific and accountable framework for the PCAOB to conduct inspections and investigations of PCAOB-governed accounting firms in mainland China and Hong Kong.
In August 2022, the PCAOB, the CSRC and the Ministry of Finance of the PRC signed the Statement of Protocol, which establishes a specific and accountable framework for the PCAOB to conduct inspections and investigations of PCAOB-governed accounting firms in mainland China and Hong Kong.
The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used.
The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used.
The Overseas Listing Trial Measures has comprehensively improved and reformed the existing regulatory regime for overseas offering and listing of securities by PRC domestic companies and regulates both direct and indirect overseas offering and listing of securities by PRC domestic companies by adopting a filing-based regulatory regime.
The Overseas Listing Trial Measures has comprehensively improved and reformed the existing regulatory regime for overseas offering and listing of securities by PRC domestic companies and regulates both direct and indirect overseas offering and listing of securities by PRC domestic companies by adopting a filing-based regulatory regime.
According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information.
According to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either in direct or indirect means, are required to fulfill the filing procedure with the CSRC and report relevant information.
The CSRC provided further notice related to the Overseas Listing Trial Measures that companies that have already been listed on overseas stock exchanges prior to March 31, 2023 are not required to make immediate filings for its listing, but are required to make filings for subsequent offerings in accordance with the Overseas Listing Trial Measures, i.e., to file with the CSRC within three business days after the closing of such subsequent offerings.
The CSRC provided further notice related to the Overseas Listing Trial Measures that companies that have already been listed on overseas stock exchanges prior to March 31, 2023 are not required to make immediate filings for its listing, but are required to make filings for subsequent offerings in accordance with the Overseas Listing Trial Measures, i.e., to file with the CSRC within three business days after the closing of such subsequent offerings.
Any such failure would subject us to sanctions by the CSRC or other PRC regulatory authorities.
Any such failure would subject us to sanctions by the CSRC or other PRC regulatory authorities.
These regulatory authorities may impose restrictions and penalties on the operations in China, significantly limit or completely hinder our ability to launch any new offering of our securities, limit our ability to pay dividends outside of China, delay or restrict the repatriation of the proceeds from future capital raising activities into China, or take other actions that could materially and adversely affect our business, results of operations, financial condition and prospects, as well as the trading price of our Class A ordinary shares.
These regulatory authorities may impose restrictions and penalties on the operations in China, significantly limit or completely hinder our ability to launch any new offering of our securities, limit our ability to pay dividends outside of China, delay or restrict the repatriation of the proceeds from future capital raising activities into China, or take other actions that could materially and adversely affect our business, results of operations, financial condition and prospects, as well as the trading price of our Class A ordinary shares.
Because the Parent qualifies as a foreign private issuer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: ● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; ● the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; ● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and ● the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
Because the Parent qualifies as a foreign private issuer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including: ● the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; ● the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; 65 ● the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and ● the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
Risks include the following: ● Our pending applications for intellectual property rights may not be approved; ● Our intellectual property rights may not be adequately protected; ● Our intellectual property rights could be challenged by third parties or found by a judicial authority to be invalid or unenforceable; 26 ● Third parties may claim that we are infringing their rights, and we may not be successful in defending these claims; and ● We may not enforce and defend our proprietary rights or prevent infringement or misappropriation, without substantial expense to us and a significant diversion of management time and attention from our business strategy.
Risks include the following: ● Our pending applications for intellectual property rights may not be approved; ● Our intellectual property rights may not be adequately protected; ● Our intellectual property rights could be challenged by third parties or found by a judicial authority to be invalid or unenforceable; ● Third parties may claim that we are infringing their rights, and we may not be successful in defending these claims; and ● We may not enforce and defend our proprietary rights or prevent infringement or misappropriation, without substantial expense to us and a significant diversion of management time and attention from our business strategy.
Any failure by us or our third-party service providers to comply with applicable privacy laws, privacy policies or privacy-related contractual obligations may result in governmental enforcement actions, fines, litigation, other claims and adverse publicity. 27 Similar to other companies, our information technology systems face the threat of cyber-attacks, such as security breaches, phishing scams, malware and denial-of-service attacks.
Any failure by us or our third-party service providers to comply with applicable privacy laws, privacy policies or privacy-related contractual obligations may result in governmental enforcement actions, fines, litigation, other claims and adverse publicity. Similar to other companies, our information technology systems face the threat of cyber-attacks, such as security breaches, phishing scams, malware and denial-of-service attacks.
As long as the Parent remains a controlled company under this definition, we are permitted to elect to rely on certain exemptions from corporate governance rules, including: ● an exemption from the rule that a majority of our Board of Directors must be independent directors; 60 ● an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and ● an exemption from the rule that our director nominees must be selected or recommended solely by independent directors.
As long as the Parent remains a controlled company under this definition, we are permitted to elect to rely on certain exemptions from corporate governance rules, including: ● an exemption from the rule that a majority of our Board of Directors must be independent directors; ● an exemption from the rule that the compensation of our chief executive officer must be determined or recommended solely by independent directors; and ● an exemption from the rule that our director nominees must be selected or recommended solely by independent directors.
The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.” The Holding Foreign Companies Accountable Act The Holding Foreign Companies Accountable Act (the “HFCAA”) was enacted on December 18, 2020.
The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.” 16 The Holding Foreign Companies Accountable Act The Holding Foreign Companies Accountable Act (the “HFCAA”) was enacted on December 18, 2020.
These members frequently have limited budgets and are more vulnerable to adverse economic conditions and unfavorable changes in the regulatory environment. If these businesses experience economic hardship, they may be unwilling or unable to use our services. This would reduce demand for our services, increase customer attrition and adversely affect our business, financial condition and results of operations.
These members frequently have limited budgets and are more vulnerable to adverse economic conditions and unfavorable changes in the regulatory environment. 22 If these businesses experience economic hardship, they may be unwilling or unable to use our services. This would reduce demand for our services, increase customer attrition and adversely affect our business, financial condition and results of operations.
On the other hand, if we raise additional funds through the issuance of equity or convertible debt securities, the ownership interests of our shareholders could be significantly diluted. These newly issued securities may have rights, preferences or privileges senior to those of our existing shareholders. Our advertising and branding services are subject to risks associated with concentration of customers.
On the other hand, if we raise additional funds through the issuance of equity or convertible debt securities, the ownership interests of our shareholders could be significantly diluted. These newly issued securities may have rights, preferences or privileges senior to those of our existing shareholders. 23 Our advertising and branding services are subject to risks associated with concentration of customers.
Information on the Company - Regulation - Regulations Relating to Internet Information Security and Privacy Protection.” 10 Pursuant to the Cybersecurity Review Measures, in addition to “critical information infrastructure operators” who procure internet products and services that affect or may affect national security shall be subject to a cybersecurity review, any “online platform operators” carrying out data processing activities that affect or may affect national security should also be subject to the cybersecurity review requirements.
Information on the Company — Regulation — Regulations Relating to Internet Information Security and Privacy Protection.” Pursuant to the Cybersecurity Review Measures, in addition to “critical information infrastructure operators” who procure internet products and services that affect or may affect national security shall be subject to a cybersecurity review, any “online platform operators” carrying out data processing activities that affect or may affect national security should also be subject to the cybersecurity review requirements.
While the application of the M&A Rules remains unclear, we believe that the CSRC approval was not required in the context of our Business Combination, follow-on public offering or Warrants offerings of the Parent under the M&A Rules, because (1) our WFOEs were incorporated as a wholly foreign-owned enterprise by means of foreign direct investments rather than by merger with or acquisition of any PRC domestic companies owned by PRC companies or individuals as defined under the M&A Rules; (2) no explicit provision in the M&A Rules clearly classifies the contractual arrangements among Ucommune Technology, VIEs and VIEs’ shareholders as an acquisition falling under the M&A Rules; and (3) the CSRC has not issued any definitive rule or interpretation concerning whether Business Combination, follow-on public offering or Warrants offerings like ours under this annual report are subject to this regulation.
While the application of the M&A Rules remains unclear, we believe that the CSRC approval was not required in the context of our Business Combination, follow-on public offering or Warrants offerings of the Parent under the M&A Rules, because (1) our WFOEs were incorporated as a wholly foreign-owned enterprise by means of foreign direct investments rather than by merger with or acquisition of any PRC domestic companies owned by PRC companies or individuals as defined under the M&A Rules; (2) no explicit provision in the M&A Rules clearly classifies the contractual arrangements among Youshenghengtong Technology, VIEs and VIEs’ shareholders as an acquisition falling under the M&A Rules; and (3) the CSRC has not issued any definitive rule or interpretation concerning whether Business Combination, follow-on public offering or Warrants offerings like ours under this annual report are subject to this regulation.
In addition to market and industry factors, the price and trading volume for the Class A ordinary shares and the listed warrants may be highly volatile for factors specific to our own operations, including the following: ● variations in our net revenue, earnings and cash flows; ● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; ● announcements of new offerings and expansions by us or our competitors; ● changes in financial estimates by securities analysts; ● detrimental adverse publicity about us, our shareholders, affiliates, directors, officers or employees, our business model, our services or our industry; ● announcements of new regulations, rules or policies relevant for our business; ● additions or departures of key personnel; ● release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and ● potential litigation or regulatory investigations.
In addition to market and industry factors, the price and trading volume for the Class A ordinary shares and the listed warrants may be highly volatile for factors specific to our own operations, including the following: ● variations in our net revenue, earnings and cash flows; ● announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors; ● announcements of new offerings and development by us or our competitors; ● changes in financial estimates by securities analysts; ● detrimental adverse publicity about us, our shareholders, affiliates, directors, officers or employees, our business model, our services or our industry; ● announcements of new regulations, rules or policies relevant for our business; ● additions or departures of key personnel; ● release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and ● potential litigation or regulatory investigations.
Uncertainties remain over the long-term effects of the expansionary monetary and fiscal policies of the central banks and financial authorities of some of the world’s leading economies, including the United States and China. Unrest and terrorist threats in the Middle East, Europe and Africa and conflicts involving Ukraine, Syria and North Korea have also raised concerns.
Uncertainties remain over the long-term effects of the monetary and fiscal policies of the central banks and financial authorities of some of the world’s leading economies, including the United States and China. Unrest and terrorist threats in the Middle East, Europe and Africa and conflicts involving Ukraine, Syria and North Korea have also raised concerns.
If we cannot resolve any conflict of interest or dispute between us and these shareholders, we would rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings. 33 Our contractual arrangements are governed by PRC law.
If we cannot resolve any conflict of interest or dispute between us and these shareholders, we would rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings. Our contractual arrangements are governed by PRC law.
The Cybersecurity Review Measures propose the following key changes: ● companies who are engaged in data processing are also subject to the regulatory scope; ● the CSRC is included as one of the regulatory authorities for purposes of jointly establishing the state cybersecurity review working mechanism; ● the online platform operators holding more than one million users individual information and seeking a listing outside China shall file for cybersecurity review with the Cybersecurity Review Office; and 51 ● the risks of core data, material data or large amounts of personal information being stolen, leaked, destroyed, damaged, illegally used or transmitted to overseas parties and the risks of critical information infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used maliciously shall be collectively taken into consideration during the cybersecurity review process.
The Cybersecurity Review Measures propose the following key changes: ● companies who are engaged in data processing are also subject to the regulatory scope; ● the CSRC is included as one of the regulatory authorities for purposes of jointly establishing the state cybersecurity review working mechanism; 58 ● the online platform operators holding more than one million users individual information and seeking a listing outside China shall file for cybersecurity review with the Cybersecurity Review Office; and ● the risks of core data, material data or large amounts of personal information being stolen, leaked, destroyed, damaged, illegally used or transmitted to overseas parties and the risks of critical information infrastructure, core data, material data or large amounts of personal information being influenced, controlled or used maliciously shall be collectively taken into consideration during the cybersecurity review process.
Material slowdown of the agile office space industry against the projected rates may have materially and adversely affect our business and the market price of our Class A ordinary shares. We may not adequately protect our intellectual property from unauthorized use by others. Our trademarks and other intellectual property are critical to our business.
Material slowdown of the agile office space industry against the projected rates may have materially and adversely affect our business and the market price of our Class A ordinary shares. 32 We may not adequately protect our intellectual property from unauthorized use by others. Our trademarks and other intellectual property are critical to our business.
Controls and Procedures — Internal Control Over Financial Reporting.” However, we cannot assure you that these measures may fully address the material weaknesses and deficiencies in our internal control over financial reporting or that we may conclude that they have been fully remediated. The Parent is subject to the Sarbanes-Oxley Act of 2002.
Controls and Procedures — Internal Control Over Financial Reporting.” However, we cannot assure you that these measures may fully address the material weaknesses and deficiencies in our internal control over financial reporting or that we may conclude that they have been fully remediated. 36 The Parent is subject to the Sarbanes-Oxley Act of 2002.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “ de facto management body” in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: ● the primary location of the day-to-day operational management is in the PRC; ● decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; 49 ● the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC; and ● at least 50% of voting board members or senior executives habitually reside in the PRC.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “ de facto management body” in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: ● the primary location of the day-to-day operational management is in the PRC; ● decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; 56 ● the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC; and ● at least 50% of voting board members or senior executives habitually reside in the PRC.
If we cannot resolve the impact of the interruptions of operations of our third-party suppliers or service providers, our operations and financial results may be materially and adversely affected. 23 In some cases, we may rely on a single source for procurement of construction materials or other supplies in a given region.
If we cannot resolve the impact of the interruptions of operations of our third-party suppliers or service providers, our operations and financial results may be materially and adversely affected. In some cases, we may rely on a single source for procurement of construction materials or other supplies in a given region.
These liabilities to be settled in shares have been reclassified to additional paid-in capital and increased the amount of long-term investments of the parent company in the amount of RMB2.3 billion. 9 (3) During 2018, all the entities were VIEs. During 2019, some of the VIEs changed to our subsidiaries through restructuring.
These liabilities to be settled in shares have been reclassified to additional paid-in capital and increased the amount of long-term investments of the parent company in the amount of RMB2.3 billion. (3) During 2018, all the entities were VIEs. During 2019, some of the VIEs changed to our subsidiaries through restructuring.
In 2023, although the restrictions related to the COVID-19 have been lifted, its influence over the economy continued to impact our financial position, results of operations and cash flows. These conditions raise substantial doubt about our ability to continue as a going concern.
In 2023 and 2024, although the restrictions related to the COVID-19 have been lifted, its influence over the economy continued to impact our financial position, results of operations and cash flows. These conditions raise substantial doubt about our ability to continue as a going concern.
Our business, results of operations, financial condition and prospects could be materially and adversely affected to the extent that COVID-19 harms the Chinese and global economy in general. 24 Our business and our reputation may be affected if our employees or members of our community or guests who enter our spaces behave badly.
Our business, results of operations, financial condition and prospects could be materially and adversely affected to the extent that COVID-19 harms the Chinese and global economy in general. Our business and our reputation may be affected if our employees or members of our community or guests who enter our spaces behave badly.
Sales of substantial numbers of such shares in the public market or the fact that such warrants or UPOs may be exercised could adversely affect the market price of our Class A ordinary shares. 55 The trading prices of the Class A ordinary shares and the Prior Warrants are likely to be volatile, which could result in substantial losses to investors.
Sales of substantial numbers of such shares in the public market or the fact that such warrants or UPOs may be exercised could adversely affect the market price of our Class A ordinary shares. The trading prices of the Class A ordinary shares and the Prior Warrants are likely to be volatile, which could result in substantial losses to investors.
In addition, our redevelopment activities are subject to cost and schedule overruns as a result of many factors, some of which are beyond our control and ability to foresee, including increases in the cost of materials and labor. We incur costs relating to the maintenance, refurbishment and remediation of our spaces.
In addition, our redevelopment activities are subject to cost and schedule overruns as a result of many factors, some of which are beyond our control and ability to foresee, including increases in the cost of materials and labor. 27 We incur costs relating to the maintenance, refurbishment and remediation of our spaces.
The proceeds could be invested in a way that does not yield a favorable, or any, return for you. 57 The Parent’s memorandum and articles of association contain anti-takeover provisions that could materially and adversely affect the rights of holders of our Class A ordinary shares.
The proceeds could be invested in a way that does not yield a favorable, or any, return for you. The Parent’s memorandum and articles of association contain anti-takeover provisions that could materially and adversely affect the rights of holders of our Class A ordinary shares.
We also face regulatory uncertainties that could restrict our ability to adopt incentive plans for our directors, executive officers and employees under PRC law. 47 The SAT has also issued relevant rules and regulations concerning employee share incentives.
We also face regulatory uncertainties that could restrict our ability to adopt incentive plans for our directors, executive officers and employees under PRC law. The SAT has also issued relevant rules and regulations concerning employee share incentives.
The vacancy period might also be longer than expected if we cannot attract members to our new spaces or maintain members of our existing spaces. We rely on a limited number of key large enterprise members to sustain our occupancy rates.
The vacancy period might also be longer than expected if we cannot attract members to our new spaces or maintain members of our existing spaces. 21 We rely on a limited number of key large enterprise members to sustain our occupancy rates.
Our ongoing investment in technology may not generate the expected level of returns and failure to adopt new technologies to adapt to such changing environment may materially and adversely impact our business. Our business generates and processes a large amount of data.
Our ongoing investment in technology may not generate the expected level of returns and failure to adopt new technologies to adapt to such changing environment may materially and adversely impact our business. 33 Our business generates and processes a large amount of data.
These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. We may also not be aware of our violation of any of government policies and rules until after the violation occurs.
These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. We may not be aware of our violation of any of government policies and rules until after the violation occurs.
SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to use Renminbi converted from the net proceeds of securities offering, to fund the establishment of new entities in China by the VIEs, to invest in or acquire any other PRC companies through our PRC subsidiaries, or to establish new consolidated VIEs in China, which may adversely affect our business, financial condition and results of operations. 44 Governmental control of currency conversion may limit our ability to utilize our net revenue effectively and our ability to transfer cash between our PRC subsidiaries and us, across borders, and to investors and affect the value of your investment.
SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to use Renminbi converted from the net proceeds of securities offering, to fund the establishment of new entities in China by the VIEs, to invest in or acquire any other PRC companies through our PRC subsidiaries, or to establish new consolidated VIEs in China, which may adversely affect our business, financial condition and results of operations. 51 Governmental control of currency conversion may limit our ability to utilize our net revenue effectively and our ability to transfer cash between our PRC subsidiaries and us, across borders, and to investors and affect the value of your investment.
Sales of these registered shares in the public market, or the perception that such sales could occur, could cause the price of our Class A ordinary shares to decline. 56 Techniques employed by short sellers may drive down the market price of the Class A ordinary shares.
Sales of these registered shares in the public market, or the perception that such sales could occur, could cause the price of our Class A ordinary shares to decline. Techniques employed by short sellers may drive down the market price of the Class A ordinary shares.
The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.” 39 If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future our securities may decline in value or become worthless.
The approval of and the filing with the CSRC or other PRC government authorities may be required in connection with our future offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.” 46 If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future our securities may decline in value or become worthless.
Such financing might not be available to us in a timely manner or on terms that are acceptable, or at all. Our business will require significant working capital to support our growth.
Such financing might not be available to us in a timely manner or on terms that are acceptable, or at all. Our business will require significant working capital to support our business.
The Parent’s 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 you, as the holders of the Parent’s Class A ordinary shares, may view as beneficial. 35 Certain of the existing shareholders of the Parent have substantial influence over our company, and their interests may not be aligned with the interests of our other stockholders.
The Parent’s 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 you, as the holders of the Parent’s Class A ordinary shares, may view as beneficial. 42 Certain of the existing shareholders of the Parent have substantial influence over our company, and their interests may not be aligned with the interests of our other stockholders.
In addition, any foreign loan procured by our PRC subsidiaries cannot exceed statutory limits and is required to be registered with SAFE or its respective local branches. 43 As an offshore holding company, the Parent may use the proceeds of our offshore fund-raising activities to provide loans or make capital contributions to our PRC subsidiaries or provide loans to the consolidated VIEs, in each case subject to the satisfaction of applicable regulatory requirements.
In addition, any foreign loan procured by our PRC subsidiaries cannot exceed statutory limits and is required to be registered with SAFE or its respective local branches. 50 As an offshore holding company, the Parent may use the proceeds of our offshore fund-raising activities to provide loans or make capital contributions to our PRC subsidiaries or provide loans to the consolidated VIEs, in each case subject to the satisfaction of applicable regulatory requirements.
On February 13, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment (“SAFE Notice 13”), which became effective on June 1, 2015. 45 Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE.
On February 13, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment (“SAFE Notice 13”), which became effective on June 1, 2015. 52 Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE.
We primarily rely on a limited number of telecommunication service providers to provide data communications capacity through local telecommunications lines and internet data centers to host our servers. 42 We have limited access to alternative networks or services in the event of disruptions, failures or other problems with China’s internet infrastructure or the fixed telecommunications networks provided by telecommunications service providers.
We primarily rely on a limited number of telecommunication service providers to provide data communications capacity through local telecommunications lines and internet data centers to host our servers. 49 We have limited access to alternative networks or services in the event of disruptions, failures or other problems with China’s internet infrastructure or the fixed telecommunications networks provided by telecommunications service providers.
The rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. We may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming.
The rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. We may develop our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming.
While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract our management from growing our business.
While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract our management from developing our business.
Substantially all of the assets of these persons are located outside the United States. 36 As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if your rights have been infringed under the U.S. federal securities laws or otherwise.
Substantially all of the assets of these persons are located outside the United States. 43 As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States if your rights have been infringed under the U.S. federal securities laws or otherwise.
If any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. 1 We may face challenges in enforcing the contractual arrangements due to jurisdictional and legal limitations.
If any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. 4 We may face challenges in enforcing the contractual arrangements due to jurisdictional and legal limitations.
We may need to offer attractive compensation and other benefits packages, including share-based compensation, to attract and retain them. We also need to provide our employees with sufficient training to help them realize their career development and grow with us. Any failure to attract, train, retain or motivate experienced and capable personnel could severely disrupt our business and growth.
We may need to offer attractive compensation and other benefits packages, including share-based compensation, to attract and retain them. We also need to provide our employees with sufficient training to help them realize their career development and grow with us. Any failure to attract, train, retain or motivate experienced and capable personnel could severely disrupt our business and operation.
PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of securities offerings, to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of securities offerings, to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and develop our business.
The Parent and our subsidiaries rely on contractual arrangements with the VIEs to use, or otherwise benefit from, certain foreign restricted licenses and permits that we need or may need in the future as our business continues to expand, such as the internet content provider license (the “ICP license”) held by one of the VIEs.
The Parent and our subsidiaries rely on contractual arrangements with the VIEs to use, or otherwise benefit from, certain foreign restricted licenses and permits that we need or may need in the future as our business continues to develop, such as the internet content provider license (the “ICP license”) held by one of the VIEs.
If the VIEs undergo a voluntary or involuntary liquidation proceeding, their shareholders or unrelated third-party creditors may claim rights to some or all of the assets of the VIEs, hindering our ability to operate our business and constrain our growth. The foregoing risks could materially and adversely affect our business, financial condition and results of operations.
If the VIEs undergo a voluntary or involuntary liquidation proceeding, their shareholders or unrelated third-party creditors may claim rights to some or all of the assets of the VIEs, hindering our ability to operate our business and constrain our development. The foregoing risks could materially and adversely affect our business, financial condition and results of operations.
Due to the reliance on such business partners, any interruption of their operations, any failure of them to accommodate our fast-growing business scale, any termination or suspension of our partnership arrangements, any change in cooperation terms, or any deterioration of cooperative relationships with them may materially and adversely affect our brand image and impact our operations.
Due to the reliance on such business partners, any interruption of their operations, any failure of them to accommodate our business scale, any termination or suspension of our partnership arrangements, any change in cooperation terms, or any deterioration of cooperative relationships with them may materially and adversely affect our brand image and impact our operations.
If our website or internet platform violates any such requirements, we may be penalized by relevant authorities, and our operations or reputation could be adversely affected. 40 Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.
If our website or internet platform violates any such requirements, we may be penalized by relevant authorities, and our operations or reputation could be adversely affected. 47 Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.
Lawsuits against us may also generate negative publicity that significantly harms our reputation, which may adversely affect our ability to expand our member base. In addition to the related cost, managing and defending litigation and related indemnity obligations can significantly divert management’s attention from operating our business.
Lawsuits against us may also generate negative publicity that significantly harms our reputation, which may adversely affect our ability to develop our member base. In addition to the related cost, managing and defending litigation and related indemnity obligations can significantly divert management’s attention from operating our business.
(NYSE: YMM) and Boss of KANZHUN LIMITED (Nasdaq: BZ). 38 On August 17, 2021, the State Council promulgated the Regulations on the Protection of the Security of Critical Information Infrastructure (the “Regulations”), which took effect on September 1, 2021. The Regulations supplement and specify the provisions on the security of critical information infrastructure as stated in the Cybersecurity Review Measures.
(NYSE: YMM) and Boss of KANZHUN LIMITED (Nasdaq: BZ). 45 On August 17, 2021, the State Council promulgated the Regulations on the Protection of the Security of Critical Information Infrastructure (the “Regulations”), which took effect on September 1, 2021. The Regulations supplement and specify the provisions on the security of critical information infrastructure as stated in the Cybersecurity Review Measures.
On July 21, 2023, we announced that Parent received written notification (the “Notification Letter”) from the Nasdaq Stock Market LLC (“Nasdaq”) that we were not in compliance with the minimum bid price requirement of US$1.00 per share under the Nasdaq Listing Rules.
On July 21, 2023, we announced that Parent received written notification (the “Notification Letter”) from the Nasdaq Stock Market LLC (“Nasdaq”) that we were not in compliance with the minimum bid price requirement of US$1.00 per share under the Nasdaq Listing Rules (the “Bid Price Requirement”).
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), we have included a report from management on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F for the year ended December 31, 2023.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), we have included a report from management on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F for the year ended December 31, 2024.
Our strategy of overseas expansion will further subject us to different cultural norms and business practices, risks relating to fluctuations in currency exchange rates, and unpredictable disruptions as a result of security threats or political or social unrest and economic instability.
Our strategy of overseas development will further subject us to different cultural norms and business practices, risks relating to fluctuations in currency exchange rates, and unpredictable disruptions as a result of security threats or political or social unrest and economic instability.
Complying with the requirements of the new regulations to complete such transactions could be time-consuming, and any required approval processes, including approval from MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.
Complying with the requirements of the new regulations to complete such transactions could be time-consuming, and any required approval processes, including approval from MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to develop our business or maintain our market share.
The value of the assets of our Parent for purposes of the PFIC determination will generally be determined by reference to the market price of our Class A ordinary shares, which could fluctuate significantly. Our market capitalization fluctuated significantly during the taxable year ended December 31, 2023.
The value of the assets of our Parent for purposes of PFIC determination will generally be determined by reference to the market price of our Class A ordinary shares, which could fluctuate significantly. Our market capitalization fluctuated significantly during the taxable year ended December 31, 2024.
The Parent adopted share incentive plans in August 2019 and November 2020, which we respectively refer to as 2019 Plan and 2020 Plan in this annual report, to enhance our ability to attract and retain qualified individuals and align their interests with our growth and performance.
The Parent adopted share incentive plans in August 2019 and November 2020, which we respectively refer to as 2019 Plan and 2020 Plan in this annual report, to enhance our ability to attract and retain qualified individuals and align their interests with our operations and performance.
Any limitation on the ability of our PRC subsidiaries to distribute dividends or other payments to their shareholders could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends or otherwise fund and conduct our business.
Any limitation on the ability of our PRC subsidiaries to distribute dividends or other payments to their shareholders could materially and adversely limit our ability to develop, make investments or acquisitions that could be beneficial to our business, pay dividends or otherwise fund and conduct our business.
The delisting of our securities, or the threat of their being delisted, may materially and adversely affect the value of your investment. 11 A. [Reserved] B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D.
The delisting of our securities, or the threat of their being delisted, may materially and adversely affect the value of your investment. A. [Reserved] B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. 17 D.
If we lose the services of any member of our key management, we may not hire suitable or qualified replacements, and may incur additional expenses to recruit and train new staff, which could severely disrupt our business and growth.
If we lose the services of any member of our key management, we may not hire suitable or qualified replacements, and may incur additional expenses to recruit and train new staff, which could severely disrupt our business and operation.
The delisting of our securities, or the threat of their being delisted, may materially and adversely affect the value of your investment. Trading in our securities on U.S. markets, including the over-the-counter market, may be prohibited under the HFCAA if the PCAOB determines that it is unable to inspect or investigate completely our auditor for two consecutive years.
The delisting of our securities, or the threat of their being delisted, may materially and adversely affect the value of your invest ment. Trading in our securities on U.S. markets, including the over-the-counter market, may be prohibited under the HFCAA if the PCAOB determines that it is unable to inspect or investigate completely our auditor for two consecutive years.
As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCAA for the fiscal year ended December 31, 2023 after we file our annual report on Form 20-F for such fiscal year.
As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCAA for the fiscal year ended December 31, 2024 after we file our annual report on Form 20-F for such fiscal year.
As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCAA for the fiscal year ended December 31, 2023 after we file our annual report on Form 20-F for such fiscal year.
As a result, we do not expect to be identified as a “Commission-Identified Issuer” under the HFCAA for the fiscal year ended December 31, 2024 after we file our annual report on Form 20-F for such fiscal year.
We expect to continue to distribute earnings and settle the service fees owed under the contractual arrangements at the request of the WFOEs and based on our business needs, and do not expect to declare dividend in the foreseeable future.
We expect to continue to distribute earnings and settle the service fees owed under the contractual arrangements at the request of the WFOEs and based on our business needs, and do not expect to declare dividends in the foreseeable future.
If we are unable to grow the business to achieve economies of scale in the future, it will become even more difficult for us to sustain a sufficient source of cash to cover our operating costs.
If we are unable to develop the business to achieve economies of scale in the future, it will become even more difficult for us to sustain a sufficient source of cash to cover our operating costs.
With the expansion of our business, we may need to upgrade our technology and infrastructure to keep up with the increasing traffic on our apps. The digital infrastructure and the telecommunications networks in China may not support the demands associated with the growth in digital usage.
With the development of our business, we may need to upgrade our technology and infrastructure to keep up with the increasing traffic on our apps. The digital infrastructure and the telecommunications networks in China may not support the demands associated with the growth in digital usage.
If we fail to complete such registrations, our ability to use the proceeds of securities offering, and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.
If we fail to complete such registrations, our ability to use the proceeds of securities offering, and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and develop our business.
As of December 31, 2023, there were outstanding 333,002 UPOs exercisable for 1,388 Class A ordinary shares, 333,002 UPO Warrants to purchase an additional 694 Class A ordinary shares, and 333,002 UPO Rights to convert to an additional 139 Class A ordinary shares.
As of December 31, 2024, there were outstanding 333,002 UPOs exercisable for 1,388 Class A ordinary shares, 333,002 UPO Warrants to purchase an additional 694 Class A ordinary shares, and 333,002 UPO Rights to convert to an additional 139 Class A ordinary shares.
These risks are discussed more fully below and include, but are not limited to, risks relating to: Risks relating to our business and industry ● our limited operating history; ● our ability to attract new members or retain existing ones; ● our ability to manage our growth effectively; ● our ability to generate profits and positive cash flows, and to maintain sufficient working capital; ● our ability to return to profitability or raise sufficient capital to cover our capital needs; ● our reliance on large enterprise members to sustain our occupancy rates; ● our ability to use key operational metrics to accurately evaluate our performance; ● our significant capital requirements to fund our operations and growth; ● our ability to retain our major customers for marketing and branding services; and ● our expansion into new regions, markets and business areas.
These risks are discussed more fully below and include, but are not limited to, risks relating to: Risks relating to our business and industry ● our limited operating history; ● our ability to attract new members or retain existing ones; ● our ability to manage our business scale, achieve growth and operate effectively; ● our ability to generate profits and positive cash flows, and to maintain sufficient working capital; ● our ability to return to profitability or raise sufficient capital to cover our capital needs; ● our reliance on large enterprise members to sustain our occupancy rates; ● our ability to use key operational metrics to accurately evaluate our performance; ● our significant capital requirements to fund our operations; ● our ability to retain our major customers for marketing and branding services; and ● our development into new regions, markets and business areas.
The cost of continuing operations could further reduce our cash position, and an increase in our net cash outflow from operating activities could adversely affect our operations by reducing the amount of cash available for our operations and business expansion.
The cost of continuing operations could further reduce our cash position, and an increase in our net cash outflow from operating activities could adversely affect our operations by reducing the amount of cash available for our operations and business development.
There remain significant uncertainties surrounding the COVID-19 outbreak, including with respect to the ultimate spread of the virus, the severity and duration of the pandemic and the further actions government authorities may take in response.
There also remain uncertainties surrounding the COVID-19 outbreak, including with respect to the ultimate spread of the virus, the severity and duration of the pandemic and the further actions government authorities may take in response.
Any required approval processes, including obtaining approval from MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.
Any required approval processes, including obtaining approval from MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to develop our business or maintain our market share.
If we cannot obtain sufficient capital on acceptable terms to meet our capital needs, we may not execute our growth strategies, and our business, financial condition and prospects may be materially and adversely affected.
If we cannot obtain sufficient capital on acceptable terms to meet our capital needs, we may not execute our development strategies, and our business, financial condition and prospects may be materially and adversely affected.
We need to invest heavily on our technology to sustain and grow our business, and the uncertainties associated with the evolving customer needs and emerging industry standards create risks with respect to such investment.
We need to invest heavily on our technology to sustain and develop our business, and the uncertainties associated with the evolving customer needs and emerging industry standards create risks with respect to such investment.
Our financial position could be materially and adversely affected if the tax liabilities of the VIEs increase or if they are required to pay late payment fees and other penalties. 34 The Parent and our subsidiaries may lose the ability to use, or otherwise benefit from, the licenses, approvals and assets held by the VIEs, which could severely disrupt our business, render us unable to conduct some or all of our business and constrain our growth.
Our financial position could be materially and adversely affected if the tax liabilities of the VIEs increase or if they are required to pay late payment fees and other penalties. 41 The Parent and our subsidiaries may lose the ability to use, or otherwise benefit from, the licenses, approvals and assets held by the VIEs, which could severely disrupt our business, render us unable to conduct some or all of our business and constrain our development.
As a result, our business, financial condition and results of operations could be materially and adversely affected. 48 Our employment practices may be adversely impacted under the labor contract law of the PRC.
As a result, our business, financial condition and results of operations could be materially and adversely affected. 55 Our employment practices may be adversely impacted under the labor contract law of the PRC.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of US$1.00 per share, and Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for 30 consecutive business days.
Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of US$1.00 per share, and Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for 30 consecutive business days.
At the November EGM, the Parent’s shareholders approved: (1) an increase of authorized share capital from US$50,000.00 divided into 25,000,000 ordinary shares of par value of US$0.002 each, comprising (i) 20,000,000 Class A ordinary shares of par value of US$0.002 each and (ii) 5,000,000 Class B ordinary shares of par value of US$0.002 each, to US$600,000.00 divided into 300,000,000 ordinary shares of par value of US$0.002 each, comprising (i) 240,000,000 Class A ordinary shares of par value of US$0.002 each and (ii) 60,000,000 Class B ordinary shares of par value of US$0.002 each, by creating additional 220,000,000 authorized but unissued Class A ordinary shares and 55,000,000 authorized but unissued Class B ordinary shares (the “Increase of Share Capital”); (2) a share consolidation of 12 ordinary shares with par value of US$0.002 each in the Parent’s issued and unissued share capital into one ordinary share with par value of US$0.024 (the “2023 Share Consolidation”), so that the authorized share capital of the Parent will be US$600,000.00 divided into 25,000,000 ordinary shares of par value of US$0.024 each, comprising (i) 20,000,000 Class A ordinary shares of par value of US$0.024 each and (ii) 5,000,000 Class B ordinary shares of par value of US$0.024 each; and (3) an amendment of the Parent’s memorandum and articles of association currently in effect to (i) reflect the Increase of Share Capital and the 2023 Share Consolidation and (ii) change the voting power of the Class B ordinary shares of par value of US$0.024 each (the “Class B Ordinary Shares”) from thirty-five (35) votes for each Class B Ordinary Share to fifty-five (55) votes for each Class B Ordinary Share.
At the November EGM, the Parent’s shareholders approved: (1) an increase of authorized share capital from US$50,000.00 divided into 25,000,000 ordinary shares of par value of US$0.002 each, comprising (i) 20,000,000 Class A ordinary shares of par value of US$0.002 each and (ii) 5,000,000 Class B ordinary shares of par value of US$0.002 each, to US$600,000.00 divided into 300,000,000 ordinary shares of par value of US$0.002 each, comprising (i) 240,000,000 Class A ordinary shares of par value of US$0.002 each and (ii) 60,000,000 Class B ordinary shares of par value of US$0.002 each, by creating additional 220,000,000 authorized but unissued Class A ordinary shares and 55,000,000 authorized but unissued Class B ordinary shares (the “Increase of Share Capital”); 73 (2) a share consolidation of 12 ordinary shares with par value of US$0.002 each in the Parent’s issued and unissued share capital into one ordinary share with par value of US$0.024 (the “2023 Share Consolidation”), so that the authorized share capital of the Parent will be US$600,000.00 divided into 25,000,000 ordinary shares of par value of US$0.024 each, comprising (i) 20,000,000 Class A ordinary shares of par value of US$0.024 each and (ii) 5,000,000 Class B ordinary shares of par value of US$0.024 each; and (3) an amendment of the Parent’s memorandum and articles of association currently in effect to (i) reflect the Increase of Share Capital and the 2023 Share Consolidation and (ii) change the voting power of the Class B ordinary shares of par value of US$0.024 each (the “Class B Ordinary Shares”) from thirty-five (35) votes for each Class B Ordinary Share to fifty-five (55) votes for each Class B Ordinary Share.
The Series B Warrant is exercisable immediately and expires on the twelve-month anniversary of the Effective Date; and 64 ● A series C warrant of the Parent (the “Series C Warrant,” and together with the Series A Warrant and Series B Warrant, the “JAK Warrants”) to purchase up to a number of Class A ordinary shares equal to an aggregate exercise price of $18,750,000, with an exercise price of US$4.05 per Class A ordinary share. 50% of Series C Warrant vested upon issuance, and 50% of the Series C Warrant shall vest proportionately based on the number of Series B Warrants exercised.
The Series B Warrant is exercisable immediately and expires on the twelve-month anniversary of the Effective Date; and ● A series C warrant of the Parent (the “Series C Warrant,” and together with the Series A Warrant and Series B Warrant, the “JAK Warrants”) to purchase up to a number of Class A ordinary shares equal to an aggregate exercise price of $18,750,000, with an exercise price of US$4.05 per Class A ordinary share. 50% of Series C Warrant vested upon issuance, and 50% of the Series C Warrant shall vest proportionately based on the number of Series B Warrants exercised.
Until 60 days after the Effective Date, the signatories agreed not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition whether by actual disposition or effective economic disposition due to cash settlement or otherwise), directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position with respect to, any Class A ordinary shares or securities convertible, exchangeable or exercisable into, Class A ordinary shares beneficially owned, held or hereafter acquired by any such signatory. 65 The Securities Purchase Agreement, Debenture, JAK Warrants were amended on March 1, 2022, August 29, 2022, October 25, 2022, January 24, 2023, June 7, 2023 and January 30, 2024 to set and amend the Floor Price.
Until 60 days after the Effective Date, the signatories agreed not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition whether by actual disposition or effective economic disposition due to cash settlement or otherwise), directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position with respect to, any Class A ordinary shares or securities convertible, exchangeable or exercisable into, Class A ordinary shares beneficially owned, held or hereafter acquired by any such signatory. 72 The Securities Purchase Agreement, Debenture, JAK Warrants were amended on March 1, 2022, August 29, 2022, October 25, 2022, January 24, 2023, June 7, 2023 and January 30, 2024 to set and amend the Floor Price.
Fees charged to members for ancillary services under our self-operated model, such as printing and copying, are recognized as other services revenue. Asset-light Model. We provide space design and build as well as management services to develop and manage agile office spaces for landlords who bear most of the capital investments to build out and launch new spaces.
Fees charged to members for ancillary services under our self-operated model, such as printing and copying, are recognized as other services revenue. 74 Asset-light Model. We provide space design and build as well as management services to develop and manage agile office spaces for landlords who bear most of the capital investments to build out and launch new spaces.
The conversion of RMB into other currencies and remittance of the converted foreign currency outside the PRC for the purpose of capital account items, such as direct equity investments, loans and repatriation of investment, require the prior approval from SAFE or its local branches. Payments for transactions that take place within the PRC must be made in RMB.
The conversion of RMB into other currencies and remittance of the converted foreign currency outside the PRC for the purpose of capital account items, such as direct equity investments, loans and repatriation of investment, require the prior approval from SAFE or its local branches. 97 Payments for transactions that take place within the PRC must be made in RMB.
With respect to the products or services affecting consumers’ life and health, the e-commerce platform operators will be held jointly liable with the merchants if they fail to review the qualifications of merchants or fail to safeguard the interests of the consumers. Regulations Relating to Advertising Business The SAMR is the primary governmental authority regulating advertising activities in China.
With respect to the products or services affecting consumers’ life and health, the e-commerce platform operators will be held jointly liable with the merchants if they fail to review the qualifications of merchants or fail to safeguard the interests of the consumers. 91 Regulations Relating to Advertising Business The SAMR is the primary governmental authority regulating advertising activities in China.
Prior to distributing advertisements subject to government censorship and approval, advertising distributors are obligated to confirm that such censorship has been performed and approval has been obtained. 86 Violation of these regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting the misleading information.
Prior to distributing advertisements subject to government censorship and approval, advertising distributors are obligated to confirm that such censorship has been performed and approval has been obtained. Violation of these regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting the misleading information.
Our spaces offering includes certain basic services and amenities free of charge, including high-speed internet access, reception services, package handling, security services, office furniture and stationery, lounge and common area and shared kitchen and pantry. Our spaces also feature various smart functions that aim to improve our members’ experience.
Our spaces offering includes certain basic services and amenities free of charge, including high-speed internet access, reception services, package handling, security services, office furniture and stationery, lounge and common area and shared kitchen and pantry. 78 Our spaces also feature various smart functions that aim to improve our members’ experience.
In October 2017, SAT issued the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, (“SAT Circular 37”), which was amended in June 2018. 90 SAT Circular 37 superseded the Non-resident Enterprises Measures and SAT Circular 698 as a whole and partially amended some provisions in SAT Circular 24 and SAT Circular 7.
In October 2017, SAT issued the Announcement on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises, (“SAT Circular 37”), which was amended in June 2018. SAT Circular 37 superseded the Non-resident Enterprises Measures and SAT Circular 698 as a whole and partially amended some provisions in SAT Circular 24 and SAT Circular 7.
Our members must acknowledge the terms and conditions of the user agreement before using our spaces or our app. Intellectual Property We develop and protect our intellectual property portfolio by registering our patents, trademarks, copyrights and domain names. We have also adopted a comprehensive set of internal rules for intellectual property management.
Our members must acknowledge the terms and conditions of the user agreement before using our spaces or our app. 85 Intellectual Property We develop and protect our intellectual property portfolio by registering our patents, trademarks, copyrights and domain names. We have also adopted a comprehensive set of internal rules for intellectual property management.
SAT Circular 7 also addresses transfer of the equity interest in a foreign intermediate holding company broadly. In addition, SAT Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings.
SAT Circular 7 also addresses transfer of the equity interest in a foreign intermediate holding company broadly. 95 In addition, SAT Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings.
We have entered into standard employee agreements with our employees, including research and development employees, which state that the intellectual property created by them in connection with their employment with us is our intellectual property. 80 We develop proprietary SOP on agile office space operations.
We have entered into standard employee agreements with our employees, including research and development employees, which state that the intellectual property created by them in connection with their employment with us is our intellectual property. We develop proprietary SOP on agile office space operations.
Competition We compete in an emerging and competitive industry for the following: ● Locations: The growth of our business depends on our ability to source suitable real estate for management under our self-operated model and asset-light model. ● Members: While the number of companies and individuals seeking agile office space solutions is growing, we compete to acquire new members and retaining existing members. ● Business Partners: Our ability to continue to attract and retain quality business partners and to obtain favorable pricing for our members from such business partners depends on our ability to grow our member base and effectively match our members’ needs with the services provided by our business partners. ● Technology: Technology drives the growth and operating efficiencies of our business.
Competition We compete in an emerging and competitive industry for the following: ● Locations: The development of our business depends on our ability to source suitable real estate for management under our self-operated model and asset-light model. ● Members: While the number of companies and individuals seeking agile office space solutions is growing, we compete to acquire new members and retaining existing members. ● Business Partners: Our ability to continue to attract and retain quality business partners and to obtain favorable pricing for our members from such business partners depends on our ability to grow our member base and effectively match our members’ needs with the services provided by our business partners. ● Technology: Technology drives the development and operating efficiencies of our business.
We bear the cost of leasing office buildings or floors from the landlords and expenses on design and build and operation of the spaces. 70 We generate revenue by directly leasing spaces to members and charging monthly rent in the form of membership service fees or office workstation rental fees.
We bear the cost of leasing office buildings or floors from the landlords and expenses on design and build and operation of the spaces. We generate revenue by directly leasing spaces to members and charging monthly rent in the form of membership service fees or office workstation rental fees.
Pursuant to the Labor Contract Law, employers shall establish employment relationships with employees on the date that they start employing employees. To establish employment, a written employment contract shall be concluded, or employers will be liable for the illegal actions.
Pursuant to the Labor Contract Law, employers shall establish employment relationships with employees on the date that they start employing employees. 96 To establish employment, a written employment contract shall be concluded, or employers will be liable for the illegal actions.
Shengguang Zhongshuo has won numerous awards and accolades, such as the Golden Award granted at the Kerui International Innovation Festival and the Golden Bi Te Award granted at the Mobile Intelligent Marketing Conference in 2018. 76 Through Shengguang Zhongshuo, we provide members with a wide range of tailor-made advertising and branding services based on their respective industries, business scale, competitive environments and phase of lifecycle.
Shengguang Zhongshuo has won numerous awards and accolades, such as the Golden Award granted at the Kerui International Innovation Festival and the Golden Bi Te Award granted at the Mobile Intelligent Marketing Conference in 2018. 82 Through Shengguang Zhongshuo, we provide members with a wide range of tailor-made advertising and branding services based on their respective industries, business scale, competitive environments and phase of lifecycle.
See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Corporate Structure.” 96 Contractual Arrangements with the VIEs and Their Respective Shareholders Current PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in VATSs and certain other businesses. We are a company incorporated in the Cayman Islands.
See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Corporate Structure.” 100 Contractual Arrangements with the VIEs and Their Respective Shareholders Current PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in VATSs and certain other businesses. We are a company incorporated in the Cayman Islands.
Smart Office System Our smart office system consists of three major components: smart conferencing system, access control system and UcomOS office operating system. 79 Smart Conferencing System Our smart conferencing system, integrated with U Bazaar, manages the availability and booking of our conference rooms.
Smart Office System Our smart office system consists of three major components: smart conferencing system, access control system and UcomOS office operating system. Smart Conferencing System Our smart conferencing system, integrated with U Bazaar, manages the availability and booking of our conference rooms.
In connection with this transfer, on June 26, 2023, such employee entered into a new series of contractual arrangements, including equity pledge agreement, exclusive option agreement and voting rights proxy agreement, with Ucommune Technology and Beijing U Bazaar on terms substantially similar to the previous ones, and the contractual arrangements previously entered into on May 20, 2019 were terminated on the same date.
In connection with this transfer, on June 26, 2023, such employee entered into a new series of contractual arrangements, including equity pledge agreement, exclusive option agreement and voting rights proxy agreement, with Youshenghengtong Technology and Beijing U Bazaar on terms substantially similar to the previous ones, and the contractual arrangements previously entered into on May 20, 2019 were terminated on the same date.
Based on factors including redevelopment costs, location and standards of decoration and office facilities, we have developed three product lines based on different design standards, i.e., premium, superior and standard, which can satisfy the various needs and different budgets of our members. — Premium Product Line Our premium product line serves as flagship Ucommune spaces and are critical to our branding.
Product Line Development Based on factors including redevelopment costs, location and standards of decoration and office facilities, we have developed three product lines based on different design standards, i.e., premium, superior and standard, which can satisfy the various needs and different budgets of our members. 79 — Premium Product Line Our premium product line serves as flagship Ucommune spaces and are critical to our branding.
We believe that we are leading the competition in the agile office space industry on the basis of the above factors. However, some of our competitors may have more resources than we do, and may be able to devote greater resources than we can to expand their business and market shares. See “Item 3. Key Information — D.
We believe that we are leading the competition in the agile office space industry on the basis of the above factors. However, some of our competitors may have more resources than we do, and may be able to devote greater resources than we can to develop their business and market shares. See “Item 3. Key Information — D.
Based on the closing bid price of the Parent’s Class A ordinary shares for the 30 consecutive business days from December 8, 2021 to January 21, 2022, the Parent no longer meets the minimum bid price requirement. 63 On April 21, 2022, the Parent effected a 20-to-1 share consolidation in order to cure the deficiency.
Based on the closing bid price of the Parent’s Class A ordinary shares for the 30 consecutive business days from December 8, 2021 to January 21, 2022, the Parent no longer meets the minimum bid price requirement. 70 On April 21, 2022, the Parent effected a 20-to-1 share consolidation in order to cure the deficiency.
Branding, Marketing and Sales We have built a strong brand by providing superior experience and distinguished value proposition to our members and business partners. Our highly recognizable brand allows us to expand through word-of-mouth. Active on social media, we regularly interact with our members and business partners to promote our brand and the Ucommune spaces.
Branding, Marketing and Sales We have built a strong brand by providing superior experience and distinguished value proposition to our members and business partners. Our highly recognizable brand allows us to develop through word-of-mouth. Active on social media, we regularly interact with our members and business partners to promote our brand and the Ucommune spaces.
On June 26, 2023, in connection with the transfer of equity interests in Beijing U Bazaar as discussed above, the shareholders’ voting rights proxy agreement previously entered into on May 20, 2019 was terminated, and a new one on substantially similar terms was entered into among Ucommune Technology, Beijing U Bazaar and the new shareholder of Beijing U Bazaar.
On June 26, 2023, in connection with the transfer of equity interests in Beijing U Bazaar as discussed above, the shareholders’ voting rights proxy agreement previously entered into on May 20, 2019 was terminated, and a new one on substantially similar terms was entered into among Youshenghengtong Technology, Beijing U Bazaar and the new shareholder of Beijing U Bazaar.
We plan to evaluate investment opportunities, including acquiring local agile office brands with strong regional influence to expand our coverage, and companies that may support the integration of industrial chain resources for refining our one-stop space upgrade service.
We plan to evaluate investment opportunities, including acquiring local agile office brands with strong regional influence to develop our coverage, and companies that may support the integration of industrial chain resources for refining our one-stop space upgrade service.
As our member base grows, we are exploring diversified monetization channels to serve our community. 75 Individual Services By cooperating with over 700 business partners, we offer comprehensive individual services to improve the experience of our individual members and help them to achieve self-development.
As our member base grows, we are exploring diversified monetization channels to serve our community. 81 Individual Services By cooperating with over 700 business partners, we offer comprehensive individual services to improve the experience of our individual members and help them to achieve self-development.
For example, many of our SMEs members have significant financing needs and are target customers for online financial service providers. We have attracted certain online financial service providers as the major customers of our advertising and branding services since 2019. In 2023, we provided services to two top online financial service providers.
For example, many of our SMEs members have significant financing needs and are target customers for online financial service providers. We have attracted certain online financial service providers as the major customers of our advertising and branding services since 2019. In 2024, we provided services to two top online financial service providers.
From time to time, we also provide venture financing to companies that expand our service offerings and refine our ecosystem. We expect the wide coverage of services provided by our investees to enable us to keep satisfying the evolving needs of our members.
From time to time, we also provide venture financing to companies that develop our service offerings and refine our ecosystem. We expect the wide coverage of services provided by our investees to enable us to keep satisfying the evolving needs of our members.
To offer various U Plus services, we cooperate with third-party business partners and have strategically invested in enterprises engaging in a wide range of services. Our investees extend our offerings and their businesses grow with our expansion.
To offer various U Plus services, we cooperate with third-party business partners and have strategically invested in enterprises engaging in a wide range of services. Our investees extend our offerings and their businesses grow with our development.
Pursuant to the Provisions on Administration of Foreign-Invested Telecommunications Enterprises promulgated by the State Council in December 2001 and most recently amended in March 2022 and will become effective on May 1, 2022 (the “FITE Regulations”), unless otherwise promulgated, the ultimate foreign equity ownership in a VATS provider may not exceed 50%.
Pursuant to the Provisions on Administration of Foreign-Invested Telecommunications Enterprises promulgated by the State Council in December 2001 and most recently amended in March 2022 and became effective on May 1, 2022 (the “FITE Regulations”), unless otherwise promulgated, the ultimate foreign equity ownership in a VATS provider may not exceed 50%.
We need to develop better operating systems and more user-friendly apps to remain competitive. ● Personnel: Employees are our most valuable assets. We compete with our peer company to retain and recruit talented employees by providing competitive compensation and growth opportunities to our employees.
We need to develop better operating systems and more user-friendly apps to remain competitive. 86 ● Personnel: Employees are our most valuable assets. We compete with our peer company to retain and recruit talented employees by providing competitive compensation and development opportunities to our employees.
In the future, we plan to charge partnered brands fees for selling products through our U Product platform. 77 Through our members’ word-of-mouth referrals through social networks, our platform has attracted a large and growing base of members.
In the future, we plan to charge partnered brands fees for selling products through our U Product platform. Through our members’ word-of-mouth referrals through social networks, our platform has attracted a large base of members.
Individual Members Our individual members consist primarily of employees of our enterprise members and freelancers. As of December 31, 2023, we had approximately 1,166,170 individual members. A large portion of our individual members using workstations have bachelor’s or master’s degrees and their annual incomes are higher than per capita disposable income in China.
Individual Members Our individual members consist primarily of employees of our enterprise members and freelancers. As of December 31, 2024, we had approximately 1,170,837 individual members. A large portion of our individual members using workstations have bachelor’s or master’s degrees and their annual incomes are higher than per capita disposable income in China.
We underwent a series of restructuring transactions, which primarily included the following: ● In September 2018, Ucommune Group Holdings was incorporated under the laws of the Cayman Islands. ● In December 2018, Ucommune HK was incorporated under the laws of Hong Kong. ● In January 2019, Ucommune Technology, was incorporated in the PRC as a wholly owned subsidiary of Ucommune HK. ● In May 2019, Ucommune Technology entered into a series of contractual arrangements with Ucommune Venture as well as its shareholders, and the contractual arrangements were renewed in July 2019 and in November 2019. ● In May 2019, Ucommune Technology entered into a series of contractual arrangements with Beijing U Bazaar as well as its shareholder.
We underwent a series of restructuring transactions, which primarily included the following: ● In September 2018, Ucommune Group Holdings was incorporated under the laws of the Cayman Islands. ● In December 2018, Ucommune HK was incorporated under the laws of Hong Kong. ● In January 2019, Youshenghengtong Technology, formerly known as Ucommune (Beijing) Technology Co., Ltd., was incorporated in the PRC as a wholly owned subsidiary of Ucommune HK. 68 ● In May 2019, Youshenghengtong Technology entered into a series of contractual arrangements with Ucommune Venture as well as its shareholders, and the contractual arrangements were renewed in July 2019 and in November 2019. ● In May 2019, Youshenghengtong Technology entered into a series of contractual arrangements with Beijing U Bazaar as well as its shareholder.
We experienced increased occupancy rates as a result of the recovery of market demand and adjustment of promotion policy in 2023.
We experienced increased occupancy rates as a result of the recovery of market demand and adjustment of promotion policy in 2024.
Screen casting and video conferencing can be enabled through our smart conferencing system and allows members to have video conferences across departments, locations and cities without modifying their current network or having to pre-install software. As of December 31, 2023, approximately 70% conference rooms were equipped with smart conferencing systems.
Screen casting and video conferencing can be enabled through our smart conferencing system and allows members to have video conferences across departments, locations and cities without modifying their current network or having to pre-install software. As of December 31, 2024, approximately 78.57% conference rooms were equipped with smart conferencing systems.
We also use QR codes and Bluetooth-enabled access control technology to allow members and visitors to enter our spaces by using their mobile devices. As of December 31, 2023, over 50 of our agile office spaces were equipped with facial recognition access control, and cloud-based security system cover almost all of our agile office spaces.
We also use QR codes and Bluetooth-enabled access control technology to allow members and visitors to enter our spaces by using their mobile devices. As of December 31, 2024, most of our agile office spaces were equipped with facial recognition access control, and cloud-based security system cover almost all of our agile office spaces.
Organizational Structure The following chart shows our corporate structure as of March 31, 2024, including our principal subsidiaries and the VIEs. The Nasdaq-listed entity is the Parent, Ucommune International Ltd, and the public shareholders are purchasing the equity interests of the Parent.
Organizational Structure The following chart shows our corporate structure as of March 31, 2025, including our principal subsidiaries and the VIEs. The Nasdaq-listed entity is the Parent, Ucommune International Ltd, and the public shareholders are purchasing the equity interests of the Parent. The VIEs and our principal subsidiaries are the operating entities.
As of December 31, 2023, we had approximately 39,130 enterprise members ranging from large enterprises to SMEs. Our enterprise member base is diverse in terms of size, industry and geography with a healthy mix of large enterprise members and SME members. — Large enterprise members Large enterprise members are enterprise members with 100 or more employees.
As of December 31, 2024, we had approximately 39,822 enterprise members ranging from large enterprises to SMEs. 75 Our enterprise member base is diverse in terms of size, industry and geography with a healthy mix of large enterprise members and SME members. — Large enterprise members Large enterprise members are enterprise members with 100 or more employees.
Our SME members are a significant driver of the growth of our business. As our SME members grow, they typically rely on us to access more workstations and extensively utilize our suite of corporate services.
Our SME members are a significant driver of the development of our business. As our SME members develop, they typically rely on us to access more workstations and extensively utilize our suite of corporate services.
Each of such shareholders further agreed to not transfer or pledge his or her respective equity interest in Ucommune Venture without the prior written consent of Ucommune Technology. The equity pledge agreement will remain binding until the pledgers discharge all their obligations under the above-mentioned agreements.
Each of such shareholders further agreed to not transfer or pledge his or her respective equity interest in Beijing U Bazaar without the prior written consent of Youshenghengtong Technology. The equity pledge agreement will remain binding until the pledgers discharge all their obligations under the above-mentioned agreements.
Starting from November 17, 2020, the Class A ordinary shares of the Parent are listed on the Nasdaq Capital Market under the symbol “UK” and the Prior Warrants of the Parent, are listed on Nasdaq under the symbol “UKOMW.” The Parent is regarded as the primary beneficiary of each of Ucommune Venture and Beijing U Bazaar their respective subsidiaries.
Starting from November 17, 2020, the Class A ordinary shares of the Parent are listed on the Nasdaq Capital Market under the symbol “UK” and the Prior Warrants of the Parent, are listed on Nasdaq under the symbol “UKOMW.” The Parent is regarded as the primary beneficiary of Beijing U Bazaar and its subsidiaries.
We have completed the registration of equity pledge of Ucommune Venture and Beijing U Bazaar with the relevant offices of the SAMR (formerly, the SAIC).
We have completed the registration of equity pledge of Beijing U Bazaar with the relevant offices of the SAMR (formerly, the SAIC).
Risk Factors — Risks Relating to Our Corporate Structure.” Exclusive Business Cooperation Agreement Under the exclusive business cooperation agreement dated July 5, 2019, Ucommune Technology has agreed to provide the following services (among others) to Ucommune Venture: ● the provision of technical support and marketing services, including, but not limited to consultancy, collection and research of information thereof, support and training for employees, services related to customers and order management; ● the provision of services related to the transfer, leasing and disposal of equipment or assets; 97 ● the development, maintenance and updates of computer system, hardware and database; ● the licensing of software legally owned by Ucommune Technology; and ● the development of application software and related updates and operational support.
Risk Factors — Risks Relating to Our Corporate Structure.” 101 Exclusive Business Cooperation Agreement Under the exclusive business cooperation agreement dated May 20, 2019, Youshenghengtong Technology has agreed to provide the following services (among others) to Beijing U Bazaar: ● the provision of technical support and marketing services, including, but not limited to consultancy, collection and research of information thereof, support and training for employees, services related to customers and order management; ● the provision of services related to the transfer, leasing and disposal of equipment or assets; ● the development, maintenance and updates of computer system, hardware and database; ● the licensing of software legally owned by Youshenghengtong Technology; and ● the development of application software and related updates and operational support.
For more details of Udata, see “ — Technology — Udata.” 74 Utilizing our offering of U Plus services and technology capabilities, we have experienced growth in our member base, increasing from approximately 1,176,970 as of December 31, 2021 to approximately 1,193,930 as of December 31, 2022, and further to approximately 1,205,310 as of December 31, 2023.
For more details of Udata, see “— Technology — Udata.” Utilizing our offering of U Plus services and technology capabilities, we have experienced growth in our member base, increasing from approximately 1,193,930 as of December 31, 2022, to approximately 1,205,310 as of December 31, 2023 and further to 1,210,659 as of December 31, 2024.
If we are not able to compete effectively with others, our business, financial condition and results of operations may be materially and adversely affected.” 81 Insurance Consistent with industry practices, we maintain three types of insurance: public liability insurance, third-party liability insurance and property all risks insurance.
If we are not able to compete effectively with others, our business, financial condition and results of operations may be materially and adversely affected.” Insurance Consistent with industry practices, we maintain three types of insurance: public liability insurance, third-party liability insurance and property all risks insurance. We consider our insurance coverage to be sufficient for our business operations in China.
Facial-recognition and smart monitoring systems are available in the majority of our spaces. As of December 31, 2023, cloud access control had been installed in approximately 90% of our spaces; and approximately 70% of our conference rooms were equipped with smart conferencing systems, featuring screen casting and video conferencing. Our members can host video conferences across departments and geographical locations.
Facial-recognition and smart monitoring systems are available in the majority of our spaces. As of December 31, 2024, cloud access control had been installed in approximately 71.43% of our spaces; and approximately 78.57% of our conference rooms were equipped with smart conferencing systems, featuring screen casting and video conferencing. Our members can host video conferences across departments and geographical locations.
The shareholders’ voting rights proxy agreement shall remain effective until all of the equity interests in or assets of Ucommune Venture have been acquired by Ucommune Technology or its designee under the exclusive option agreement, or until Ucommune Technology unilaterally terminates the agreement by written notice.
The shareholders’ voting rights proxy agreement shall remain effective until all of the equity interests in or assets of Beijing U Bazaar have been acquired by Youshenghengtong Technology or its designee under the exclusive option agreement, or until Youshenghengtong Technology unilaterally terminates the agreement by written notice.
On December 27, 2021, MOFCOM and NDRC promulgated the Special Entry Management Measures (Negative List) for the Access of Foreign Investment (2021 Version) (the “Negative List”), effective on January 1, 2022. According to the Negative List, the proportion of foreign investment in a value-added telecommunications business (excluding e-commerce business, domestic multi-party communications, store-and-forward and call center) shall not exceed 50%.
On September 6, 2024, MOFCOM and NDRC promulgated the Special Entry Management Measures (Negative List) for the Access of Foreign Investment (2024 Version) (the “Negative List”), effective on November 1, 2024. According to the Negative List, the proportion of foreign investment in a value-added telecommunications business (excluding e-commerce business, domestic multi-party communications, store-and-forward and call center) shall not exceed 50%.
In 2021, 2022 and 2023, the consolidated VIEs accounted for an aggregate of 97.2%, 97.4% and 100.0%, respectively, of our consolidated total net revenue. See our consolidated financial statements and the related notes included elsewhere in this annual report.
In 2022, 2023 and 2024, the consolidated VIEs accounted for an aggregate of 97.0%, 100.0% and 84.9%, respectively, of our consolidated total net revenue. See our consolidated financial statements and the related notes included elsewhere in this annual report.
We also generate revenue by leasing storefronts, restaurants and workstations to our business partners who occupy our spaces to provide services to our members. As of December 31, 2023, we had 11 spaces under the U Space category, all of which were spaces in operation with approximately 6,310 workstations available for members.
We also generate revenue by leasing storefronts, restaurants and workstations to our business partners who occupy our spaces to provide services to our members. As of December 31, 2024, we had four spaces under the U Space category, all of which were spaces in operation with approximately 1,657 workstations available for members.
Under such equity pledge agreement, each of the shareholders of Ucommune Venture agreed to pledge its respective equity interest in Ucommune Venture to Ucommune Technology to secure their obligations under the exclusive option agreement, shareholders’ voting rights proxy agreement, and exclusive business cooperation agreement.
Under such equity pledge agreement, each of the shareholders of Beijing U Bazaar agreed to pledge its respective equity interest in Beijing U Bazaar to Youshenghengtong Technology to secure their obligations under the exclusive option agreement, shareholders’ voting rights proxy agreement, and exclusive business cooperation agreement.
On June 26, 2023, in connection with the transfer of equity interests in Beijing U Bazaar as discussed above, the exclusive purchase option agreement previously entered into on May 20, 2019 was terminated, and a new one on substantially similar terms was entered into among Ucommune Technology, Beijing U Bazaar and the new shareholder of Beijing U Bazaar.
On May 17,2024, in connection with the transfer of equity interests in Beijing U Bazaar as discussed above, the exclusive purchase option agreement previously entered into on June 26, 2023 was terminated, and a new one on substantially similar terms was entered into among Youshenghengtong Technology, Beijing U Bazaar and the new shareholders of Beijing U Bazaar.
As of December 31, 2023, we had 39 spaces under the U Brand category, including 33 spaces in operation with approximately 14,200 workstations available for members. U Partner We are making substantial effort in exploring a new operation category, U Partner, and launched our first space under U Partner category in July 2019.
As of December 31, 2024, we had two spaces under the U Brand category, including two spaces in operation with approximately 671 workstations available for members. U Partner We are making substantial effort in exploring a new operation category, U Partner, and launched our first space under U Partner category in July 2019.
Under the exclusive option agreement, Ucommune Venture granted Ucommune Technology or its designee an option to purchase all or a portion of the assets of Ucommune Venture or its subsidiaries for the minimum amount of consideration permitted by PRC law.
Under the exclusive option agreement, Beijing U Bazaar granted Youshenghengtong Technology or its designee an option to purchase all or a portion of the assets of Beijing U Bazaar or its subsidiaries for the minimum amount of consideration permitted by PRC law.
Each of Ucommune Venture and its shareholders agreed not to transfer, mortgage or permit any security interest to be created on any equity interest in or assets of Ucommune Venture without the prior written consent of Ucommune Technology.
Each of Beijing U Bazaar and its shareholders agreed not to transfer, mortgage or permit any security interest to be created on any equity interest in or assets of Beijing U Bazaar without the prior written consent of Youshenghengtong Technology.
As of December 31, 2023, we had nine spaces under our superior product line, all of which were in operation with approximately 4,790 workstations available for members. — Standard Product Line We develop our standard product line by utilizing the original facilities and decor and conduct necessary modelling.
As of December 31, 2024, we had four spaces under our superior product line, all of which were in operation with approximately 1,190 workstations available for members. — Standard Product Line We develop our standard product line by utilizing the original facilities and decor and conduct necessary modelling.
Once a space reaches maturity, occupancy is generally stable, our initial investment in build-out and sales and marketing to acquire members is complete and the space typically generates recurring revenue and cash flow. As of December 31, 2023, the overall occupancy rate for our 79 total spaces in operation and 48 mature spaces was approximately 62% and 58%, respectively.
Once a space reaches maturity, occupancy is generally stable, our initial investment in build-out and sales and marketing to acquire members is complete and the space typically generates recurring revenue and cash flow. As of December 31, 2024, the overall occupancy rate for our 12 total spaces in operation and 10 mature spaces was approximately 73% and 74%, respectively.
In addition, the labor wages shall not be lower than local standards on minimum wages and shall be paid to the laborers timely. 91 Regulations on Social Insurance and Housing Provident Fund According to the Social Insurance Law of the PRC effective as of July 1, 2011, and as amended on December 29, 2018, the Regulations on Occupational Injury Insurance effective as of January 1, 2004 and as amended on December 20, 2010, the Interim Measures concerning the Maternity Insurance for Enterprise Employees effective as of January 1, 1995, the Interim Regulations concerning the Levy of Social Insurance effective as of January 22, 1999 and most recently amended on March 24, 2019, enterprises and institutions in the PRC shall provide their employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, occupational injury insurance and medical insurance.
Regulations on Social Insurance and Housing Provident Fund According to the Social Insurance Law of the PRC effective as of July 1, 2011, and as amended on December 29, 2018, the Regulations on Occupational Injury Insurance effective as of January 1, 2004 and as amended on December 20, 2010, the Interim Measures concerning the Maternity Insurance for Enterprise Employees effective as of January 1, 1995, the Interim Regulations concerning the Levy of Social Insurance effective as of January 22, 1999 and most recently amended on March 24, 2019, enterprises and institutions in the PRC shall provide their employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, occupational injury insurance and medical insurance.
Pursuant to the Computer Software Copyright Protection Regulations promulgated in December 2001 and amended in January 2013, the software copyright owner may undergo registration formalities with a software registration authority recognized by the State Council’s copyright administrative department.
Pursuant to the Computer Software Copyright Protection Regulations promulgated in December 2001 and amended in January 2013, the software copyright owner may undergo registration formalities with a software registration authority recognized by the State Council’s copyright administrative department. The software copyright owner may authorize others to exercise that copyright, and is entitled to receive remuneration.
If the landlords engage us to design and build the spaces, we charge separate service fees for providing such services. 71 We generate revenue under a revenue sharing mechanism with landlords. As of December 31, 2023, we had 30 spaces under the U Partner category, including 21 spaces in operation with approximately 7,510 workstations available for members.
If the landlords engage us to design and build the spaces, we charge separate service fees for providing such services. We generate revenue under a revenue sharing mechanism with landlords. As of December 31, 2024, we had seven spaces under the U Partner category, including six spaces in operation with approximately 3,516 workstations available for members.
This agreement was effective from July 5, 2019 and will continue to be effective unless it is terminated by written notice of Ucommune Technology or, or until all of the equity interests in or assets of Ucommune Venture have been acquired by Ucommune Technology or its designee under the exclusive purchase option agreement.
This agreement was effective from May 20, 2019 and will continue to be effective unless it is terminated by written notice of Youshenghengtong Technology or, or until all of the equity interests in or assets of Beijing U Bazaar have been acquired by Youshenghengtong Technology or its designee under the exclusive purchase option agreement.
Exclusive Option Agreement Under the exclusive option agreement entered into by Ucommune Technology, Ucommune Venture and the shareholders of Ucommune Venture, dated November 22, 2019, shareholders of Ucommune Venture granted Ucommune Technology or its designee an option to purchase all or a portion of their respective equity interest in Ucommune Venture for the minimum amount of consideration permitted by PRC law.
Exclusive Option Agreement Under the exclusive option agreement entered into by Youshenghengtong Technology, Beijing U Bazaar and the shareholders of Beijing U Bazaar, dated May 20, 2019, shareholders of Beijing U Bazaar granted Youshenghengtong Technology or its designee an option to purchase all or a portion of their respective equity interest in Beijing U Bazaar for the minimum amount of consideration permitted by PRC law.
Under the Securities Purchase Agreement, the Parent agreed not to undertake any action which (1) alters or changes the rights, preferences or privileges of the Debenture as a class, (2) results in the company incurring any debt incurred not in the ordinary course of the business, or (3) alters or amends our amended and restated articles of association.
The Series C Warrant shall expire on the seven-year anniversary of Effective Date. 71 Under the Securities Purchase Agreement, the Parent agreed not to undertake any action which (1) alters or changes the rights, preferences or privileges of the Debenture as a class, (2) results in the company incurring any debt incurred not in the ordinary course of the business, or (3) alters or amends our amended and restated articles of association.
Failure to comply with the registration procedures as set out in SAFE Circular 37 may result in penalties. 93 The SAFE Circular No. 13 has further revised Circular No. 37 by requiring domestic residents to register with qualified banks rather than SAFE or its local counterparts in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.
The SAFE Circular No. 13 has further revised Circular No. 37 by requiring domestic residents to register with qualified banks rather than SAFE or its local counterparts in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing.
The Telecom Regulations set out the general framework for the provision of telecommunication services by PRC companies. Under the Telecom Regulations, telecommunications service providers must procure operating licenses prior to their commencement of operations.
The Telecom Regulations set out the general framework for the provision of telecommunication services by PRC companies. Under the Telecom Regulations, telecommunications service providers must procure operating licenses prior to their commencement of operations. The Telecom Regulations draw a distinction between “basic telecommunications services” and VATSs.
Udata also helps us explore diversified monetization opportunities, such as community e-commerce and precision marketing businesses. U Bazaar U Bazaar is our official app for members, consolidating various functions and services enabled by other operation systems.
It enhances our ability to provide more services meeting members’ demands and preferences. Udata also helps us explore diversified monetization opportunities, such as community e-commerce and precision marketing businesses. U Bazaar U Bazaar is our official app for members, consolidating various functions and services enabled by other operation systems.
Shareholders’ Voting Rights Proxy Agreement Under the shareholders’ voting rights proxy agreement among Ucommune Technology, Ucommune Venture and shareholders of Ucommune Venture, dated November 22, 2019, each of the shareholders of Ucommune Venture, agreed to irrevocably entrust Ucommune Technology or its designee to represent it to exercise all the voting rights and other shareholders’ rights to which it is entitled as a shareholder of Ucommune Venture.
Shareholders’ Voting Rights Proxy Agreement Under the shareholders’ voting rights proxy agreement among Youshenghengtong Technology, Beijing U Bazaar and shareholders of Beijing U Bazaar, dated May 20, 2019, each of the shareholders of Beijing U Bazaar, agreed to irrevocably entrust Youshenghengtong Technology or its designee to represent it to exercise all the voting rights and other shareholders’ rights to which it is entitled as a shareholder of Beijing U Bazaar.
The Fire Prevention Law provides that the fire prevention design or construction of a construction project must conform to national fire prevention technical standards. 83 Pursuant to Notice of the Adjustments to the Functions, Structure and Staffing of the Ministry of Housing and Urban-Rural Development issued by the General Office of the CPC Central Committee and the General Office of the State Council on September 13, 2018, the review and examine function of fire protection designs for construction projects of the Ministry of Public Security was assigned to the Ministry of Housing and Urban-Rural Development.
Pursuant to Notice of the Adjustments to the Functions, Structure and Staffing of the Ministry of Housing and Urban-Rural Development issued by the General Office of the CPC Central Committee and the General Office of the State Council on September 13, 2018, the review and examine function of fire protection designs for construction projects of the Ministry of Public Security was assigned to the Ministry of Housing and Urban-Rural Development.
As of December 31, 2023, we had four spaces under our premium product line, all of which are spaces in operation with approximately 2,250 workstations available for members. 73 — Superior Product Line We develop the superior product line with high-end facilities and decor.
As our top product line, it features premium facilities and decor. As of December 31, 2024, we had two spaces under our premium product line, all of which are spaces in operation with approximately 763 workstations available for members. — Superior Product Line We develop the superior product line with high-end facilities and decor.
As the first systematic and comprehensive law specifically for the protection of personal information in the PRC, the Personal Information Protection Law provides, among others, that (1) an individual’s consent shall be obtained to use sensitive personal information, such as biometric characteristics and individual location tracking; (2) personal information operators using sensitive personal information shall notify individuals of the necessity of such use and the impact on the individual’s rights; and (3) where personal information operators reject an individual’s request to exercise his or her rights, the individual may file a lawsuit with a People’s Court. 88 On November 14, 2021, the CAC promulgated the draft Regulations on the Administration of Cyber Data Security (Draft for Comments) (the “Draft CAC Regulation”), which has not yet become effective.
As the first systematic and comprehensive law specifically for the protection of personal information in the PRC, the Personal Information Protection Law provides, among others, that (1) an individual’s consent shall be obtained to use sensitive personal information, such as biometric characteristics and individual location tracking; (2) personal information operators using sensitive personal information shall notify individuals of the necessity of such use and the impact on the individual’s rights; and (3) where personal information operators reject an individual’s request to exercise his or her rights, the individual may file a lawsuit with a People’s Court.
Pursuant to the Notice of the SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment (“SAFE Circular No. 59”) which was promulgated on November 19, 2012, became effective on December 17, 2012 and was revised on May 4, 2015 and October 10, 2018, the approval is not required for the opening of an account entry in foreign exchange accounts under direct investment or for domestic transfer of the foreign exchange under direct investment. 92 SAFE Circular No. 59 also simplifies the capital verification and confirmation formalities for foreign invested enterprises, the foreign capital and foreign exchange registration formalities required for the foreign investors to acquire the equity interests and foreign exchange registration formalities required for the foreign investors to acquire the equity interests of Chinese party, and further improves the administration on exchange settlement of foreign exchange capital of foreign invested enterprises.
Pursuant to the Notice of the SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment (“SAFE Circular No. 59”) which was promulgated on November 19, 2012, became effective on December 17, 2012 and was revised on May 4, 2015 and October 10, 2018, the approval is not required for the opening of an account entry in foreign exchange accounts under direct investment or for domestic transfer of the foreign exchange under direct investment.
They generally spend an average of eight hours in our spaces during a typical working day, providing us with opportunities to offer services to help their career advancement and improve the quality of their personal lives.
They generally spend an average of eight hours in our spaces during a typical working day, providing us with opportunities to offer services to help their career advancement and improve the quality of their personal lives. As of December 31, 2024, approximately 4,485 of our individual members were using workstations.
Agile Office Space Services Member Base for Agile Office Space Services We provide agile office space services to enterprise and individual members on a regular or as-needed basis. 68 Enterprise Members Our unique and comprehensive network of agile office spaces covering economically vibrant regions, including all the tier-1 and new tier-1 cities in China, provides our enterprise members with flexible and cost-efficient office space solutions, particularly for their geographic expansion, helping them to rapidly achieve scale and enhance productivity.
Enterprise Members Our unique and comprehensive network of agile office spaces covering economically vibrant regions, including all the tier-1 and new tier-1 cities in China, provides our enterprise members with flexible and cost-efficient office space solutions, particularly for their geographic development, helping them to rapidly achieve scale and enhance productivity.
Our consolidated affiliated entity, Beijing U Bazaar, which is also our main on-line operating entity, has obtained a VATS License for the online data processing and transaction processing business (i.e., operating e-commerce business) and information service business (only for internet information services, except for information search and query services, information community platform services, information real-time interactive services, and information protection and processing services).
Our consolidated affiliated entity, Beijing U Bazaar, which is also our main on-line operating entity, has obtained a VATS License for the online data processing and transaction processing business (i.e., operating e-commerce business) and information service business (only for internet information services, except for information search and query services, information community platform services, information real-time interactive services, and information protection and processing services). 90 Regulations Relating to E-Commerce In January 2014, SAIC, the predecessor of SAMR, adopted the Administrative Measures for Online Trading (the “Online Trading Measures”).
The following table sets forth some of our operating metrics as of the dates indicated: As of December 31, 2021 As of December 31, 2022 As of December 31, 2023 Number of cities 65 75 53 Number of Spaces 273 207 95 Number of spaces under self-operated model (1) 108 77 26 Number of spaces under asset-light model 165 130 69 Managed area (m 2 ) (2) 865,150 743,060 466,330 Managed area under self-operated model 242,335 130,230 51,830 Managed area under asset-light model 622,815 612,830 414,500 Number of spaces in operation 220 174 79 Number of workstations of spaces in operation (2) 62,580 51,040 29,850 Number of members (2) 1,176,970 1,193,930 1,205,310 Number of individual members 1,141,780 1,156,350 1,166,170 Number of individual members using workstations 44,580 27,430 19,120 Number of enterprise members 35,180 37,580 39,130 Occupancy rate for all spaces in operation 70 % 51 % 62 % Occupancy rate for mature spaces 76 % 52 % 58 % Notes: (1) As spaces under U Studio category were small offices, we counted one or more small offices operated under U Studio category in one building as one space.
The following table sets forth some of our operating metrics as of the dates indicated: As of December 31, 2022 As of December 31, 2023 As of December 31, 2024 Number of cities 75 53 7 Number of spaces 207 95 13 Number of spaces under self-operated model (1) 77 26 4 Number of spaces under asset-light model 130 69 9 Managed area (m 2 ) (2) 743,060 466,330 46,370 Managed area under self-operated model 130,230 51,830 15,019 Managed area under asset-light model 612,830 414,500 31,351 Number of spaces in operation 174 79 12 Number of workstations of spaces in operation (2) 51,040 29,850 5,844 Number of members (2) 1,193,930 1,205,310 1,210,659 Number of individual members 1,156,350 1,166,170 1,170,837 Number of individual members using workstations 27,430 19,120 4,485 Number of enterprise members 37,580 39,130 39,822 Occupancy rate for all spaces in operation 51 % 62 % 73 % Occupancy rate for mature spaces 52 % 58 % 74 % 76 Notes: (1) As spaces under U Studio category were small offices, we counted one or more small offices operated under U Studio category in one building as one space.
Furthermore, MIIT’s Provisions on Protection of Personal Information of Telecommunications and Internet Users which was promulgated in July 2013 and became effective September 2013, contain detailed requirements on the use and collection of personal information as well as security measures required to be taken by telecommunications business operators and internet information service providers. 87 Pursuant to the Ninth Amendment to the Criminal Law issued by the SCNPC in August 2015 which became effective November 2015, any internet service provider that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders, shall be subject to criminal penalty for the result of: ● any dissemination of illegal information in large scale; ● any severe effect due to the leakage of the client’s information; ● any serious loss of criminal evidence; or ● other severe situation.
Pursuant to the Ninth Amendment to the Criminal Law issued by the SCNPC in August 2015 which became effective November 2015, any internet service provider that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders, shall be subject to criminal penalty for the result of: ● any dissemination of illegal information in large scale; ● any severe effect due to the leakage of the client’s information; ● any serious loss of criminal evidence; or ● other severe situation.
Beyond physical spaces, we have built a technology-driven platform consisting of U Bazaar, a smart office system, IoT solutions and a data management system, Udata, to foster a vibrant Ucommune community by offering U Plus services to satisfy member needs.
Beyond physical spaces, we have built a technology-driven platform consisting of U Bazaar, a smart office system, IoT solutions and a data management system, Udata, to foster a vibrant Ucommune community by offering U Plus services to satisfy member needs. We launched our first space in September 2015, and owned our operations in seven cities as of December 31, 2024.
We consider our insurance coverage to be sufficient for our business operations in China. Regulation This section sets forth a summary of the most significant rules and regulations that affect our business activities in China.
Regulation This section sets forth a summary of the most significant rules and regulations that affect our business activities in China.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Workspace Membership. The following table sets forth a breakdown of the cost of revenue (excluding impairment loss) for workspace membership, in absolute amounts and as percentage of total cost of revenue (excluding impairment loss) for workspace membership, for period indicated.
The following table sets forth a breakdown of the cost of revenue (excluding impairment loss) for workspace membership, in absolute amounts and as percentage of total cost of revenue (excluding impairment loss) for workspace membership, for period indicated.
(Loss)/Gain on Disposal of Subsidiaries Our (loss)/gain on disposal of subsidiaries was generated from the disposal of several subsidiaries. Taxation Cayman Islands Ucommune International Ltd and Ucommune Group Holdings are incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, we are not subject to income, corporate or capital gains tax in the Cayman Islands.
Gain/(Loss) on Disposal of Subsidiaries Our gain/(loss) on disposal of subsidiaries was generated from the disposal of several subsidiaries. Taxation Cayman Islands Ucommune International Ltd and Ucommune Group Holdings are incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, we are not subject to income, corporate or capital gains tax in the Cayman Islands.
Risk Factors — Risks Relating to Doing Business in China — If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable PRC tax consequences to us and our non-PRC shareholders.” 107 Results of Operations The following table summarizes our consolidated results of operations both in absolute amounts and as percentages of our total net revenue for the periods presented.
Risk Factors — Risks Relating to Doing Business in China — If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable PRC tax consequences to us and our non-PRC shareholders.” Results of Operations The following table summarizes our consolidated results of operations both in absolute amounts and as percentages of our total net revenue for the periods presented.
Key Information — D. Risk Factors — Risks Relating to Doing Business in China — If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable PRC tax consequences to us and our non-PRC shareholders.” The following table presents our selected consolidated cash flow data for the periods indicated.
Key Information — D. Risk Factors — Risks Relating to Doing Business in China — If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable PRC tax consequences to us and our non-PRC shareholders.” 118 The following table presents our selected consolidated cash flow data for the periods indicated.
Critical Accounting Policies and Estimates We prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances.
E. Critical Accounting Policies and Estimates We prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances.
If we cannot obtain sufficient capital on acceptable terms, our business, financial condition and prospects may suffer.” 117 As a holding company with no material operations of its own, the Parent operates its businesses in the PRC through our PRC subsidiaries and the consolidated VIEs in China.
If we cannot obtain sufficient capital on acceptable terms, our business, financial condition and prospects may suffer.” As a holding company with no material operations of its own, the Parent operates its businesses in the PRC through our PRC subsidiaries and the consolidated VIEs in China.
In 2023, although the restrictions related to the COVID-19 have been lifted, its influence over the economy continued to impact our financial position, results of operations and cash flows. These conditions raise substantial doubt about our ability to continue as a going concern.
In 2023 and 2024, although the restrictions related to the COVID-19 have been lifted, its influence over the economy continued to impact our financial position, results of operations and cash flows. These conditions raise substantial doubt about our ability to continue as a going concern.
Risk Factors — Risks Relating to Doing Business in China — PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of securities offerings, to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.” As a result, there is uncertainty with respect to our ability to provide prompt financial support to our PRC subsidiaries and consolidated VIEs when needed.
Risk Factors — Risks Relating to Doing Business in China — PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of securities offerings, to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and develop our business.” As a result, there is uncertainty with respect to our ability to provide prompt financial support to our PRC subsidiaries and consolidated VIEs when needed.
Risk Factors — Risks Relating to Doing Business in China — PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of securities offerings, to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business” and “Item 14.
Risk Factors — Risks Relating to Doing Business in China — PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of securities offerings, to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and develop our business” and “Item 14.
In addition, our payment of dividends, if any, is not subject to withholding tax in the Cayman Islands. 105 British Virgin Islands Ucommune International Limited, our subsidiary incorporated in the British Virgin Islands, is not subject to income tax in the British Virgin Islands.
In addition, our payment of dividends, if any, is not subject to withholding tax in the Cayman Islands. British Virgin Islands Ucommune International Limited, our subsidiary incorporated in the British Virgin Islands, is not subject to income tax in the British Virgin Islands.
Since the launch of our first agile office space in September 2015, we have expanded our operations across 35 cities primarily through our self-operating model. We derive substantially all of our net revenue from operations within Greater China. We have developed an asset-light model by providing landlords with our design and build and operation capabilities.
Since the launch of our first agile office space in September 2015, we have owned our operations across 35 cities primarily through our self-operating model. We derive substantially all of our net revenue from operations within Greater China. We have developed an asset-light model by providing landlords with our design and build and operation capabilities.
We intend to fund our future capital expenditures with our existing cash balance and proceeds from securities offerings. 119 Holding Company Structure Ucommune International Ltd, the Parent, is our ultimate Cayman Islands holding company with no material operations of its own. The Parent operates its business through our subsidiaries and the consolidated VIEs.
We intend to fund our future capital expenditures with our existing cash balance and proceeds from securities offerings. 120 Holding Company Structure Ucommune International Ltd, the Parent, is our ultimate Cayman Islands holding company with no material operations of its own. The Parent operates its business through our subsidiaries and the consolidated VIEs.
Key Components of Results of Operations We have three operating segments including (1) workspace membership, (2) marketing and branding services, and (3) other services. Operating segments are defined as components of an enterprise engaging in business activities for which separate financial information is available.
Key Components of Results of Operations for our Continuing Operations We have three operating segments including (1) workspace membership, (2) marketing and branding services, and (3) other services. Operating segments are defined as components of an enterprise engaging in business activities for which separate financial information is available.
Key Information — Implications of Being a Company with the Holding Company Structure and the VIE Structures — Financial Statement Information Related to the VIE Structures.” 120 We are subject to restrictions on foreign exchange and our ability to transfer cash between entities, across borders, and to U.S. investors.
Key Information — Implications of Being a Company with the Holding Company Structure and the VIE Structures — Financial Statement Information Related to the VIE Structures.” 121 We are subject to restrictions on foreign exchange and our ability to transfer cash between entities, across borders, and to U.S. investors.
We plan to utilize our management team’s expertise in developing and operating commercial properties and our strong relationships with landlords to identify new locations suitable for the expansion of our business and to negotiate leasing terms of such properties to effectively manage our costs and expenses.
We plan to utilize our management team’s expertise in developing and operating commercial properties and our strong relationships with landlords to identify new locations suitable for the development of our business and to negotiate leasing terms of such properties to effectively manage our costs and expenses.
Adjusted EBITDA represents net loss before (1) interest expense/(income), net, other expense/(income), net, provision for income taxes, gain on disposal of long-term investments and loss/(gain) on disposal of subsidiaries and (2) certain non-cash expenses, consisting of share-based compensation expense, impairment loss on long-term investments, impairment loss on long-lived assets and long-term prepaid expenses, impairment loss on goodwill, depreciation of property and equipment, amortization of intangible assets, change in fair value of warrant liability and change in fair value of put option liability, which we do not believe are reflective of our core operating performance during the periods presented.
Adjusted EBITDA represents net loss before (1) interest expense/(income), net, other expense/(income), net, provision for income taxes, gain on disposal of long-term investments and loss/(gain) on disposal of subsidiaries and (2) certain non-cash expenses, consisting of share-based compensation expense, impairment loss on long-term investments, impairment loss on long-lived assets and long-term prepaid expenses, impairment loss on goodwill, depreciation of property and equipment, amortization of intangible assets, change in fair value of warrant liability and change in fair value of put option liability, which we do not believe are reflective of our core operating performance during the periods presented. 115 Adjusted net loss from continuing operations represents net loss before share-based compensation expense, impairment loss on long-lived assets and long-term prepaid expenses, impairment loss on goodwill, impairment loss on long-term investments, change in fair value of warrant liability, change in fair value of put option liability, gain on disposal of long-term investments and loss/(gain) on disposal of subsidiaries.
Acquisition Activities to Expand Our Offerings We have made acquisitions or investments that we believe will expand our agile office space network and service offerings that benefit our members and have the potential to become meaningful revenue streams in the future.
Acquisition Activities to Develop Our Offerings We have made acquisitions or investments that we believe will develop our agile office space network and service offerings that benefit our members and have the potential to become meaningful revenue streams in the future.
If we are unable to grow the business to achieve economies of scale in the future, it will become even more difficult for us to sustain a sufficient source of cash to cover our operating costs.
If we are unable to develop the business to achieve economies of scale in the future, it will become even more difficult for us to sustain a sufficient source of cash to cover our operating costs.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2023 to December 31, 2023 that are reasonably likely to have a material effect on our net revenue, income, profitability, liquidity or capital resources, or that would cause the reported financial information not necessarily to be indicative of future operating results or financial conditions. 121 E.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2024 to December 31, 2024 that are reasonably likely to have a material effect on our net revenue, income, profitability, liquidity or capital resources, or that would cause the reported financial information not necessarily to be indicative of future operating results or financial conditions.
No provision for Hong Kong profits tax has been made in the consolidated financial statements as it had no assessable profit for 2021, 2022 and 2023. Singapore Ucommune Singapore Pte. Ltd. and Ucommune Technology Pte. Ltd, our subsidiaries incorporated in Singapore, are subject to Singapore corporate income taxes at the rate of 17% for 2021, 2022 and 2023.
No provision for Hong Kong profits tax has been made in the consolidated financial statements as it had no assessable profit for 2022, 2023 and 2024. 109 Singapore Ucommune Singapore Pte. Ltd. and Ucommune Technology Pte. Ltd, our subsidiaries incorporated in Singapore, are subject to Singapore corporate income taxes at the rate of 17% for 2022, 2023 and 2024.
In light of the foregoing limitations, you should not consider EBITDA, adjusted EBITDA and adjusted net loss as substitutes for, or superior to, net loss prepared in accordance with U.S. GAAP. We encourage investors and others to review its financial information in its entirety and not rely on any single financial measure.
In light of the foregoing limitations, you should not consider EBITDA, adjusted EBITDA and adjusted net loss from continuing operations as substitutes for, or superior to, net loss prepared in accordance with U.S. GAAP. We encourage investors and others to review its financial information in its entirety and not rely on any single financial measure.
However, we have not yet achieved a business scale that is able to generate a sufficient level of revenues to achieve net profit and positive cash flows from operating activities, and we expect the operating losses and negative cash flows from operations will continue for the foreseeable future.
However, we have not yet achieved a business scale that is able to generate a sufficient level of revenues to achieve stable net profit and positive cash flows from operating activities, and we expect the operating losses will continue for the foreseeable future.
Development of U Plus Services We derive revenue from U Plus services in cooperation with our business partners and investees. As of December 31, 2023, we had over 700 business partners.
Development of U Plus Services We derive revenue from U Plus services in cooperation with our business partners and investees. As of December 31, 2024, we had over 700 business partners.
In addition, our workspace membership services revenues decreased in 2022 and 2023, partially due to decreased overall occupancy rate from 70% as of December 31, 2021 to 51% as of December 31, 2022 and closures of unprofitable spaces primarily caused by the COVID-19 outbreak.
In addition, our workspace membership services revenues decreased in 2023, partially due to decreased overall occupancy rate from 51% as of December 31, 2022 to 62% as of December 31, 2023 and closures of unprofitable spaces primarily caused by the COVID-19 outbreak.
Our critical accounting policies and practices include the following: (1) impairment of right-of-use assets and other long-lived assets; (2) lease; (3) revenue recognition; and (4) long-term investments. See Note 2 — Significant Accounting Policies to our consolidated financial statements for the disclosure of these accounting policies.
Our critical accounting policies and practices include the following: (1) impairment of right-of-use assets and other long-lived assets; (2) lease; and (3) revenue recognition. See Note 2 — Significant Accounting Policies to our consolidated financial statements for the disclosure of these accounting policies.
See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business and Industry — We require significant capital to fund our operations and growth.
See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business and Industry — We require significant capital to fund our operations and development.
As EBITDA, adjusted EBITDA and adjusted net loss have material limitations as analytical metrics and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies.
As EBITDA, adjusted EBITDA and adjusted net loss from continuing operations have material limitations as analytical metrics and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies.
In the event that financing sources are not available, or that we are unsuccessful in increasing our gross profit margin, pushing collection of long term receivables and reducing operating losses, we may be unable to implement our current plans for expansion, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on our business, financial condition and results of operations and would materially and adversely affect our ability to continue as a going concern.
In the event that financing sources are not available, or that we are unsuccessful in increasing our gross profit margin and reducing operating losses, we may be unable to implement our current plans for development, repay debt obligations or respond to competitive pressures, any of which would have a material adverse effect on our business, financial condition and results of operations and would materially and adversely affect our ability to continue as a going concern.
Business Overview — Technology” and “— Intellectual Property.” D.
Business Overview — Technology” and “— Intellectual Property.” 122 D.
Impairment Loss on Goodwill Our impairment loss on goodwill was recognized whenever the carrying amount of a reporting unit exceeds its fair value. Sales and Marketing Expenses Our sales and marketing expenses consist primarily of (1) marketing and promotion expenses, (2) compensation for our sales and marketing personnel and (3) share-based compensation expense.
Impairment Loss on Goodwill Our impairment loss on goodwill was recognized whenever the carrying amount of a reporting unit exceeds its fair value. Sales and Marketing Expenses Our sales and marketing expenses consist primarily of (1) marketing and promotion expenses and (2) compensation for our sales and marketing personnel.
We also plan to raise additional capital, including among others, obtaining debt and equity financing, to support our future operation. We continue to explore opportunities to grow our business.
We also plan to raise additional capital, including among others, obtaining debt and equity financing, to support our future operation. 117 We continue to explore opportunities to develop our business.
As of the date of this annual report, Ucommune HK has provided a total of US$51.9 million in loans to Ucommune Venture, of which US$8.2 million have been repaid, under such loan agreements since the completion of our Business Combination in November 2020, using proceeds from the Parent’s previous PIPE financing and follow-on offerings.
As of the date of this annual report, Ucommune HK has provided a total of US$41.7 million in loans to Ucommune Venture, of which US$8.3 million have been repaid, under such loan agreements since the completion of our Business Combination in November 2020, using proceeds from the Parent’s previous PIPE financing and follow-on offerings.
Among which, estimates used for (1) impairment of right-of-use assets and other long-lived assets, (2) revenue recognition, and (3) long-term investments, require management to make difficult, subjective and complex judgments that often as a result of the need to make estimate on matters that are inherently uncertain and which is likely that materially different amounts would be reported under different conditions or assumptions.
Among which, estimates used for impairment of right-of-use assets and other long-lived assets, require management to make difficult, subjective and complex judgments that often as a result of the need to make estimate on matters that are inherently uncertain and which is likely that materially different amounts would be reported under different conditions or assumptions.
PRC Effective from January 1, 2008, a new Enterprise Income Tax Law (the “PRC EIT Law”), combined the previous income tax laws for foreign invested and domestic invested enterprises in the PRC by the adoption of a unified tax rate of 25% for most enterprises with the following exceptions.
PRC Effective from January 1, 2008, a new Enterprise Income Tax Law (the “PRC EIT Law”), and was last amended on December 29, 2018, combined the previous income tax laws for foreign invested and domestic invested enterprises in the PRC by the adoption of a unified tax rate of 25% for most enterprises with the following exceptions.
Net cash used in financing activities in 2022 was RMB14.9 million, primarily attributable to loan repayment to third parties of RMB67.5 million, partially offset by (i) loans received from third parties of RMB21.9 million, (ii) proceeds of RMB17.7 million from the financing in connection with the Parent’s issuance of convertible bond in January 2022, and (iii) loans received from related parties of RMB12.0 million.
Net cash used in financing activities from continuing operations in 2022 was RMB15.8 million, primarily attributable to loan repayment to third parties of RMB61.2 million, partially offset by (i) proceeds of RMB17.7 million from the financing in connection with the Parent’s issuance of convertible bond in January 2022, (ii) loans received from third parties of RMB14.8 million, and (iii) loans received from related parties of RMB12.0 million.
Investing Activities Net cash provided by investing activities in 2023 was RMB16.7 million (US$2.4 million), primarily attributable to (1) redemption of short-term investments of RMB94.1 million (US$13.3 million), (2) proceeds from settlement of non-current assets of RMB35.0 million (US$4.9 million), and (3) proceeds from disposal of long-term investment of RMB6.4 million (US$0.9 million), partially offset by (i) purchase of short-term investments of RMB103.6 million (US$14.6 million) and (ii) purchase of property, plant and equipment of RMB13.5 million (US$1.9 million).
Net cash provided by investing activities from continuing operations in 2023 was RMB16.9 million, primarily attributable to (1) redemption of short-term investments of RMB90.5 million, (2) proceeds from settlement of non-current assets of RMB35.0 million, and (3) proceeds from disposal of long-term investment of RMB6.4 million, partially offset by (i) purchase of short-term investments of RMB99.8 million and (ii) purchase of property, plant and equipment of RMB13.5 million.
The number of individual members using workstations decreased from approximately 44,580 as of December 31, 2021 to approximately 27,430 as of December 31, 2022, and further to approximately 19,120 as of December 31, 2023.
The number of individual members using workstations decreased from approximately 27,430 as of December 31, 2022 to approximately 19,120 as of December 31, 2023, and further to approximately 4,485 as of December 31, 2024.
Change in Fair Value of Warrant Liability We had a change in fair value of warrant liability of RMB9.1 million (US$1.3 million) in 2023 as compared to RMB9.1 million in 2022, primarily attributable to the fair value change of warrants issued in a private placement on January 26, 2022.
Change in Fair Value of Warrant Liability We had a gain in change in fair value of warrant liability of RMB4.9 million (US$0.7 million) in 2024 as compared to RMB9.1 million in 2023, primarily attributable to the fair value decrease of warrants issued in a private placement on January 26, 2022.
Net cash provided by investing activities in 2022 was RMB28.6 million, primarily attributable to (1) redemption of short-term investments of RMB234.1 million, (2) cash collection from trust account of RMB19.3 million, (3) cash collection from disposal of property, plant and equipment of RMB7.0 million, and (4) loan collection from third parties of RMB5.0 million, partially offset by (i) purchase of short-term investments of RMB215.4 million and (ii) purchase of property, plant and equipment of RMB20.3 million.
Net cash provided by investing activities from continuing operations in 2022 was RMB35.9 million, primarily attributable to (1) redemption of short-term investments of RMB227.9 million, (2) cash collection from trust account of RMB19.3 million, (3) cash collection from disposal of property, plant and equipment of RMB7.0 million, and (4) loan collection from third parties of RMB5.0 million, partially offset by (i) purchase of short-term investments of RMB209.2 million and (ii) purchase of property, plant and equipment of RMB13.0 million.
See “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Business and Industry — Our expansion into new regions, markets and business areas may pose increased risks.” However, we believe that we can improve the performance of our spaces in operation leveraging on our management capabilities and our experience of expanding into new markets.
Risk Factors — Risks Relating to Our Business and Industry — Our development into new regions, markets and business areas may pose increased risks.” However, we believe that we can improve the performance of our spaces in operation leveraging on our management capabilities and our experience of developing into new markets.
Capital Expenditures Our capital expenditures are incurred primarily in connection with purchase of property and equipment and purchase of intangible assets. Our capital expenditures were RMB42.8 million, RMB20.3 million and RMB13.5 million (US$1.9 million) for 2021, 2022 and 2023, respectively. We have no significant outstanding commitments for capital expenditures as of December 31, 2023.
Capital Expenditures Our capital expenditures are incurred primarily in connection with purchase of property and equipment and purchase of intangible assets. Our capital expenditures were RMB13.0 million, RMB13.5 million and RMB4.9 million (US$0.7 million) for 2022, 2023 and 2024, respectively. We have no significant outstanding commitments for capital expenditures as of December 31, 2024.
As of December 31, 2021, 2022 and 2023, we had RMB165.8 million, RMB53.2 million, RMB54.3 million (US$7.6 million), respectively, in cash and cash equivalents. Our cash and cash equivalents consist primarily of cash at bank and on hand and are primarily denominated in Renminbi, US dollars and Hong Kong dollars. Historically, we have not been profitable.
As of December 31, 2022, 2023 and 2024, we had RMB53.2 million, RMB52.4 million, and RMB90.4 million (US$12.4 million), respectively, in cash and cash equivalents. Our cash and cash equivalents consist primarily of cash at bank and on hand and are primarily denominated in Renminbi, US dollars and Hong Kong dollars. Historically, we have not been profitable.
We believe that EBITDA, adjusted EBITDA and adjusted net loss help understand and evaluate our core operating performance. 114 EBITDA, adjusted EBITDA and adjusted net loss are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP.
EBITDA, adjusted EBITDA and adjusted net loss from continuing operations are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP.
Our general and administrative expenses accounted for 16.4% and 22.0% of our total net revenue in 2022 and 2023, respectively. The increase in general and administrative expenses as a percentage of total net revenue is mainly due to decreased revenue scale.
Our general and administrative expenses accounted for 21.8% and 29.8% of our total net revenue in 2023 and 2024, respectively. The increase in general and administrative expenses as a percentage of total net revenue is mainly due to decreased revenue scale.
Our sales and marketing expenses accounted for 4.1% and 3.0% of our total net revenue in 2022 and 2023, respectively.
Our sales and marketing expenses accounted for 3.5% and 2.4% of our total net revenue in 2023 and 2024, respectively.
In 2021, 2022 and 2023, we generated operating profit from the subsidiary that operates agile office spaces under our asset-light model. We intend to focus on expanding our asset-light business as one of our major growth drivers.
In 2022, 2023 and 2024, we generated operating profit from the subsidiary that operates agile office spaces under our asset-light model. We intend to focus on developing our asset-light business.
Net Revenue The following table sets forth a breakdown of our net revenue, in absolute amounts and as percentages of total net revenue, for the periods indicated.
Cost of Revenue (Excluding Impairment Loss) The following table sets forth a breakdown of our cost of revenue (excluding impairment loss) from continuing operations, in absolute amounts and as percentages of total cost of revenue (excluding impairment loss) from continuing operations, for the periods indicated.
Cost of revenue from our asset-light model decreased by 30.6% to RMB47.3 million (US$6.7 million) in 2023 from RMB68.1 million in 2022, which was in line with the decrease in revenues from our asset-light model.
Cost of revenue from our asset-light model decreased by 29.3% to RMB33.4 million (US$4.6 million) in 2024 from RMB47.3 million in 2023, which was in line with the decrease in revenues from our asset-light model businesses.
Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements (“SAT Circular 81”), a Hong Kong resident enterprise must meet the following conditions, among others, in order to apply for the reduced withholding tax rate: (1) it must be a company; (2) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (3) it must have directly owned such required percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends.
Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, the withholding tax rate in respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10% if the Hong Kong enterprise directly holds at least 25% of the PRC enterprise. 110 Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements (“SAT Circular 81”), a Hong Kong resident enterprise must meet the following conditions, among others, in order to apply for the reduced withholding tax rate: (1) it must be a company; (2) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (3) it must have directly owned such required percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends.
Financing Activities Net cash used in financing activities in 2023 was RMB30.8 million (US$4.3 million), primarily attributable to (1) loan repayment to third parties of RMB18.2 million (US$2.6 million), (2) loan repayment to a related party of RMB12.0 million (US$1.7 million), and (3) redemption of convertible bond of RMB5.5 million (US$0.8 million), partially offset by loans received from third parties of RMB4.9 million (US$0.7 million).
Net cash used in financing activities from continuing operations in 2023 was RMB23.2 million, primarily attributable to (1) loan repayment to a related party of RMB12.0 million, (2) loan repayment to third parties of RMB7.3 million, and (3) redemption of convertible bond of RMB5.5 million, partially offset by loans received from third parties of RMB1.5million.
In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information — D. Risk Factors” in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties. A. Operating Results Overview Our brand is one of the most recognized agile office space brands in China.
In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information — D. Risk Factors” in this annual report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.
Our cost of revenue (excluding impairment loss) for workspace membership accounted for 51.3% and 30.8% of our total net revenue in 2022 and 2023, respectively.
Our cost of revenue (excluding impairment loss) for workspace membership accounted for 36.3% and 42.4% of our total net revenue in 2023 and 2024, respectively.
For example, in 2021, we acquired a company engaging in interior design and construction services and a company engaging in catering services. We intend to continue selectively pursuing strategic partnerships and acquisitions, which could include investments in private or public entities, strategic alliances, or securities offerings through our parent company or subsidiaries, to expand our Ucommune community.
We intend to continue selectively pursuing strategic partnerships and acquisitions, which could include investments in private or public entities, strategic alliances, or securities offerings through our parent company or subsidiaries, to develop our Ucommune community.
Workspace Membership Services Revenues Our workspace membership services revenues decreased by 52.0% to RMB124.1 million (US$17.5 million) in 2023 from RMB258.8 million in 2022, primarily due to (1) the closure of 37 unprofitable self-operated spaces which were in operation throughout 2022, considering our transformation plan and the COVID-19 impact, the revenue contribution of which was RMB63.1 million (US$8.8 million) in 2022, (2) the closure and disposal of 53 unprofitable self-operated spaces in operation under U Space and U Design category in 2023, resulting in a decrease of RMB38.2 million (US$5.3 million) in revenue as compared to 2022, and (3) a decrease in revenue generated from U Partner category under our asset-light model of RMB20.7 million (US$2.9 million) as a result of decreased number of spaces.
Workspace Membership Services Revenues Our workspace membership services revenues decreased by 44.8% to RMB68.6 million (US$9.4 million) in 2024 from RMB124.1 million in 2023, primarily due to (1) the closure of 53 unprofitable self-operated spaces which were in operation throughout 2023, the revenue contribution of which was RMB29.9 million (US$4.1 million) in 2023, (2) the closure and disposal of unprofitable self-operated spaces in operation under U Space and U Design category in 2024, resulting in a decrease of RMB12.9 million (US$1.8 million) in revenue as compared to 2023, and (3) a decrease in revenue generated from U Partner category under our asset-light model of RMB10.4 million (US$1.4 million) as a result of decreased number of spaces.
The difference between net loss of RMB22.6 million (US$3.2 million) and the net cash provided by operating activities was mainly due to (1) a decrease in accounts receivable of RMB94.9 million (US$13.4 million), (2) amortization of right-of-use assets of RMB62.7 million (US$8.8 million), (3) loss on disposal of creditor’s right of long-term prepaid expense of RMB46.9 million (US$6.6 million), and (4) impairment loss of long-lived assets of RMB29.1 million (US$4.1 million), partially offset by (i) gain on disposal of subsidiaries of RMB112.8 million (US$15.9 million), (ii) a decrease in lease liabilities of RMB38.4 million (US$5.4 million), (iii) gain from termination of right-of-use assets of RMB30.4 million (US$4.3 million), and (iv) an increase in amounts due from related parties of RMB29.0 million (US$4.1 million).
The difference between net loss from continuing operations of RMB7.5 million and the net cash provided by operating activities from continuing operations was mainly due to (1) a decrease in accounts receivable of RMB111.2 million, (2) amortization of right-of-use assets of RMB62.4 million, (3) loss on disposal of creditor’s right of long-term prepaid expense of RMB46.9 million, (4) impairment loss of long-lived assets of RMB29.1 million, (5) share-based compensation of RMB25.7 million, (6) impairment loss of long-term investment of RMB25.6 million, and (7) a decrease in long-term prepaid expenses of RMB25.3 million, partially offset by (i) gain on disposal of subsidiaries of RMB112.8 million, (ii) a decrease in accounts payable of RMB40.2 million, (iii) a decrease in lease liabilities of RMB37.9 million, (iv) a decrease in accrued expenses and other current liabilities of RMB32.0 million, (v) an increase in amounts due from related parties of RMB30.6 million, (vi) gain from termination of right-of-use assets of RMB30.4 million, and (vii) a decrease in amount due to related parties of RMB25.3 million. 119 Net cash used in operating activities from continuing operations in 2022 was RMB182.4 million.
For the Year Ended December 31, 2021 2022 2023 RMB % RMB % RMB US$ % (in thousands, except for percentages) Cost of revenue (excluding impairment loss) for workspace membership Lease expenses 260,318 51.2 167,369 49.4 60,464 8,516 42.7 Employee compensation and benefits 75,853 14.9 35,643 10.5 14,648 2,063 10.4 Depreciation and amortization 67,653 13.3 49,001 14.5 11,116 1,566 7.9 Other workspace operating costs 104,297 20.6 87,075 25.6 55,234 7,780 39.0 Total cost of revenue (excluding impairment loss) for workspace membership 508,121 100.0 339,088 100.0 141,462 19,925 100.0 Cost of revenue (excluding impairment loss) for workspace membership primarily consists of (1) lease expenses, (2) employee compensation and benefits, (3) depreciation and amortization expenses, and (4) other workspace operating costs, such as costs for daily maintenance and cleaning, and insurance costs.
For the Year Ended December 31, 2022 2023 2024 RMB % RMB % RMB US$ % (in thousands, except for percentages) Cost of revenue (excluding impairment loss) for workspace membership Lease expenses 167,369 49.4 60,464 42.7 35,065 4,804 47.3 Employee compensation and benefits 35,643 10.5 14,648 10.4 5,418 742 7.3 Depreciation and amortization 49,001 14.5 11,116 7.9 9,082 1,244 12.3 Other workspace operating costs 87,075 25.6 55,234 39.0 24,500 3,357 33.1 Total cost of revenue (excluding impairment loss) for workspace membership 339,088 100.0 141,462 100.0 74,065 10,147 100.0 Cost of revenue (excluding impairment loss) for workspace membership primarily consists of (1) lease expenses, (2) employee compensation and benefits, (3) depreciation and amortization expenses, and (4) other workspace operating costs, such as costs for daily maintenance and cleaning, and insurance costs.
Risk Factors — Risks Relating to Doing Business in China — Regulation and censorship of information disseminated over the internet in China may adversely affect our business and reputation and subject us to liability for information displayed on our website.” Our results of operations and financial condition also depend on a number of company-specific factors, including the factors discussed below.
Risk Factors — Risks Relating to Doing Business in China — Regulation and censorship of information disseminated over the internet in China may adversely affect our business and reputation and subject us to liability for information displayed on our website.” The COVID-19 outbreak has materially and adversely affected our financial condition and results of operation.
As of December 31, 2023, we had cash and cash equivalents of RMB54.3 million (US$7.6 million), and negative working capital of RMB137.5 million (US$19.4 million). The COVID-19 pandemic negatively impacted our business operations for the years ended December 31, 2021 and 2022.
As of December 31, 2024, we had cash and cash equivalents of RMB90.4 million (US$12.4 million), and negative working capital of RMB2.0 million (US$0.3 million). The COVID-19 pandemic negatively impacted our business operations for the year ended December 31, 2022.
Marketing and Branding Services Our costs of marketing and branding services decreased by 23.2% to RMB223.9 million (US$31.5 million) in 2023 from RMB291.6 million in 2022, primarily due to decreased advertising costs of RMB64.7 million (US$9.1 million), which was in line with the decrease in advertising revenue.
Marketing and Branding Services Our costs of marketing and branding services decreased by 57.3% to RMB95.5 million (US$13.1 million) in 2024 from RMB223.9 million in 2023, primarily due to decreased advertising costs of RMB124.9 million (US$17.1 million), which was in line with the decrease in advertising revenue.
Revenues from our asset-light model decreased by 32.2% to RMB50.3 million (US$7.1 million) in 2023 from RMB74.1 million in 2022.
Revenues from our asset-light model decreased by 30.2% to RMB35.1 million (US$4.8 million) in 2024 from RMB50.3 million in 2023.
Workspace Membership Our costs of workspace membership decreased by 58.3% to RMB141.5 million (US$19.9 million) in 2023 from RMB339.1 million in 2022, primarily due to a decrease in operating costs related to leases and staff along with the closure of unprofitable self-operated spaces in 2023, as well as a decrease in employee compensation and benefits (including share-based compensation) of RMB11.5 million (US$1.6 million).
Workspace Membership Our costs of workspace membership decreased by 47.6% to RMB74.1 million (US$10.1 million) in 2024 from RMB141.5 million in 2023, primarily due to a decrease in operating costs related to leases and staff along with the closure of unprofitable self-operated spaces in 2024.
We also generate revenue from our business partners and investees through different arrangements, including (1) revenue sharing arrangements under which we share part of the revenue of our business partners as fees, and (2) fixed fee arrangements under which we charge our business partners and investees fixed fees for leasing our spaces to provide services. 100 Key Factors Affecting Our Results of Operations We operate in China’s agile office space industry, and our results of operations and financial condition are influenced by the macroeconomic factors affecting this industry.
We also generate revenue from our business partners and investees through different arrangements, including (1) revenue sharing arrangements under which we share part of the revenue of our business partners as fees, and (2) fixed fee arrangements under which we charge our business partners and investees fixed fees for leasing our spaces to provide services.
Growth in Our Member Base and Pricing of Our Agile Office Space Services We generate an important portion of our net revenue from providing various agile office space solutions to our members from whom we collect monthly rent in the form of membership service fees in accordance with membership service contracts or office workstation rental fees in accordance with office workstation rental contracts.
We expect our costs and expenses to increase in absolute amount as we develop our business and to decrease a percentage of our net revenue as we improve operational efficiency, achieve economies of scale and enhance our brand recognition. 105 Our Member Base and Pricing of Our Agile Office Space Services We generate an important portion of our net revenue from providing various agile office space solutions to our members from whom we collect monthly rent in the form of membership service fees in accordance with membership service contracts or office workstation rental fees in accordance with office workstation rental contracts.
Risk Factors — Risks Relating to Our Business and Industry — We face risks related to natural disasters, extreme weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt our operations.” Our financial condition and results of operations are also affected by a number of emerging market trends, such as companies’ rising needs for cost-efficient and flexible office space solutions and one-stop services for both corporates and employees, and new demand for intelligent office systems and working environments.
Our financial condition and results of operations are also affected by a number of emerging market trends, such as companies’ rising needs for cost-efficient and flexible office space solutions and one-stop services for both corporates and employees, and new demand for intelligent office systems and working environments.
As our business grows, we have opportunities to provide more services and build a vibrant community serving wider group of members beyond the physical spaces. 102 The growth of our net revenue from U Plus services depends on our own capabilities, including through acquisitions or strategic investments, or through selected quality business partners to provide services that match the needs of our members at reasonable prices.
The development of our net revenue from U Plus services depends on our own capabilities, including through acquisitions or strategic investments, or through selected quality business partners to provide services that match the needs of our members at reasonable prices.
The difference between net loss of RMB322.5 million and the net cash used by operating activities was mainly due to (1) amortization of right-of-use assets of RMB140.1 million, (2) impairment loss of long-lived assets and long-term prepaid expenses of RMB111.3 million primarily associated with right-of-use of our spaces and other non-current assets, (3) an increase in accrued expenses and other current liabilities of RMB43.5 million, (4) impairment loss on goodwill of RMB43.0 million, and (5) depreciation of property and equipment of RMB42.6 million, partially offset by (i) a decrease in lease liabilities of RMB86.0 million, (ii) an increase in accounts receivable of RMB80.5 million, and (iii) an increase in prepaid expenses and other current assets of RMB49.1 million. 118 Net cash used in operating activities in 2021 was RMB199.1 million.
The difference between net loss from continuing operations of RMB295.1 million and the net cash used in operating activities from continuing operations was mainly due to (1) amortization of right-of-use assets of RMB140.1 million, (2) impairment loss of long-lived assets and long-term prepaid expenses of RMB111.3 million primarily associated with right-of-use of our spaces and other non-current assets, (3) depreciation of property and equipment of RMB42.4 million, (4) an increase in accrued expenses and other current liabilities of RMB35.3 million, (5) a decrease in amount due from related parties of RMB31.7 million, (6) an increase in amount due to related parties of RMB18.3 million, (7) impairment loss on goodwill of RMB17.0 million, and (8) interest expense of RMB15.9 million, partially offset by (i) a decrease in lease liabilities of RMB86.0 million, (ii) an increase in accounts receivable of RMB75.0 million, (iii) an increase in prepaid expenses and other current assets of RMB52.9 million, (iv) a decrease in deferred workspace membership fee of RMB27.6 million, (v) gain from termination of right-of-use assets of RMB27.3 million, (vi) gain on disposal of subsidiaries of RMB23.0 million, and (vii) a decrease in accounts payable of RMB20.2 million.
Subsidy Income Our subsidy income was subsidies granted by local governments to support the development and operation of agile office spaces. Our subsidy income was RMB8.6 million (US$1.2 million) in 2023, as compared to RMB6.3 million in 2022.
Interest (Expense)/Income, Net Our interest expense, net was RMB1.3 million (US$0.2 million) in 2024, as compared to interest income of RMB1.7 million in 2023, primarily attributable to interest expense of loan received from third parties. Subsidy Income Our subsidy income was subsidies granted by local governments to support the development and operation of agile office spaces.
We regularly monitor our current and expected liquidity requirements to help ensure that we maintain sufficient cash balances to meet our existing and reasonably likely long-term liquidity needs.
We are seeking to develop our asset-light model, under which we can reduce upfront capital investments for opening new spaces. We regularly monitor our current and expected liquidity requirements to help ensure that we maintain sufficient cash balances to meet our existing and reasonably likely long-term liquidity needs.
Other services net revenue primarily consists of (1) interior design and construction net revenue generated from companies we acquired, (2) management fees generated from our agile office spaces under U Brand, (3) SaaS services and IoT solutions revenue and (4) charges to members for ancillary services such as printing and copying fees and catering service fees. 103 Cost of Revenue (Excluding Impairment Loss) The following table sets forth a breakdown of our cost of revenue (excluding impairment loss), in absolute amounts and as percentages of total cost of revenue (excluding impairment loss), for the periods indicated.
Other services net revenue primarily consists of (1) management fees generated from our agile office spaces under U Brand, (2) SaaS services and IoT solutions revenue and (3) charges to members for ancillary services such as printing and copying fees and catering service fees.
The net proceeds to us from the offering were approximately US$2.6 million. We have incurred recurring operating losses since our inception, including net losses of RMB2,162.8 million, RMB322.5 million and RMB22.6 million (US$3.2 million) for the years ended December 31, 2021, 2022 and 2023, respectively. Accumulated deficit was RMB4,540.8 million (US$639.6 million) as of December 31, 2023.
We have incurred recurring operating losses since our inception, including net losses from continuing operations of RMB295.1 million, RMB7.5 million and RMB75.5 million (US$10.3 million) for the years ended December 31, 2022, 2023 and 2024, respectively. Accumulated deficit was RMB4,610.1 million (US$631.6 million) as of December 31, 2024.
As of December 31, 2023, we had 69 spaces under the asset-light model with managed area of approximately 414,500 m 2 , representing 89% of the aggregate managed area of approximately 466,330 m 2 of all spaces. In 2023, we launched 12 new spaces under our asset-light model with managed area of approximately 21,680 m 2 .
As of December 31, 2024, we had nine spaces under the asset-light model with managed area of approximately 31,351 m 2 , representing 68% of the aggregate managed area of approximately 46,370 m 2 of all spaces. In 2024, we launched one new space under our asset-light model with managed area of approximately 498 m 2 .
Impairment Loss on Long-term Investments Impairment loss on long-term investments was RMB25.6 million (US$3.6 million) in 2023, as compared to nil in 2022, primarily because the operating performances of two investees indicated that the carrying value of the investments was no longer recoverable.
Impairment Loss on Long-term Investments Impairment loss on long-term investments was RMB18.0 million (US$2.5 million) in 2024, as compared to RMB25.6 million in 2023, primarily because the operating performances of investee indicated that the fair value of the investment is less than its carrying value.
Our cost of revenue (excluding impairment loss) for marketing and branding services accounted for 44.1% and 48.7% of our total net revenue in 2022 and 2023, respectively. 109 Other Services Our costs of other services decreased by 14.2% to RMB89.5 million (US$12.6 million) in 2023 from RMB104.3 million in 2022, primarily due to decreased costs related to interior design and construction services of RMB8.3 million (US$1.2 million), which was generally in line with the decrease in revenues.
Our cost of revenue (excluding impairment loss) for marketing and branding services accounted for 57.5% and 54.7% of our total net revenue in 2023 and 2024, respectively. Other Services Our costs of other services decreased by 74.5% to RMB4.9 million (US$0.7 million) in 2024 from RMB19.4 million in 2023, which was generally in line with the decrease in revenues.
This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.
This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report.
GAAP, we use the following non-GAAP financial measures for our consolidated results: EBITDA (including EBITDA margin), adjusted EBITDA (including adjusted EBITDA margin) and adjusted net loss.
Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use the following non-GAAP financial measures for our consolidated results: EBITDA (including EBITDA margin), adjusted EBITDA (including adjusted EBITDA margin) and adjusted net loss from continuing operations.
Other Services Revenues Our other services revenues decreased by 14.1% to RMB98.3 million (US$13.8 million) in 2023 from RMB114.5 million in 2022, primarily due to (1) decreased net revenue in our interior design and construction services of RMB12.6 million (US$1.8 million) as a result of decreased customer orders, and (2) decreased revenue from U Brand under our asset-light model of RMB3.2 million (US$0.5 million) as the number of spaces of this category decreased from 62 as of December 31, 2022 to 39 as of December 31, 2023.
Other Services Revenues Our other services revenues decreased by 69.0% to RMB8.7 million (US$1.2 million) in 2024 from RMB27.9 million in 2023, primarily due to decreased revenue from U Brand under our asset-light model of RMB4.8 million (US$0.7 million) as the number of spaces of this category decreased from 39 as of December 31, 2023 to two as of December 31, 2024.
Cost of revenue (excluding impairment loss) for other services primarily consists of costs in relation to our interior design and construction services, costs in relation to revenue from asset-light model, costs in relation to SaaS services and IoT solutions and other ancillary costs. 104 Impairment Loss on Long-lived Assets and Long-term Prepaid Expenses Our impairment loss on long-lived assets and long-term prepaid expenses was recognized whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset and long-term prepaid expenses may no longer be recoverable.
Impairment Loss on Long-lived Assets and Long-term Prepaid Expenses Our impairment loss on long-lived assets and long-term prepaid expenses was recognized whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset and long-term prepaid expenses may no longer be recoverable and their carrying value exceed fair value.
Change in Fair Value of Warrant Liability Warrants classified as liabilities are initially recorded at fair value with gains and losses arising from changes in fair value recognized in the consolidated statements of operations during the period in which such instruments are outstanding.
General and Administrative Expenses Our general and administrative expenses consist primarily of (1) compensation for our management and administrative personnel, (2) expenses in connection with our operation and financing supporting functions such as legal and human resources, (3) share-based compensation expense, and (4) other administrative expenses. 108 Change in Fair Value of Warrant Liability Warrants classified as liabilities are initially recorded at fair value with gains and losses arising from changes in fair value recognized in the consolidated statements of operations during the period in which such instruments are outstanding.
Sales and Marketing Expenses Our sales and marketing expenses decreased by 56.0% to RMB27.1 million in 2022 from RMB61.7 million in 2021, mainly due to (1) a decrease in share-based compensation expenses of RMB17.0 million as a result of decreased amortization, (2) a decrease in depreciation and amortization expenses of RMB6.9 million , (3) a decrease in promotion cost of RMB4.3 million , and (4) a decrease in staff cost of RMB3.8 million.
Sales and Marketing Expenses Our sales and marketing expenses decreased by 68.8% to RMB4.2 million (US$0.6 million) in 2024 from RMB13.6 million in 2023, mainly due to (1) a decrease in staff cost of RMB3.9 million (US$0.5 million), and (2) a decrease in promotion cost of RMB1.4 million (US$0.2 million) as a result of closure of spaces.
Gain/(Loss) on Disposal of Subsidiaries We had gain on disposal of subsidiaries of RMB112.8 million (US$15.9 million) in 2023, as compared to loss on disposal of subsidiaries of RMB23.0 million in 2022, primarily attributable to the disposal of some subsidiaries at net liability position with nil consideration.
Gain/(Loss) on Disposal of Subsidiaries We had loss on disposal of subsidiaries of RMB0.6 million (US$83,000) in 2024, as compared to gain on disposal of subsidiaries of RMB112.8 million in 2023, primarily attributable to the disposal of subsidiaries at net asset position with nil consideration. 114 Other Income, Net We had other income, net of RMB2.6 million (US$0.4 million) in 2024, as compared with RMB9.3 million in 2023, mainly due to the gain from asset transfer.

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Item 6. [Reserved]

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

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Conditions of Award. Our Board of Directors or any entity appointed by our Board of Directors to administer the 2020 Plan shall determine the provisions, terms, and conditions of each award including, but not limited to, the award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, and form of payment upon settlement of the award. Terms of Award.
Our Board of Directors or any entity appointed by our Board of Directors to administer the 2020 Plan shall determine the provisions, terms, and conditions of each award including, but not limited to, the award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, and form of payment upon settlement of the award. Terms of Award.
Our nominating and corporate governance committee consists of Jinghong Xu, Daqing Mao and Zhimo Zhao, chaired by Jinghong Xu. We have determined that Jinghong Xu satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Jinghong Xu, Daqing Mao and Zhimo Zhao, chaired by Jinghong Xu. We have determined that Jinghong Xu satisfies the “independence” requirements of Rule 5605(a)(2) of the Listing Rules of the Nasdaq.
The audit committee is responsible for, among other things: ● establishing clear hiring policies for employees or former employees of the independent auditors; ● reviewing and recommending to our Board of Directors for approval, the appointment, re-appointment or removal of the independent auditor, after considering its annual performance evaluation of the independent auditor; ● approving the remuneration and terms of engagement of the independent auditor and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors at least annually; ● obtaining a written report from our independent auditor describing matters relating to its independence and quality control procedures; ● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; ● discussing with our independent auditor, among other things, the audits of the financial statements, including whether any material information should be disclosed, issues regarding accounting and auditing principles and practices; ● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; 131 ● reviewing and recommending the financial statements for inclusion within our quarterly earnings releases and to our Board of Directors for inclusion in our annual reports; ● discussing the annual audited financial statements with management and the independent registered public accounting firm; ● reviewing policies with respect to risk assessment and risk management; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; ● periodically reviewing and reassessing the adequacy of the committee charter; ● approving annual audit plans, and undertaking an annual performance evaluation of the internal audit function; ● establishing and overseeing procedures for the handling of complaints and whistleblowing; ● meeting separately and periodically with management, the internal auditors and the independent registered public accounting firm; ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of its procedures to ensure proper compliance; ● reporting periodically to our Board of Directors; and ● handling other matters that are specifically delegated to our audit committee by our Board of Directors from time to time.
The audit committee is responsible for, among other things: ● establishing clear hiring policies for employees or former employees of the independent auditors; ● reviewing and recommending to our Board of Directors for approval, the appointment, re-appointment or removal of the independent auditor, after considering its annual performance evaluation of the independent auditor; ● approving the remuneration and terms of engagement of the independent auditor and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors at least annually; 129 ● obtaining a written report from our independent auditor describing matters relating to its independence and quality control procedures; ● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response; ● discussing with our independent auditor, among other things, the audits of the financial statements, including whether any material information should be disclosed, issues regarding accounting and auditing principles and practices; ● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act; ● reviewing and recommending the financial statements for inclusion within our quarterly earnings releases and to our Board of Directors for inclusion in our annual reports; ● discussing the annual audited financial statements with management and the independent registered public accounting firm; ● reviewing policies with respect to risk assessment and risk management; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures; ● periodically reviewing and reassessing the adequacy of the committee charter; ● approving annual audit plans, and undertaking an annual performance evaluation of the internal audit function; ● establishing and overseeing procedures for the handling of complaints and whistleblowing; ● meeting separately and periodically with management, the internal auditors and the independent registered public accounting firm; ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of its procedures to ensure proper compliance; ● reporting periodically to our Board of Directors; and ● handling other matters that are specifically delegated to our audit committee by our Board of Directors from time to time.
From 1998 to 2004, Mr. Li served as a commercial representative at Auqisn (Australia) Electric. Mr. Li graduated from Wuhan University of Technology with the major of architecture in 1998. Yan Xu has served as our financial reporting director since December 2021. Prior to joining us, Ms.
From 1998 to 2004, Mr. Li served as a commercial representative at Auqisn (Australia) Electric. Mr. Li graduated from Wuhan University of Technology with the major of architecture in 1998. 125 Yan Xu has served as our financial reporting director since December 2021. Prior to joining us, Ms.
We enter into standard labor contracts with our employees. We also enter into standard confidentiality agreements with our senior management that contain non-compete restrictions. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes. E.
We enter into standard labor contracts with our employees. We also enter into standard confidentiality agreements with our senior management that contain non-compete restrictions. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes. 132 E.
The administrator of the 2020 Plan may amend, alter, suspend, discontinue or terminate the 2020 Plan, or any award agreement hereunder or any portion hereof or thereof at any time; provided, however, that no such amendment, alteration, suspension, discontinuation or termination shall be made without: ● shareholder approval with such legally mandated threshold for a resolution of the shareholders if such approval is necessary to comply with any tax or regulatory requirement for which or with which the administrator of the 2020 Plan deems it necessary or desirable to qualify, or ● shareholder approval with such threshold for a resolution of the shareholders in respect of such amendment, alteration, suspension, discontinuation or termination as provided in our Memorandum and Articles of Association for any amendment to the 2020 Plan that increases the total number of shares reserved for the purposes of the 2020 Plan, and ● with respect to any award agreement, the consent of the affected employee, if such action would materially and adversely affect the rights of such employee under any outstanding award. 129 The following table summarizes, as of March 31, 2024, the outstanding options that we granted to the persons who serve as our directors and executive officers under the 2020 Plan, which have been retroactively adjusted to reflect the 2022 Share Consolidation and the 2023 Share Consolidation.
The administrator of the 2020 Plan may amend, alter, suspend, discontinue or terminate the 2020 Plan, or any award agreement hereunder or any portion hereof or thereof at any time; provided, however, that no such amendment, alteration, suspension, discontinuation or termination shall be made without: ● shareholder approval with such legally mandated threshold for a resolution of the shareholders if such approval is necessary to comply with any tax or regulatory requirement for which or with which the administrator of the 2020 Plan deems it necessary or desirable to qualify, or ● shareholder approval with such threshold for a resolution of the shareholders in respect of such amendment, alteration, suspension, discontinuation or termination as provided in our Memorandum and Articles of Association for any amendment to the 2020 Plan that increases the total number of shares reserved for the purposes of the 2020 Plan, and ● with respect to any award agreement, the consent of the affected employee, if such action would materially and adversely affect the rights of such employee under any outstanding award. 127 The following table summarizes, as of March 31, 2025, the outstanding options that we granted to the persons who serve as our directors and executive officers under the 2020 Plan, which have been retroactively adjusted to reflect the 2022 Share Consolidation and the 2023 Share Consolidation.
Daqing Mao has the right to acquire upon exercise of options within 60 days as of March 31, 2024, and (iv) 5,980 Class B ordinary shares held by Astro Angel Limited, a British Virgin Islands company wholly owned by Baixh Limited and ultimately controlled by Ms. Angela Bai, the spouse of Dr. Daqing Mao.
Daqing Mao has the right to acquire upon exercise of options within 60 days as of March 31, 2025, and (iv) 5,980 Class B ordinary shares held by Astro Angel Limited, a British Virgin Islands company wholly owned by Baixh Limited and ultimately controlled by Ms. Angela Bai, the spouse of Dr. Daqing Mao.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days as of March 31, 2024, including through the exercise of any option, warrant, or other right or the conversion of any other security.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days as of March 31, 2025, including through the exercise of any option, warrant, or other right or the conversion of any other security.
Xu worked in the audit department at KPMG Huazhen LLP, Beijing office from 2016 to 2021. Ms. Xu received her master’s degree in finance from University of International Business and Economics in 2016. B. Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of RMB5.0 million (US$0.7 million) in cash to our directors and executive officers.
Xu worked in the audit department at KPMG Huazhen LLP, Beijing office from 2016 to 2021. Ms. Xu received her master’s degree in finance from University of International Business and Economics in 2016. B. Compensation For the fiscal year ended December 31, 2024, we paid an aggregate of RMB5.4 million (US$0.7 million) in cash to our directors and executive officers.
Share Incentive Plan 2019 Plan We adopted the 2019 Plan on August 22, 2019, to attract and retain exceptionally qualified personnel and to encourage them to acquire a proprietary interest in our growth and performance.
Share Incentive Plan 2019 Plan We adopted the 2019 Plan on August 22, 2019, to attract and retain exceptionally qualified personnel and to encourage them to acquire a proprietary interest in our development and performance.
The compensation committee is responsible for, among other things: ● reviewing and evaluating our executive compensation and benefits policies generally; ● reviewing and recommending any incentive compensation or equity plans, programs or other similar arrangements; ● periodically reviewing and reassessing the adequacy of the committee charter; ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management; and ● reporting periodically to our Board of Directors; and ● handling other matters that are specifically delegated to the compensation committee by our Board of Directors from time to time. 132 Nominating and Corporate Governance Committee.
The compensation committee is responsible for, among other things: ● reviewing and evaluating our executive compensation and benefits policies generally; ● reviewing and recommending any incentive compensation or equity plans, programs or other similar arrangements; ● periodically reviewing and reassessing the adequacy of the committee charter; 130 ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management; and ● reporting periodically to our Board of Directors; and ● handling other matters that are specifically delegated to the compensation committee by our Board of Directors from time to time.
Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Jian Zhang and Jinghong Xu, chaired by Jian Zhang. We have determined that each of them satisfies the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq and meet the independence standards under Rule 10A-3 under the Exchange Act, as amended.
Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Gray Zhu and Jinghong Xu, chaired by Gray Zhu. We have determined that each of them satisfies the “independence” requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq and meet the independence standards under Rule 10A-3 under the Exchange Act, as amended.
As of the date of this annual report, options to purchase an aggregate number of 783,366 Class A ordinary shares were granted and outstanding, including 28,625 Class A ordinary shares granted to replace the granted and outstanding awards under 2019 Plan. The terms under the 2020 Plan are substantially the same with the 2019 Plan.
As of the date of this annual report, options to purchase an aggregate number of 552,086 Class A ordinary shares were granted and outstanding, including 28,625 Class A ordinary shares granted to replace the granted and outstanding awards under 2019 Plan. 126 The terms under the 2020 Plan are substantially the same with the 2019 Plan.
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; ● appointing directors or officers and determining their terms of offices and responsibilities; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of our shares, including the registering of such shares in our share register. 133 Terms of Directors and Officers Our officers are elected by and serve at the discretion of our Board of Directors.
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; 131 ● declaring dividends; ● appointing directors or officers and determining their terms of offices and responsibilities; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of our shares, including the registering of such shares in our share register.
D. Employees We had a total of 513, 357 and 269 employees as of December 31, 2021, 2022 and 2023, respectively. As of December 31, 2023, approximately 74% of our employees held a bachelor’s degree or above.
D. Employees We had a total of 357, 269 and 127 employees as of December 31, 2022, 2023 and 2024, respectively. As of December 31, 2024, approximately 74% of our employees held a bachelor’s degree or above.
We have determined that Jian Zhang qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of our financial statements.
We have determined that Gray Zhu qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of our financial statements.
The registered address of Maodq Limited is Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands. The registered address of Fair Vision Group Limited and Astro Angel Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. (3) Ms.
The registered address of Maodq Limited is Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands. The registered address of Fair Vision Group Limited and Astro Angel Limited is Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. (3) Each of Mr. Cheong Kwok Mun, Ms. Jian Zhang and Mr.
An executive officer may terminate his or her employment at any time by giving prior written notice. 127 Each executive officer has agreed to hold, unless expressly consented to by us, at all times during and after the termination of his or her employment agreement, in strict confidence and not to use, any of our confidential information or the confidential information of our customers and suppliers.
Each executive officer has agreed to hold, unless expressly consented to by us, at all times during and after the termination of his or her employment agreement, in strict confidence and not to use, any of our confidential information or the confidential information of our customers and suppliers.
Name Position Class A Ordinary Shares Underlying Outstanding Options to Be Assumed Option Exercise Price (US$ per Share) Date of Grant Date of Expiration Daqing Mao Director * 0.0504 May 16, 2023 — Zirui Wang Chief Executive Officer and Chief Risk Officer * 0.0504 Various dates from September 19, 2019 to October 13, 2020 Various dates from September 19, 2029 to October 13, 2030 Xin Guan (1) General Manager * 0.0504 Various dates from September 19, 2019 to September 1, 2020 Various dates from September 19, 2029 to September 1, 2030 Cheong Kwok Mun Director * 0.0504 Various dates from September 19, 2019 to September 1, 2020 Various dates from September 19, 2029 to September 1, 2030 Zhimo Zhao Director * 0.0504 Various dates from September 19, 2019 to January 11, 2022 Various dates from September 19, 2029 to January 11, 2032 Jian Zhang Independent Director — — — — Jinghong Xu Independent Director — — — — Xianhao Gu Independent Director — — — — Binchao Xu Chief Technology Officer * 0.0504 Various dates from September 19, 2019 to September 1, 2020 Various dates from September 19, 2029 to September 1, 2030 Zhenfei Wu Chief Marketing Officer * 0.0504 September 1, 2020 September 1, 2030 Jianghai Shen Chief Product Designer — — — — Xiaodong Li Chief Operating Officer * 0.0504 Various dates from September 19, 2019 to May 16, 2023 Various dates from September 18, 2029 to May 15, 2033 Yan Xu Financial Reporting Director — — — — All directors and executive officers as a group 9,218 All non-executive employees as a group 774,148 0.0504 Various dates from September 19, 2019 to March 12, 2024 Various dates from September 19, 2029 to May 15, 2033 * Less than 1% of our ordinary shares.
Name Position Class A Ordinary Shares Underlying Outstanding Options to Be Assumed Option Exercise Price (US$ per Share) Date of Grant Date of Expiration Daqing Mao Director * 0.0504 May 16, 2023 — Zirui Wang Chief Executive Officer and Chief Risk Officer * 0.0504 Various dates from September 19, 2019 to October 13, 2020 Various dates from September 19, 2029 to October 13, 2030 Cheong Kwok Mun (1) Director * 0.0504 Various dates from September 19, 2019 to September 1, 2020 Various dates from September 19, 2029 to September 1, 2030 Zhimo Zhao Director * 0.0504 Various dates from September 19, 2019 to January 11, 2022 Various dates from September 19, 2029 to January 11, 2032 Wei Hu Director — — — — Jian Zhang (1) Independent Director — — — — Jinghong Xu Independent Director — — — — Xianhao Gu (1) Independent Director — — — — Gray Zhu Independent Director — — — — Binchao Xu (2) Chief Technology Officer * 0.0504 Various dates from September 19, 2019 to September 1, 2020 Various dates from September 19, 2029 to September 1, 2030 Zhenfei Wu Chief Marketing Officer * 0.0504 September 1, 2020 September 1, 2030 Jianghai Shen Chief Product Designer — — — — Xiaodong Li Chief Operating Officer * 0.0504 Various dates from September 19, 2019 to May 16, 2023 Various dates from September 18, 2029 to May 15, 2033 Yan Xu Financial Reporting Director — — — — All directors and executive officers as a group 8,372 All non-executive employees as a group 543,714 0.00021 Various dates from September 19, 2019 to December 26, 2024 Various dates from September 19, 2029 to December 25, 2033 * Less than 1% of our ordinary shares.
Compensation Committee. Our compensation committee consists of Cheong Kwok Mun and Xianhao Gu. The compensation committee assists our Board of Directors in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which their compensation is deliberated upon.
Compensation Committee. Our compensation committee consists of Wei Hu and Gray Zhu. The compensation committee assists our Board of Directors in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which their compensation is deliberated upon.
Wang joined us in July 2016 and has served as our risk officer of our risk control department, legal director and legal manager of our legal department. Mr. Wang received his master’s degree in law from Beijing Normal University in July 2016. Mr. Wang has maintained a legal professional qualification certificate since March 2015.
Wang joined us in July 2016 and has served as our risk officer of our risk control department, legal director and legal manager of our legal department. Mr. Wang received his master’s degree in law from Beijing Normal University in July 2016. Mr.
Each director is not subject to a term of office and holds office until such time as his successor takes office or until the earlier of his death, resignation or removal from office by ordinary resolution of all shareholders.
Terms of Directors and Officers Our officers are elected by and serve at the discretion of our Board of Directors. Each director is not subject to a term of office and holds office until such time as his successor takes office or until the earlier of his death, resignation or removal from office by ordinary resolution of all shareholders.
We may also terminate an executive officer’s employment by giving a prior written notice or by paying certain compensation.
We may also terminate an executive officer’s employment by giving a prior written notice or by paying certain compensation. An executive officer may terminate his or her employment at any time by giving prior written notice.
Daqing Mao/Angela Bai (2) 10,626 119,387 130,013 17.64 % 91.55 % * Less than 1%. ** On as-converted basis. The Parent has adopted a dual-class share structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares.
Daqing Mao/Angela Bai (2) 10,626 119,387 130,013 6.13 % 76.77 % * On as-converted basis. The Parent has adopted a dual-class share structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares.
Ordinary Shares Beneficially Owned Name and Address of Beneficial Owner (1) Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares** % of Beneficial Ownership*** % of Aggregate Voting Power**** Executive Officers and Directors Daqing Mao (2) 10,626 119,387 130,013 17.64 % 91.55 % Zirui Wang * — * * * Xin Guan (3) * — * * * Cheong Kwok Mun * — * * * Zhimo Zhao * — * * * Jian Zhang — — — — — Jinghong Xu — — — — — Xianhao Gu — — — — — Binchao Xu * — * * * Zhenfei Wu * — * * * Jianghai Shen * — * * * Xiaodong Li * — * * * Yan Xu — — — — — All Executive Officers and Directors as a group 18,917 119,387 138,304 18.66 % 91.61 % 5% or Greater Holders Holding group of Dr.
Ordinary Shares Beneficially Owned Name and Address of Beneficial Owner (1) Class A Ordinary Shares Class B Ordinary Shares Total Ordinary Shares** % of Beneficial Ownership*** % of Aggregate Voting Power**** Executive Officers and Directors Daqing Mao (2) 10,626 119,387 130,013 6.13 % 76.77 % Zirui Wang — — — — — Xiaodong Li — — — — — Wei Hu — — — — — Cheong Kwok Mun (3) — — — — — Zhimo Zhao — — — — — Jian Zhang (3) — — — — — Jinghong Xu — — — — — Binchao Xu (4) — — — — — Xianhao Gu (3) — — — — — Gray Zhu — — — — — Zhenfei Wu — — — — — Jianghai Shen — — — — — Yan Xu — — — — — All Executive Officers and Directors as a group 10,626 119,387 130,013 6.13 % 76.77 % 5% or Greater Holders — — — — — Holding group of Dr.
The following table gives a breakdown of our employees as of December 31, 2023 by function: Function Number Operation and development 142 Technology and product development 84 Sales and marketing 2 Finance 17 General administrative and others 24 Total 269 As of December 31, 2023, all of our employees were based in Greater China.
The following table gives a breakdown of our employees as of December 31, 2024 by function: Function Number Operation and development 96 Technology and product development 11 Sales and marketing 2 Finance 5 General administrative and others 13 Total 127 As of December 31, 2024, all of our employees were based in Greater China.
The 1,047,532 Class A ordinary shares, although legally issued, are not deemed as issued from an accounting perspective.
The 2,659,625 Class A ordinary shares, although legally issued, are not deemed as issued from an accounting perspective.
(HKEX: 2202) from 2009 to 2015 and the chief executive officer of Vanke Company Limited Beijing Region from 2015 to 2016. Prior to that, Dr.
Mao served as the executive vice president of China Vanke Co., Ltd. (HKEX: 2202) from 2009 to 2015 and the chief executive officer of Vanke Company Limited Beijing Region from 2015 to 2016. Prior to that, Dr.
Cheong received his bachelor’s degree in economics from the University of Western Australia in 1993. Zhimo Zhao has served as our director since November 2020. Mr. Zhao is in charge of our investor relations. Mr. Zhao served as chief marketing officer and chief representative for East Asia region at Eurofr Environment Tech. Ltd. Mr.
Zhao is in charge of our investor relations. Mr. Zhao served as chief marketing officer and chief representative for East Asia region at Eurofr Environment Tech. Ltd. Mr. Zhao received his master’s degree in management from the Australian National University in 2013. Jinghong Xu has served as our independent director since November 2020. Mr.
The Listing Rules of the Nasdaq generally require that a majority of an issuer’s board of directors must consist of independent directors. A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with us is required to declare the nature of his or her interest at a meeting of our directors.
A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with us is required to declare the nature of his or her interest at a meeting of our directors.
The 2020 Plan shall be administrated by a committee formed in accordance with applicable stock exchange rules, unless otherwise determined by our Board of Directors. 128 Eligibility. Our employees and consultants are eligible to participate in the 2020 Plan.
The 2020 Plan shall be administrated by a committee formed in accordance with applicable stock exchange rules, unless otherwise determined by our Board of Directors. Eligibility. Our employees and consultants are eligible to participate in the 2020 Plan. An employee or consultant who has been granted an award may, if he or she is otherwise eligible, be granted additional awards.
Mao has also served as a director of UK Wisdom Limited, and we own an 85% equity interest of Ucommune Talent Limited, the sponsor of UK Wisdom Limited. Prior to founding our company, Dr. Mao served as the executive vice president of China Vanke Co., Ltd.
Mao has served as the chairman of our Board of Directors since June 2021. Since March 2021, Mr. Mao has also served as a director of UK Wisdom Limited, and we own an 85% equity interest of Ucommune Talent Limited, the sponsor of UK Wisdom Limited. Prior to founding our company, Dr.
Zhenfei Wu has served as our chief marketing officer since November 2020. Prior to joining us in 2018, Mr. Wu Zhenfei founded Shengguang Zhongshuo Digital Marketing Co., Ltd. in 2015, which we acquired in 2018. Prior to that, Mr.
Wu Zhenfei founded Shengguang Zhongshuo Digital Marketing Co., Ltd. in 2015, which we acquired in 2018. Prior to that, Mr.
An employee or consultant who has been granted an award may, if he or she is otherwise eligible, be granted additional awards. Designation of Award. Each award under the 2020 Plan is designated in an award agreement, which is a written agreement evidencing the grant of an award executed by our company and the grantee, including any amendments thereto.
Designation of Award. Each award under the 2020 Plan is designated in an award agreement, which is a written agreement evidencing the grant of an award executed by our company and the grantee, including any amendments thereto. Conditions of Award.
These shares, however, are not included in the computation of the percentage ownership of any other person. **** 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 ordinary shares as a single class.
These shares, however, are not included in the computation of the percentage ownership of any other person. *** 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 ordinary shares as a single class. 133 (1) Except for Jinghong Xu, and Xianhao Gu, the address of our directors and executive officers is 4th Floor, Building 1, No. 2 Dongsihuan North Road, Chaoyang District, Beijing, People’s Republic of China.
(2) Represents (i) 5,626 Class A Class A ordinary shares and 97,500 Class B ordinary shares, directly held by Maodq Limited, a limited liability company incorporated in the British Virgin Islands wholly owned by Dr.
The business address of Wei Hu is Room 601 6-F, No.2 Kexueyuan South Road, Haidian District, Beijing, People’s Republic of China. (2) Represents (i) 5,626 Class A ordinary shares and 97,500 Class B ordinary shares, directly held by Maodq Limited, a limited liability company incorporated in the British Virgin Islands wholly owned by Dr.
Share Ownership The following table sets forth information regarding the beneficial ownership of the ordinary shares of the Parent as of March 31, 2024 by: ● each person known to us to beneficially own 5% or more of our outstanding shares; ● each of the officers and directors of the Parent; and ● all of the officers and directors of the Parent as a group. 134 The calculations in the table below were based on 731,966 ordinary shares issued and outstanding as of March 31, 2024, comprising of 612,579 Class A ordinary shares (excluding 1,047,532 Class A ordinary shares reserved for future issuance under our 2020 Plan) and 119,387 Class B ordinary shares.
Share Ownership The following table sets forth information regarding the beneficial ownership of the ordinary shares of the Parent as of March 31, 2025 by: ● each person known to us to beneficially own 5% or more of our outstanding shares; ● each of the officers and directors of the Parent; and ● all of the officers and directors of the Parent as a group.
Xin Guan ceased to be our chief executive officer and chief operating officer since November 2023. 135 To our knowledge, as of March 31, 2024, 2,285 of our Class A ordinary shares are held by 29 record holders in the United States, representing approximately 0.3% of our total outstanding shares on an as converted basis. F.
To our knowledge, as of March 31, 2025, 21,603 of our Class A ordinary shares are held by 29 record holders in the United States, representing approximately 1.0% of our total outstanding shares on an as converted basis. F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.
Name Age Position Daqing Mao 55 Chairman of the Board of Directors Zirui Wang 33 Chief Executive Officer, Chief Risk Officer Cheong Kwok Mun 54 Director Zhimo Zhao 42 Director Jian Zhang 48 Independent Director Jinghong Xu 60 Independent Director Xianhao Gu 42 Independent Director Binchao Xu 46 Chief Technology Officer Zhenfei Wu 46 Chief Marketing Officer Jianghai Shen 39 Chief Product Designer Xiaodong Li 48 Chief Operating Officer Yan Xu 31 Financial Reporting Director (1) Ms.
Name Age Position Daqing Mao 56 Chairman of the Board of Directors Zirui Wang 34 Chief Executive Officer, Chief Risk Officer Wei Hu 50 Director Zhimo Zhao 43 Director Jinghong Xu 61 Independent Director Gray Zhu 50 Independent Director Zhenfei Wu 47 Chief Marketing Officer Jianghai Shen 40 Chief Product Designer Xiaodong Li 49 Chief Operating Officer Yan Xu 32 Financial Reporting Director * Each of Mr.
Mr. Gu received his bachelor’s degree in accounting from Dongbei University of Finance and Economics in July 2004 and is a chartered accountant. Binchao Xu has served as our chief technology officer since November 2020. Prior to joining us in 2015, Mr.
Zhu received his bachelor’s degree in economics from University of International Business and Economics in July 1997 and received his EMBA degree from China Europe International Business School in July 2008. Zhenfei Wu has served as our chief marketing officer since November 2020. Prior to joining us in 2018, Mr.
Xin Guan ceased to be our chief executive officer and chief operating officer since November 2023. 125 Daqing Mao is our founder and has served as our director since December 2020. Mr. Mao has served as the chairman of our Board of Directors since June 2021. Since March 2021, Mr.
Cheong Kwok Mun, Ms. Jian Zhang and Mr. Xianhao Gu ceased to be our director since June 2024. Mr. Binchao Xu ceased to be our chief technology officer since December 31, 2024. Daqing Mao is our founder and has served as our director since December 2020. Mr.
(1) Ms. Xin Guan ceased to be our chief executive officer and chief operating officer since November 2023. 130 C. Board Practices Board of Directors Our Board of Directors consists of six directors, including three independent directors: Jian Zhang, Jinghong Xu and Xianhao Gu. A director is not required to hold any of our shares to qualify as a director.
Board Practices Board of Directors Our Board of Directors consists of six directors, including two independent directors: Jinghong Xu and Gray Zhu. A director is not required to hold any of our shares to qualify as a director. The Listing Rules of the Nasdaq generally require that a majority of an issuer’s board of directors must consist of independent directors.
Removed
Cheong Kwok Mun has served as our director since November 2020. From November 2020 to June 2021, Mr. Cheong also served as the chairman of our Board of Directors and chief financial officer. Prior to joining us in 2019, he was an independent consultant specializing in real estate advisory services.
Added
Wang has maintained a legal professional qualification certificate since March 2015. 124 Wei Hu has served as our director since June 2024. Mr. Hu has held various positions including financial director and the head of internal audit at Ucommune since January 2016. Mr. Hu has over 20 years of experiences in finance management.
Removed
He previously served as the Asian regional head of capital raising and client relations at Corestate Capital Group from 2015 to 2017.
Added
Before joining Ucommune, from March 2011 to December 2015, Mr. Hu served as a financial analysis manager and global internal audit manager at John Deere China. From May 2007 to March 2011, he worked as a financial analysis manager at CTS Tianjin. From August 2003 to May 2007, he served as a finance manager at Fiberweb (China) Airlaid Co., Ltd.
Removed
Before that, he had worked at CapitaLand Limited (SGX: C31) for 11 years, during which he served as the managing director of Raffles City China Fund from 2008 to 2010 and as vice president of investor relations and capital partners at the headquarters in Singapore from 2009 to 2015. Mr.
Added
From March 1997 to August 2003, he worked in several financial roles at Honeywell Tianjin. Mr. Hu received his bachelor’s degree in accounting from Nankai University in June 1996 and received his master’s degree in professional accounting from Nankai University in June 2008. Zhimo Zhao has served as our director since November 2020. Mr.
Removed
Zhao received his master’s degree in management from the Australian National University in 2013. Jian Zhang has served as our independent director since November 2020. Ms. Zhang has served as independent director of Shenzhen Sinexcel Electric Co., Ltd. (SZSE: 300693) from 2015 to 2021, and served as independent director of NetPosa Technologies Ltd. (SZSE: 300367) from 2016 to 2020. Ms.
Added
Xu received his master’s degree in mechanical engineering from Tsinghua University in 1988. Gray Zhu has served as our independent director since June 2024. Since June 2021, Mr. Zhu has served as the president of PharmaGend Global Medical Services Pte Ltd, the vice president of Pharmaron Beijing Co., Ltd. (SHE: 300759), and a partner of Bayland Capital.
Removed
Zhang worked at TCL group from 2007 to 2014, in charge of financial matters. Ms. Zhang also had nine years of professional auditing experience at Ernst & Young from 1998 to 2007. Ms. Zhang received her EMBA degree from China Europe International Business School in 2013 and her bachelor’s degree in accounting from Beijing Wuzi University in 1997.
Added
Prior to that, from February 2010 to February 2020, Mr. Zhu served as the general manger and the director of Dingli Corp Ltd (SHE: 300050). Mr. Zhu also served as an independent director of Beijing Kaiwen Education Tech Co Ltd (SHE: 002659) from February 2010 to February 2020. From October 2007 to January 2009, Mr.
Removed
In November 2020, the CSRC imposed a penalty of RMB50,000 on Ms. Zhang because NetPosa Technologies failed to disclose certain guarantee arrangements and material contracts in annual reports when Mr. Zhang acted as a director of NetPosa Technologies. Jinghong Xu has served as our independent director since November 2020. Mr.
Added
Zhu served as the vice president and chief financial officer of Zhonghe Co., Ltd. From October 2004 to October 2007, Mr. Zhu served as an executive director and the chief financial officer of Asia Media Co., Ltd. (TSE: 2149). From September 2001 to October 2004, Mr. Zhu served as a senior financial officer at Mars Foods (Beijing) Co., Ltd.
Removed
Xu received his master’s degree in mechanical engineering from Tsinghua University in 1988. 126 Xianhao Gu has served as our independent director since December 2020. Mr. Gu has worked for New Oriental Education & Technology (NYSE: EDU) since 2006.
Added
From July 1999 to September 2001, Mr. Zhu served as a finance manager at Lucent Technologies China. From July 1997 to July 1999, Mr. Zhu served as a senior accountant at KMPG Huazhen LLP. Mr.
Removed
He served in various positions in New Oriental Education & Technology, including the assistant to the chief financial officer since 2019, managing director and head of risk control of the New Oriental Education Industry Fund since 2018, chief financial officer of Maxen International Education, a subsidiary of New Oriental Education & Technology, from 2012 to 2018, and financial manager of financial management department from 2006 and 2012.
Added
(1) Each of Mr. Cheong Kwok Mun, Ms. Jian Zhang and Mr. Xianhao Gu ceased to be our director since June 2024. (2) Mr. Binchao Xu ceased to be our chief technology officer since December 31, 2024. 128 C.
Removed
Xu served as general manager of the product center of Hi Sun Technology (China) Limited (HKEX: 0818) from 2009 to 2013, and manager of the product division of Ninetowns Internet Technology Group Co., Ltd from 2004 to 2007. Mr. Xu received his bachelor’s degree in computer science and application from Lanzhou University in 2003.
Added
The calculations in the table below were based on 2,119,873 ordinary shares issued and outstanding as of March 31, 2025, comprising of 2,000,486 Class A ordinary shares (excluding 2,659,625 Class A ordinary shares reserved for future issuance under our 2020 Plan) and 119,387 Class B ordinary shares.
Removed
(1) Except for Jian Zhang, Jinghong Xu, and Xianhao Gu, the address of our directors and executive officers is Floor B1, Tower D, No.2 Guang Hua Road, Chaoyang District, Beijing, People’s Republic of China. The business address of Jian Zhang is 3D Building D, Baoneng Taigucheng North, Nanshan District, Shenzhen, People’s Republic of China.
Added
Xianhao Gu ceased to be our director since June 2024. (4) Mr. Binchao Xu ceased to be our chief technology officer since December 31, 2024.
Removed
The business address of Jinghong Xu is Room 601 6-F, No.2 Kexueyuan South Road, Haidian District, Beijing, People’s Republic of China. The business address of Xianhao Gu is No.6 Haidian Zhongjie, Haidian District, Beijing, People’s Republic of China.
Removed
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable.

Item 7. Management's Discussion & Analysis

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

16 edited+4 added−5 removed7 unchanged
Siyuan Wang, our former chief financial officer who resigned in February 2023, has served as chief financial officer of UK Wisdom Limited. 136 In June 2021, we entered into a loan agreement with UK Wisdom Limited to provide an interest-free loan of US$3 million for a one-year term from June 8, 2021 to June 7, 2022.
Siyuan Wang, our former chief financial officer who resigned in February 2023, has served as chief financial officer of UK Wisdom Limited. In June 2021, we entered into a loan agreement with UK Wisdom Limited to provide an interest-free loan of US$3 million for a one-year term from June 8, 2021 to June 7, 2022.
The disposal loss of RMB13.1 million was recognized into additional paid-in capital as it is the transaction under common control. 137 Transactions with Guangdong Advertising Co., Ltd. We provided marketing services to Guangdong Advertising Co., Ltd., an affiliate of Shengguang Zhongshuo, one of our subsidiaries.
The disposal loss of RMB13.1 million was recognized into additional paid-in capital as it is the transaction under common control. Transactions with Guangdong Advertising Co., Ltd. We provided marketing services to Guangdong Advertising Co., Ltd., an affiliate of Shengguang Zhongshuo, one of our subsidiaries.
As of December 31, 2021, 2022 and 2023, the amounts due to Guangdong Advertising Co., Ltd. for advertisement distribution services were nil, nil and RMB1.5 million (US$0.2 million), respectively. We entered into one lease agreement with Guangdong Advertising Co., Ltd. in 2022. The agreement has a term of one year, with daily rents of RMB4/m 2 .
As of December 31, 2022, 2023 and 2024, the amounts due to Guangdong Advertising Co., Ltd. for advertisement distribution services were nil, RMB1.5 million and nil, respectively. We entered into one lease agreement with Guangdong Advertising Co., Ltd. in 2022. The agreement has a term of one year, with daily rents of RMB4/m 2 .
For 2021, 2022 and 2023, the expenses incurred in connection with property management services provided by Youxiang Group were RMB5.1 million, RMB6.9 million and RMB0.9 million (US$0.1 million), respectively. As of December 31, 2021, 2022 and 2023, the amounts due to Youxiang Group for property management services were nil.
For 2022, 2023 and 2024, the expenses incurred in connection with property management services provided by Youxiang Group were RMB6.9 million, RMB0.9 million and RMB0.5 million (US$0.1 million), respectively. As of December 31, 2022, 2023 and 2024, the amounts due to Youxiang Group for property management services were nil.
Transactions with Guangdong Marketing Advertising Group Guangdong Marketing Advertising Group, a subsidiary of an affiliate of our subsidiary Shengguang Zhongshuo, sells advertisement distribution resources to us. For 2021, 2022 and 2023, the expenses incurred from Guangdong Marketing Advertising Group in connection with the purchase of advertisement distribution resources were RMB12.6 million, RMB96.5 million and RMB42.3 million (US$6.0 million), respectively.
Transactions with Guangdong Marketing Advertising Group Guangdong Marketing Advertising Group, a subsidiary of an affiliate of our subsidiary Shengguang Zhongshuo, sells advertisement distribution resources to us. For 2022, 2023 and 2024, the expenses incurred from Guangdong Marketing Advertising Group in connection with the purchase of advertisement distribution resources were RMB96.5 million, RMB42.3 million and RMB4.2 million (US$0.6 million), respectively.
For 2022 and 2023, the lease expenses incurred in connection with the lease agreement with Guangdong Advertising Co., Ltd. were RMB0.9 million and RMB0.7 million (US$98,000), respectively. As of December 31, 2022 and 2023, the amounts due to Guangdong Advertising Co., Ltd. under the lease agreement were nil and nil, respectively.
For 2022, 2023 and 2024, the lease expenses incurred in connection with the lease agreement with Guangdong Advertising Co., Ltd. were RMB0.9 million, RMB0.7 million, and RMB0.6 million (US$0.1 million), respectively. As of December 31, 2022, 2023 and 2024, the amounts due to Guangdong Advertising Co., Ltd. under the lease agreement were nil and nil, respectively.
For 2021, 2022 and 2023, revenue generated from Youxiang Group for workspace membership services was RMB0.2 million, RMB0.2 million and RMB34,000 (US$5,000), respectively. As of December 31, 2021, 2022 and 2023, the amounts due from Youxiang Group for workspace membership services were nil.
For 2022, 2023 and 2024, revenue generated from Youxiang Group for workspace membership services was RMB0.2 million, RMB34,000, and RMB26,000 (US$3,600), respectively. As of December 31, 2022, 2023 and 2024, the amounts due from Youxiang Group for workspace membership services were nil.
Guangdong Advertising Co., Ltd. sells advertisement distribution resources to us. For 2021, 2022 and 2023, the expenses incurred from Guangdong Advertising Co., Ltd. in connection with the purchase of advertisement distribution resources were RMB1.9 million, RMB0.4 million and RMB0.6 million (US$87,000), respectively.
Guangdong Advertising Co., Ltd. sells advertisement distribution resources to us. For 2022, 2023 and 2024, the expenses incurred from Guangdong Advertising Co., Ltd. in connection with the purchase of advertisement distribution resources were RMB0.4 million, RMB0.6 million and RMB74,000 (US$10,100), respectively.
Those lease agreements have terms ranging from two years to 20 years, and we pay daily rents ranging from RMB2.83/m 2 to RMB10/m 2 with annual increases set forth in the lease agreements. For 2021, 2022 and 2023, the lease expenses incurred in connection with lease agreements with Youxiang Group were RMB5.1 million, RMB1.8 million and RMB27,000 (US$3,800), respectively.
Those lease agreements have terms ranging from two years to 20 years, and we pay daily rents ranging from RMB2.83/m 2 to RMB10/m 2 with annual increases set forth in the lease agreements. For 2022, 2023 and 2024, the lease expenses incurred in connection with lease agreements with Youxiang Group were RMB0.9 million, RMB27,000 and nil, respectively.
As of December 31, 2021, 2022 and 2023, the amounts due to Youxiang Group under these lease agreements were nil, RMB1.4 million and RMB0.5 million (US$72,000), respectively. Youxiang Group provides property management services to us.
As of December 31, 2022, 2023 and 2024, the amounts due to Youxiang Group under these lease agreements were RMB1.4 million, RMB0.4 million and RMB1.3 million (US$0.2 million), respectively. Youxiang Group provides property management services to us.
In 2021, 2022 and 2023, revenues generated from providing marketing services to Guangdong Advertising Co., Ltd. were RMB45.5 million, RMB25.0 million and RMB26.0 million (US$3.7 million), respectively. As of December 31, 2021, 2022 and 2023, the amounts due from Guangdong Advertising Co., Ltd. for marketing services were RMB35.9 million, RMB3.7 million and RMB0.3 million (US$40,000), respectively.
In 2022, 2023 and 2024, revenues generated from providing marketing services to Guangdong Advertising Co., Ltd. were RMB25.0 million, RMB26.0 million and RMB20.8 million (US$2.8 million), respectively. As of December 31, 2022, 2023 and 2024, the amounts due from Guangdong Advertising Co., Ltd. for marketing services were RMB3.7 million, RMB0.3 million and RMB8.5 million (US$1.2 million), respectively.
In March 2021, Youxiang Group provided a loan of RMB1.0 million due March 22, 2022 with an interest of 4.785% per annum to us. As of December 31, 2021 and 2022, the amounts due to Youxiang Group were RMB1.0 million and nil, respectively.
In March 2021, Youxiang Group provided a loan of RMB1.0 million due March 22, 2022 with an interest of 4.785% per annum to us. We incurred aggregate interest expense of RMB0.4 million on these borrowings in 2022. As of December 31, 2022, the amounts due to Youxiang Group were nil. 135 We provide workspace membership services to Youxiang Group.
We fully collected the loan in 2022. Other Transactions of Ucommune Transactions with Angela Bai and Dr. Daqing Mao In August 2020, Angela Bai, spouse of Dr. Daqing Mao, extended two loans of US$1.1 million and RMB8.0 million to us, respectively.
We fully collected the loan in 2022. Other Transactions of Ucommune Transactions with Angela Bai and Dr. Daqing Mao In September 2022, Angela Bai, spouse of Dr. Daqing Mao, entered into two new loan agreements of RMB3.5 million (US$0.5 million) and RMB8.5 million (US$1.2 million) with us, respectively.
As of December 31, 2021, 2022 and 2023, the amounts due to Guangdong Marketing Advertising Group for advertisement distribution services were RMB12.3 million, RMB25.2 million and nil, respectively. C. Interests of Experts and Counsel Not Applicable.
As of December 31, 2022, 2023 and 2024, the amounts due to Guangdong Marketing Advertising Group for advertisement distribution services were RMB25.2 million, nil and nil, respectively. Transactions with Ucommune Venture In May 2019, Youshenghengtong Technology entered into a series of contractual arrangements with Ucommune Venture, a company influenced significantly by Dr.
In October 2020, Angela Bai lent us another loan of RMB1.5 million with interest rate of 4.785% and a maturity date of January 5, 2021. The three loans was repaid as of December 31, 2021. In September 2022, Angela Bai entered into two new loan agreements of RMB3.5 million (US$0.5 million) and RMB8.5 million (US$1.2 million) with us, respectively.
On April 15, 2024, we entered into two loan agreements of RMB0.7 million (US$0.1 million) and RMB1.4 million (US$0.2 million) with Dr. Daqing Mao, which have no interest with a maturity date of April 15, 2025. As of the date of this annual report, the loans have not been repaid.
In connection with the closing of business combination, as of November 18, 2020, certain backstop investors had invested an aggregate amount of US$68.0 million pursuant to backstop agreements, including an aggregate investment of US$60.9 million in a PIPE financing. Share Incentives See “Item 6. Directors, Senior Management and Employees — B. Compensation — Share Incentive Plan.” UK Wisdom Limited Mr.
Directors, Senior Management and Employees — B. Compensation — Employment Agreements and Indemnification Agreements.” 134 Share Incentives See “Item 6. Directors, Senior Management and Employees — B. Compensation — Share Incentive Plan.” UK Wisdom Limited Mr.
Removed
Directors, Senior Management and Employees — B. Compensation — Employment Agreements and Indemnification Agreements.” Business Combination On November 17, 2020, we consummated a business combination pursuant to a merger agreement with Orisun Acquisition Corp. and certain other parties. Following the business combination, Ucommune Group Holdings became a wholly owned subsidiary of Ucommune International Ltd.
Added
Daqing Mao and his spouse Angela Bai, as well as its shareholders, and the contractual arrangements were renewed in July 2019 and in November 2019, respectively. On September 20, 2024, Youshenghengtong Technology issued the Notice of Termination to terminate the contractual arrangements with Ucommune Venture, and the existing shareholders of Ucommune Venture.
Removed
One loan had an interest rate of 8.0% per annum with a maturity date of January 4, 2021, and the other had an interest rate of 4.785% per annum with a maturity date of August 15, 2021.
Added
As a result, the series of contractual arrangements entered into by and among Youshenghengtong Technology, Ucommune Venture and/or its shareholders, including exclusive business cooperation agreement, equity pledge agreement, exclusive option agreement, shareholders’ voting rights proxy agreement and spousal consent letter, were terminated in accordance with the terms therein following 30 calendar days after the delivery date of the Notice of Termination.
Removed
We incurred aggregate interest expense of RMB0.1 million and RMB0.4 million on these borrowings in 2021 and 2022, respectively. We provide consulting, construction and designing services to Youxiang Group. For 2021, 2022 and 2023, revenue generated from Youxiang Group for consulting, construction and designing services was RMB24.6 million, RMB4.3 million and RMB1.2 million (US$0.2 million), respectively.
Added
Ucommune Venture became a related party of us since October 26, 2024, due to the termination of contractual arrangements. After October 26 in 2024, Ucommune Venture forgave an aggregate of RMB11.5 million (US$1.6 million) in connection with the termination of contractual arrangements. As of December 31, 2024, the amount due to Ucommune Venture was RMB75.7 million (US$10.4 million).
Removed
As of December 31, 2021, 2022 and 2023, the amounts due from Youxiang Group for consulting, construction and designing services were RMB18.0 million, RMB16.2 million and RMB14.6 million (US$2.1 million), respectively. We provide workspace membership services to Youxiang Group.
Added
After October 26 in 2024, we forgave an aggregate of RMB7.9 million (US$1.1 million) in connection with the termination of contractual arrangements. As of December 31, 2024, the amount due from Ucommune Venture was RMB1.5 million (US$0.2 million). C. Interests of Experts and Counsel Not Applicable.
Removed
On July 28, 2021, we disposed of one of our subsidiaries, Beijing Ucommune Jingkai Technology Co., Ltd. to Youxiang Group with a consideration of RMB14.5 million, which was used to settle the payables due to Youxiang Group. The disposal gain of RMB38,000 was recognized into additional paid-in capital as it is the transaction under common control.

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