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Zepp Health Corp

Zepp Health CorpZEPP财报

NYSE · 工业 · 电子计算机

Zepp Health Corp is a global digital health and smart wearable technology company. It develops and sells fitness trackers, smartwatches, and AI-powered health monitoring tools, serving individual consumers, sports teams, and healthcare providers across Asia, North America, and Europe, with core focus on wellness tracking and remote health management solutions.

What changed in Zepp Health Corp's 20-F — 2023 vs 2024

Top changes in Zepp Health Corp's 2024 20-F

664 paragraphs added · 789 removed · 481 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

219 edited+81 added−91 removed468 unchanged
Risk Factors—Risks Related to Doing Business in China—As the case in many other civil law jurisdictions, there are uncertainties regarding the interpretation and enforcement of laws, rules and regulations in the jurisdictions in which we operate, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” Furthermore, in connection with offering and listing in an overseas market, we, our PRC subsidiaries and the VIEs, under the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies as well as five supporting guidelines, released by the China Securities Regulatory Commission, or the CSRC, on February 17, 2023, and effective on March 31, 2023, may be required to fulfill filing procedures with and report material events to the CSRC, and under the Measures for Cybersecurity Review, which is effective on February 15, 2022, as well as its relevant laws, regulations and regulatory rules, may be required to go through cybersecurity review by the Cyberspace Administration of China.
Risk Factors—Risks Related to Doing Business in Jurisdictions in which We Operate—As the case in many other civil law jurisdictions, there are uncertainties regarding the interpretation and enforcement of laws, rules and regulations in the jurisdictions in which we operate, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” Furthermore, in connection with offering and listing in an overseas market, we, our PRC subsidiaries and the VIEs, under the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies as well as five supporting guidelines, released by the China Securities Regulatory Commission, or the CSRC, on February 17, 2023, and effective on March 31, 2023, may be required to fulfill filing procedures with and report material events to the CSRC, and under the Measures for Cybersecurity Review, which is effective on February 15, 2022, as well as its relevant laws, regulations and regulatory rules, may be required to go through cybersecurity review by the Cyberspace Administration of China.
Substantially all of the components and raw materials used to produce our products are sourced from third-party suppliers, and some of these components are sourced from a limited number of or a single supplier.
Substantially all of the components and raw materials used to produce our products are sourced from third-party suppliers, and some of these components are sourced from a limited number of suppliers or a single supplier.
It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.
Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.
Our operations in China are governed by PRC laws and regulations.
Our operations in China are governed by PRC laws and regulations.
In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or record-filing on a timely basis, if at all, with respect to our future loans to our PRC subsidiaries or VIEs or with respect to our future capital contributions to our PRC subsidiaries.
In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or record-filing on a timely basis, if at all, with respect to our future loans to our PRC subsidiaries or the VIEs or with respect to our future capital contributions to our PRC subsidiaries.
Risk Factors—Risks Related to Doing Business in China—As the case in many other civil law jurisdictions, there are uncertainties regarding the interpretation and enforcement of laws, rules and regulations in the jurisdictions in which we operate, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” Meanwhile, there are very few precedents as to whether contractual arrangements would be judged to form effective control over the VIEs through the contractual arrangements, or how contractual arrangements in the context of a variable interest entity should be interpreted or enforced by the PRC courts.
Risk Factors—Risks Related to Doing Business in Jurisdictions in which We Operate—As the case in many other civil law jurisdictions, there are uncertainties regarding the interpretation and enforcement of laws, rules and regulations in the jurisdictions in which we operate, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” Meanwhile, there are very few precedents as to whether contractual arrangements would be judged to form effective control over the VIEs through the contractual arrangements, or how contractual arrangements in the context of a variable interest entity should be interpreted or enforced by the PRC courts.
Risk Factors—Risks Related to Our Business—We operate in highly competitive markets and the scale and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our revenue and profitability.” ● If we are unable to anticipate and satisfy consumer preferences in a timely manner or if technological innovation renders existing smart wearable technology non-competitive or obsolete, our business may be materially and adversely affected.
Risk Factors—Risks Related to Our Business—We operate in highly competitive markets and the scale and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our revenue and profitability.” ● If we are unable to anticipate and satisfy consumer preferences in a timely manner or if technological innovation renders existing smart wearable technology non-competitive or obsolete, our business may be adversely affected.
If we do not adapt to or comply with the evolving expectations and standards on ESG matters from investors and the PRC government or are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and the business, financial condition, and the price of our ADSs could be materially and adversely effected.
If we do not adapt to or comply with the evolving expectations and standards on ESG matters from investors and the PRC government or are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and the business, financial condition, and the price of our ADSs could be adversely effected.
These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.
These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.
These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.
These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs.
The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.” ● The filing with and/or approval of the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to complete such filing or obtain such approval.
The delisting of the ADSs, or the threat of their being delisted, may adversely affect the value of your investment.” ● The filing with and/or approval of the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to complete such filing or obtain such approval.
As result, any regulation on currency exchange that effects the ability of our PRC subsidiaries to use their Renminbi revenues to pay dividends to us and the ability of our PRC subsidiaries to pay dividends or make other kinds of payments to us, may in a manner 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.
As result, any regulation on currency exchange that effects the ability of our PRC subsidiaries to use their Renminbi revenues to pay dividends to us and the ability of our PRC subsidiaries to pay dividends or make other kinds of payments to us, may in a manner 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.
A non-U.S. corporation, such as our company, will be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income; or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. 58 Table of Contents Although the law in this regard is not entirely clear, we treat the consolidated VIEs as being owned by us for U.S. federal income tax purposes because we control their management decisions and are entitled to substantially all of the economic benefits associated with these entities.
A non-U.S. corporation, such as our company, will be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income; or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. 56 Table of Contents Although the law in this regard is not entirely clear, we treat the consolidated VIEs as being owned by us for U.S. federal income tax purposes because we control their management decisions and are entitled to substantially all of the economic benefits associated with these entities.
In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over the VIEs, and our ability to conduct our business may be materially adversely affected. See “Item 3. Key Information—D.
In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over the VIEs, and our ability to conduct our business may be adversely affected. See “Item 3. Key Information—D.
In addition, the PRC tax authorities may impose late payment fees and other penalties on the VIEs for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if the VIEs’ tax liabilities increase or if it is required to pay late payment fees and other penalties.
In addition, the PRC tax authorities may impose late payment fees and other penalties on the VIEs for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be adversely affected if the VIEs’ tax liabilities increase or if it is required to pay late payment fees and other penalties.
If we fail to complete such registrations or record-filing, our ability to use the proceeds from our initial public offering and our ADS offering in April 2019 and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
If we fail to complete such registrations or record-filing, our ability to use the proceeds from our initial public offering and our ADS offering in April 2019 and to capitalize or otherwise fund our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.
Pursuant to the SAT Circular 698, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the non-resident enterprise, being the transferor, shall report to the competent tax authority of the PRC resident enterprise this Indirect Transfer. 51 Table of Contents On February 3, 2015, the State Administration of Taxation issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Public Notice 7.
Pursuant to the SAT Circular 698, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the non-resident enterprise, being the transferor, shall report to the competent tax authority of the PRC resident enterprise this Indirect Transfer. 49 Table of Contents On February 3, 2015, the State Administration of Taxation issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Public Notice 7.
For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2022 and do not expect to be so identified after we file this annual report on Form 20-F for the fiscal year ended December 31, 2023.
For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2022 and 2023 and do not expect to be so identified after we file this annual report on Form 20-F for the fiscal year ended December 31, 2024.
Failure to obtain necessary governmental approvals or to comply with applicable laws and regulations in the jurisdictions where we or the companies we invest in or acquire operate could subject us to administrative liabilities, which will materially and adversely affect our results of operations and financial performance.
Failure to obtain necessary governmental approvals or to comply with applicable laws and regulations in the jurisdictions where we or the companies we invest in or acquire operate could subject us to administrative liabilities, which will adversely affect our results of operations and financial performance.
If the VIEs go bankrupt and all or part of its assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations.
If the VIEs go bankrupt and all or part of its assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could adversely affect our business, financial condition and results of operations.
For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2022 and do not expect to be so identified after we file this annual report on Form 20-F for the fiscal year ended December 31, 2023.
For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2022 and 2023 and do not expect to be so identified after we file this annual report on Form 20-F for the fiscal year ended December 31, 2024.
Moreover, failure to comply with the various foreign exchange registration requirements described above could result in liability under PRC law for circumventing applicable foreign exchange restrictions. As a result, our business operations and our ability to distribute profits to you could be materially and adversely affected.
Moreover, failure to comply with the various foreign exchange registration requirements described above could result in liability under PRC law for circumventing applicable foreign exchange restrictions. As a result, our business operations and our ability to distribute profits to you could be adversely affected.
If we are unable to anticipate and satisfy consumer preferences in a timely manner or if technological innovation renders existing smart wearable technology non-competitive or obsolete, our business may be materially and adversely affected. Consumer preferences in smart wearable devices are changing rapidly and difficult to predict.
If we are unable to anticipate and satisfy consumer preferences in a timely manner or if technological innovation renders existing smart wearable technology non-competitive or obsolete, our business may be adversely affected. Consumer preferences in smart wearable devices are changing rapidly and difficult to predict.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” 18 Table of Contents ● We rely on contractual arrangements with the VIEs and their shareholders for a large portion of our business operations, which may not be as effective as direct ownership in providing operational control.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” 16 Table of Contents ● We rely on contractual arrangements with the VIEs and their shareholders for a large portion of our business operations, which may not be as effective as direct ownership in providing operational control.
Our business could be materially and adversely affected by the effects of epidemics, such as the COVID-19, the Influenza A virus subtype H1N1, or the H1N1 virus, Severe Acute Respiratory Syndrome, or SARS, avian influenza or other epidemics or outbreaks on the economic and business climate.
Our business could be adversely affected by the effects of epidemics, such as the COVID-19, the Influenza A virus subtype H1N1, or the H1N1 virus, Severe Acute Respiratory Syndrome, or SARS, avian influenza or other epidemics or outbreaks on the economic and business climate.
If we or any of the VIEs are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including: ● discontinuing or placing restrictions or onerous conditions on our operations through any transactions between our WFOE and the VIEs; ● imposing fines, confiscating the income from our WFOE or the VIEs, or imposing other requirements with which we or the VIEs may not be able to comply; ● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIEs and deregistering the equity pledges of the VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over the VIEs; or ● restricting or prohibiting our use of the proceeds of our initial public offering and our ADS offering in April 2019 to finance our business and operations in China.
If we or any of the VIEs are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including: ● discontinuing or placing restrictions or onerous conditions on our operations through any transactions between our WFOE and the VIEs; ● imposing fines, confiscating the income from our WFOE or the VIEs, or imposing other requirements with which we or the VIEs may not be able to comply; 36 Table of Contents ● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIEs and deregistering the equity pledges of the VIEs, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over the VIEs; or ● restricting or prohibiting our use of the proceeds of our initial public offering and our ADS offering in April 2019 to finance our business and operations in China.
Any failure to comply with applicable regulations could also result in regulatory enforcement actions against us, and the misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against us by governmental entities or others, damage our reputation and credibility and could have a negative impact on revenues and profits. 26 Table of Contents Any significant cybersecurity incident or disruption of our information technology systems or those of third-party partners could materially damage user relationships and subject us to significant reputational, financial, legal and operation consequences.
Any failure to comply with applicable regulations could also result in regulatory enforcement actions against us, and the misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against us by governmental entities or others, damage our reputation and credibility and could have a negative impact on revenues and profits. 22 Table of Contents Any significant cybersecurity incident or disruption of our information technology systems or those of third-party partners could materially damage user relationships and subject us to significant reputational, financial, legal and operation consequences.
In addition, we may not have sufficient intellectual property rights in all countries and regions where unauthorized third-party copying or use of our proprietary technology may occur and the scope of our intellectual property might be more limited in certain countries and regions.
We may not have sufficient intellectual property rights in all countries and regions where unauthorized third-party copying or use of our proprietary technology may occur and the scope of our intellectual property might be more limited in certain countries and regions.
This integration process involves inherent uncertainties, and we cannot assure you that the anticipated benefits of these acquisitions will be fully realized without incurring unanticipated costs or diverting management’s attention from our core operations. 34 Table of Contents Acquisitions and investments may disrupt our ongoing operations, divert management from their primary responsibilities, subject us to additional liabilities, increase our expenses, and adversely impact our business, financial condition, operating results, and cash flows.
This integration process involves inherent uncertainties, and we cannot assure you that the anticipated benefits of these acquisitions will be fully realized without incurring unanticipated costs or diverting management’s attention from our core operations. 31 Table of Contents Acquisitions and investments may disrupt our ongoing operations, divert management from their primary responsibilities, subject us to additional liabilities, increase our expenses, and adversely impact our business, financial condition, operating results, and cash flows.
Operators in violation of the PRC Anti-unfair Competition Law may be subject to civil, administrative or criminal liabilities depending on the specific circumstances. 48 Table of Contents In March 2018, the State Administration for Market Regulation was formed as a new governmental agency to take over, among other things, the anti-monopoly enforcement functions from the relevant departments under the Ministry of Commerce, the National Development and Reform Commission, and the former State Administration for Industry and Commerce, respectively.
Operators in violation of the PRC Anti-unfair Competition Law may be subject to civil, administrative or criminal liabilities depending on the specific circumstances. 46 Table of Contents In March 2018, the State Administration for Market Regulation was formed as a new governmental agency to take over, among other things, the anti-monopoly enforcement functions from the relevant departments under the Ministry of Commerce, the National Development and Reform Commission, and the former State Administration for Industry and Commerce, respectively.
Risk Factors—Risks Related to Doing Business in China—As the case in many other civil law jurisdictions, there are uncertainties regarding the interpretation and enforcement of laws, rules and regulations in the jurisdictions in which we operate, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” 4 Table of Contents The Holding Foreign Companies Accountable Act Pursuant to the Holding Foreign Companies Accountable Act, which was enacted on December 18, 2020 and further amended by the Consolidated Appropriations Act, 2023 signed into law on December 29, 2022, or the HFCAA, if the Securities and Exchange Commission, or the SEC, determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
Risk Factors—Risks Related to Doing Business in Jurisdictions in which We Operate—As the case in many other civil law jurisdictions, there are uncertainties regarding the interpretation and enforcement of laws, rules and regulations in the jurisdictions in which we operate, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” The Holding Foreign Companies Accountable Act Pursuant to the Holding Foreign Companies Accountable Act, which was enacted on December 18, 2020 and further amended by the Consolidated Appropriations Act, 2023 signed into law on December 29, 2022, or the HFCAA, if the Securities and Exchange Commission, or the SEC, determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder. 56 Table of Contents The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your Class A ordinary shares.
No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder. 54 Table of Contents The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your Class A ordinary shares.
If we experience greater replacement or returns of defective products from end users or Xiaomi, or greater warranty claims, in excess of our reserves, our brand name could suffer, and our business, revenue, gross margin, and operating results could be harmed. 31 Table of Contents We cooperate with a wide range of strategic partners to enable diversified application scenarios, further enhance the performance of our products and expand our sales channels.
If we experience greater replacement or returns of defective products from end users or Xiaomi, or greater warranty claims, in excess of our reserves, our brand name could suffer, and our business, revenue, gross margin, and operating results could be harmed. 28 Table of Contents We cooperate with a wide range of strategic partners to enable diversified application scenarios, further enhance the performance of our products and expand our sales channels.
Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the VIEs and their shareholders for a large portion of our business operations, which may not be as effective as direct ownership in providing operational control.” ● Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.
Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the VIEs and their shareholders for a large portion of our business operations, which may not be as effective as direct ownership in providing operational control.” ● Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have an adverse effect on our business.
SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. 49 Table of Contents Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles will be required to register such investments with the State Administration of Foreign Exchange or its local branches.
SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we make in the future. 47 Table of Contents Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles will be required to register such investments with the State Administration of Foreign Exchange or its local branches.
Based upon the nature and composition of our assets (in particular, the retention of substantial amounts of cash and investments), and the market price of our ADSs, we believe that we were a PFIC for the taxable year ended December 31, 2023 and we will likely be a PFIC for our current taxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of active income.
Based upon the nature and composition of our assets (in particular, the retention of substantial amounts of cash and investments), and the market price of our ADSs, we believe that we were a PFIC for the taxable year ended December 31, 2024, and we will likely be a PFIC for our current taxable year unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive assets we hold in assets that produce or are held for the production of active income.
Accordingly, yearly or quarterly comparisons of our operating results may not be useful and our results in any particular period will not necessarily be indicative of the results to be expected for any future period. 33 Table of Contents You should not rely on our Mobile App MAU or number of registered users metrics as indicators of future retention of users, continual user engagement or other revenue opportunities.
Accordingly, yearly or quarterly comparisons of our operating results may not be useful and our results in any particular period will not necessarily be indicative of the results to be expected for any future period. 30 Table of Contents You should not rely on our Mobile App MAU or number of registered users metrics as indicators of future retention of users, continual user engagement or other revenue opportunities.
Any failure to obtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of such approval if obtained by us, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations. 42 Table of Contents On July 6, 2021, the PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law.
Any failure to obtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of such approval if obtained by us, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may adversely affect our business, financial condition, and results of operations. 40 Table of Contents On July 6, 2021, the PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law.
Risk Factors—Risks Related to Our Business—We are susceptible to supply shortages, long lead time for raw materials and components, and supply changes, any of which could disrupt our supply chain and have a material adverse impact on our results of operation because some of the key components of our products come from a limited number of sources of supply.” ● We operate in highly competitive markets and the scale and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our revenue and profitability.
Risk Factors—Risks Related to Our Business—We are susceptible to supply shortages, long lead time for raw materials and components, and supply changes, any of which could disrupt our supply chain and have a material adverse impact on our results of operation because some of the key components of our products come from a limited number of sources of supply.” 15 Table of Contents ● We operate in highly competitive markets and the scale and resources of some of our competitors may allow them to compete more effectively than we can, which could result in a loss of our market share and a decrease in our revenue and profitability.
The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.” Cash Flows through Our Organization Zepp Health Corporation, our Cayman Islands holding company, or the Parent, may transfer cash to our wholly-owned Hong Kong subsidiary by making capital contributions or providing intra-group loans.
The delisting of the ADSs, or the threat of their being delisted, may adversely affect the value of your investment.” Cash Flows through Our Organization Zepp Health Corporation, our Cayman Islands holding company, or the Parent, may transfer cash to our wholly-owned Hong Kong subsidiary by making capital contributions or providing intra-group loans.
Risk Factors—Risks Related to Our Business—We collect, store, process and use personal information and other user data, which subjects us to laws, governmental regulations and other legal obligations related to privacy, information security and data protection, and any actual or perceived failure to comply with such legal obligations could harm our brand and business.” A.
Key Information—D. Risk Factors—Risks Related to Our Business—We collect, store, process and use personal information and other user data, which subjects us to laws, governmental regulations and other legal obligations related to privacy, information security and data protection, and any actual or perceived failure to comply with such legal obligations could harm our brand and business.” A.
Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.” ● As the case in many other jurisdictions, there may be uncertainties with respect to effecting service of legal process, enforcing foreign judgments or bringing actions in China or Cayman Islands against us or our management named in this annual report based on foreign laws.
Risk Factors—Risks Related to Doing Business in Jurisdictions in which We Operate—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.” ● As the case in many other jurisdictions, there may be uncertainties with respect to effecting service of legal process, enforcing foreign judgments or bringing actions in China or Cayman Islands against us or our management named in this annual report based on foreign laws.
Although we purchased products liability insurance in 2023, which covers a wide range of our products, a successful claim brought against us due to injuries suffered by our users in excess of our available insurance coverage may have a material adverse effect on our financial conditions, results of operations and reputation.
Although we purchased products liability insurance in 2024, which covers a wide range of our products, a successful claim brought against us due to injuries suffered by our users in excess of our available insurance coverage may have a material adverse effect on our financial conditions, results of operations and reputation.
An occurrence of a widespread health epidemic or other outbreaks could materially and adversely affect our business, financial condition and results of operations.
An occurrence of a widespread health epidemic or other outbreaks could adversely affect our business, financial condition and results of operations.
Business Overview—Regulation—Regulation on Employee Share Options.” 50 Table of Contents If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.
Business Overview—Regulation—Regulation on Employee Share Options.” 48 Table of Contents If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.
In August 2020, we introduced a new brand name, “Zepp” for our self-branded products. We believe the strategy to establish and promote our own brand is crucial to our future success as it expands our addressable market and gives us more flexibility in terms of pricing, distribution and marketing.
In August 2020, we introduced a new brand name, “Zepp” for our products. We believe the strategy to establish and promote our own brand is crucial to our future success as it expands our addressable market and gives us more flexibility in terms of pricing, distribution and marketing.
In addition, an independent registered public accounting firm for a public company may be required to issue an attestation report on the effectiveness of such company’s internal control over financial reporting. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2023.
In addition, an independent registered public accounting firm for a public company may be required to issue an attestation report on the effectiveness of such company’s internal control over financial reporting. Our management has concluded that our internal control over financial reporting was effective as of December 31, 2024.
If we fail to obtain the requisite approval or complete other filing procedures, we may face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on our operations in China, limitations on our operating privileges in China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in China, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
If we fail to obtain the requisite approval or complete other filing procedures, we may face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on our operations in China, limitations on our operating privileges in China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in China, or other actions that could have an adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.
The shareholders of the VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition. The shareholders of the VIEs may have potential conflicts of interest with us.
The shareholders of the VIEs may have potential conflicts of interest with us, which may adversely affect our business and financial condition. The shareholders of the VIEs may have potential conflicts of interest with us.
We believe that we were a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the taxable year ended December 31, 2023, which could subject U.S. investors in our ADSs or Class A ordinary shares to significant adverse U.S. income tax consequences.
We believe that we were a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the taxable year ended December 31, 2024, which could subject U.S. investors in our ADSs or Class A ordinary shares to significant adverse U.S. income tax consequences.
Risk Factors—Risks Related to Our Business—If we fail to successfully and timely develop and commercialize new products, services and technologies, our operating results may be materially and adversely affected.” ● Our future success depends on our ability to promote our own brands and protect our reputation.
Risk Factors—Risks Related to Our Business—If we fail to successfully and timely develop and commercialize new products, services and technologies, our operating results may be adversely affected.” ● Our future success depends on our ability to promote our brands and protect our reputation.
These restrictions may cause a material decline in the value of our ADSs. 57 Table of Contents You may experience dilution of your holdings due to the inability to participate in rights offerings. We may, from time to time, distribute rights to our shareholders, including rights to acquire securities.
These restrictions may cause a material decline in the value of our ADSs. 55 Table of Contents You may experience dilution of your holdings due to the inability to participate in rights offerings. We may, from time to time, distribute rights to our shareholders, including rights to acquire securities.
As of March 31, 2024, awards to purchase 13,564,827 Class A ordinary shares under the 2015 Plan have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates.
As of March 31, 2025, awards to purchase 13,564,827 Class A ordinary shares under the 2015 Plan have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates.
Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of our business in general, which may reduce the number of orders we receive. 27 Table of Contents Our patents, know-how, trade secrets and other intellectual property rights and proprietary rights are critical to our success.
Any perception by the public that online transactions or the privacy of user information are becoming increasingly unsafe or vulnerable to attacks could inhibit the growth of our business in general, which may reduce the number of orders we receive. Our patents, know-how, trade secrets and other intellectual property rights and proprietary rights are critical to our success.
Our future growth depends on whether we can continually develop and introduce new generations of our existing product lines and new forms of smart wearable technology with enhanced functionalities and value-added services in a timely manner.
Our future success depends on whether we can continually develop and introduce new generations of our existing product lines and new forms of smart wearable technology with enhanced functionalities and value-added services in a timely manner.
Risk Factors—Risks Related to Doing Business in China—As the case in many other civil law jurisdictions, there are uncertainties regarding the interpretation and enforcement of laws, rules and regulations in the jurisdictions in which we operate, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” ● The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.
Risk Factors—Risks Related to Doing Business in Jurisdictions in which We Operate—As the case in many other civil law jurisdictions, there are uncertainties regarding the interpretation and enforcement of laws, rules and regulations in the jurisdictions in which we operate, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” 17 Table of Contents ● The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.
International sales and operations may be subject to risks such as: ● limited brand recognition (compared with our home market in China); ● costs associated with establishing new distribution networks; ● fluctuations in freight costs, which can be influenced by factors beyond our control; ● difficulties in capturing foreign consumers’ preferences and customs; ● difficulties in staffing and managing foreign operations; ● costs and difficulties associated with providing after-sales customer services; ● burdens of complying with a wide variety of local laws and regulations, including packaging and labeling; ● adverse tax effects and foreign exchange controls making it difficult to repatriate earnings and cash; ● political and economic instability; ● potential cross-border commercial disputes; ● trade restrictions, including sanction-related restrictions; ● differing employment practices and laws and labor disruptions; ● the imposition of government controls; ● lesser degrees of intellectual property protection; ● tariffs and customs duties and the classifications of our goods by applicable governmental bodies; and ● a legal system subject to undue influence or corruption.
International sales and operations may be subject to risks such as: ● limited brand recognition; ● costs associated with establishing new distribution networks; ● fluctuations in freight costs, which can be influenced by factors beyond our control; ● difficulties in capturing foreign consumers’ preferences and customs; ● difficulties in staffing and managing foreign operations; ● costs and difficulties associated with providing after-sales customer services; ● burdens of complying with a wide variety of local laws and regulations, including packaging and labeling; ● adverse tax effects and foreign exchange controls making it difficult to repatriate earnings and cash; ● political and economic instability; ● potential cross-border commercial disputes; ● trade restrictions, including sanction-related restrictions; ● differing employment practices and laws and labor disruptions; ● the imposition of government controls; 25 Table of Contents ● lesser degrees of intellectual property protection; ● tariffs and customs duties and the classifications of our goods by applicable governmental bodies; and ● a legal system subject to undue influence or corruption.
Organizational Structure.” However, the contractual arrangements may not be as effective as direct ownership in providing us with control over the VIEs and we may incur substantial costs to enforce the terms of the arrangements. Uncertainties in the PRC legal system may limit our ability, as a Cayman Islands holding company, to enforce these contractual arrangements.
Organizational Structure.” 3 Table of Contents However, the contractual arrangements may not be as effective as direct ownership in providing us with control over the VIEs and we may incur substantial costs to enforce the terms of the arrangements. Uncertainties in the PRC legal system may limit our ability, as a Cayman Islands holding company, to enforce these contractual arrangements.
Risk Factors—Risks Related to Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.” ● Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
Risk Factors—Risks Related to Doing Business in Jurisdictions in which We Operate—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.” ● Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China.
Because the courts of the Cayman Islands have yet to rule on whether such judgments are penal or punitive in nature, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.
Because the courts of the Cayman Islands have yet to rule on whether such judgments are penal or punitive in nature, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. 42 Table of Contents The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law.
Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment. The value of the Renminbi against the U.S. dollar, Euro and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies.
Fluctuations in exchange rates could have an adverse effect on our results of operations and the value of your investment. The value of the Renminbi against the U.S. dollar, Euro and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies.
This will lead to increases in warranty costs, regulatory proceedings and product recalls, which could harm not only our revenue and operating results, but also our brand name. We currently offer a standard product warranty that the product will operate under normal use. We offer product warranty to distributors of our self-branded products and Xiaomi.
This will lead to increases in warranty costs, regulatory proceedings and product recalls, which could harm not only our revenue and operating results, but also our brand name. We currently offer a standard product warranty that the product will operate under normal use. We offer product warranty to distributors of our products.
It is difficult to predict how market forces or PRC, U.S. or European government policy may impact the exchange rates among the RMB, the U.S. dollar, and the Euro in the future. 46 Table of Contents The movements of U.S. dollar and Euro relative to Renminbi affect the monetary value of our overseas sales denominated in foreign currencies.
It is difficult to predict how market forces or PRC, U.S. or European government policy may impact the exchange rates among the RMB, the U.S. dollar, and the Euro in the future. The movements of U.S. dollar and Euro relative to Renminbi affect the monetary value of our overseas sales denominated in foreign currencies.
Risk Factors—Risks Related to Our Corporate Structure—The shareholders of the VIEs may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.” 3 Table of Contents There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the VIEs and their nominee shareholders.
Risk Factors—Risks Related to Our Corporate Structure—The shareholders of the VIEs may have potential conflicts of interest with us, which may adversely affect our business and financial condition.” There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the VIEs and their nominee shareholders.
As of the date of this annual report, our PRC subsidiaries, VIEs and their subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for our business operations, including, among other things, the Business License, the Intent Content Provider License and the Medical Device Production License.
As of the date of this annual report, our PRC subsidiaries, the VIEs and their subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are necessary for our business operations, including, among other things, the Business License, the Intent Content Provider License, the Medical Device Registration License and the Medical Device Production License.
On the contrary, the strengthening of U.S. dollar and Euro against Renminbi may increase the product costs and operating costs in overseas sales, which could adversely affect our operation results. In addition, significant revaluation of the Renminbi may have a material and adverse effect on your investment.
On the contrary, the strengthening of U.S. dollar and Euro against Renminbi may increase the product costs and operating costs in overseas sales, which could adversely affect our operation results. In addition, significant revaluation of the Renminbi may have an adverse effect on your investment.
Intensified competition may result in pricing pressures and reduced profit margins and may impede our ability to continue to increase the sales of our products or cause us to lose market share, any of which could substantially harm our results of operations.
Business Overview—Competition.” Intensified competition may result in pricing pressures and reduced profit margins and may impede our ability to continue to increase the sales of our products or cause us to lose market share, any of which could substantially harm our results of operations.
We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.
We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have an adverse effect on our ability to conduct our business.
These shareholders may breach, or cause the VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIEs, which would have a material and adverse effect on our ability to effectively control the VIEs and receive economic benefits from them.
These shareholders may breach, or cause the VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIEs, which would have an adverse effect on our ability to effectively control the VIEs and receive economic benefits from them.
The delisting of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. See “Item 3. Key Information—D.
The delisting of the ADSs, or the threat of their being delisted, may adversely affect the value of your investment. See “Item 3. Key Information—D.
In addition, the conflicts between Ukraine and Russia may affect the demand for and sales of our self-branded products and Xiaomi Wearable Products in the affected regions, disrupt the operations of our local distributors in Ukraine and Russia, which in turn may cause delay in the collection of receivables and could negatively impact our operating results, and prevent us from entering into or releasing certain of our products in certain markets.
In addition, the conflicts between Ukraine and Russia may affect the demand for and sales of our products in the affected regions, disrupt the operations of our local distributors in Ukraine and Russia, which in turn may cause delay in the collection of receivables and could negatively impact our operating results, and prevent us from entering into or releasing certain of our products in certain markets.
See “—Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.” Therefore, our contractual arrangements with the VIEs may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.
See “—Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have an adverse effect on our business.” Therefore, our contractual arrangements with the VIEs may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.
Foreign exchange regulations in China may also make it difficult for us to make loans or additional capital contributions to our PRC subsidiaries.” 8 Table of Contents Permissions Required from the PRC Authorities for Our Operations We conduct a significant portion of our business through our subsidiaries and VIEs in China.
Foreign exchange regulations in China may also make it difficult for us to make loans or additional capital contributions to our PRC subsidiaries.” 8 Table of Contents Permissions Required from the PRC Authorities for Our Operations We conduct our business in China through our PRC subsidiaries, the VIEs and their subsidiaries.
Our research and development effort may not yield the benefits we expect to achieve at all after we dedicate our time and resources into it. We are endeavoring to apply our products in more scenarios, and medical use is one area that we put in significant efforts.
Our research and development effort may not yield the benefits we expect to achieve at all after we dedicate our time and resources into it. 18 Table of Contents We are endeavoring to apply our products in more scenarios, and medical use is one area that we put in significant efforts.
For upgraded services and additional functions to be added to established products, we go through the same procedures. In 2021, we obtained the ISO/IEC 27001 information security management system certification. However, we cannot guarantee that our efforts will be effective or sufficient.
For upgraded services and additional functions to be added to established products, we go through the same procedures. In 2021, we obtained the ISO/IEC 27001 information security management system certification, which was renewed in 2024. However, we cannot guarantee that our efforts will be effective or sufficient.
Information on the Company—B. Business Overview—Regulation—Regulation on Foreign Investment.” 40 Table of Contents Meanwhile, the Implementation Rules to the Foreign Investment Law came into effect on January 1, 2020, which clarify and elaborate on the provisions of the Foreign Investment Law.
Information on the Company—B. Business Overview—Regulation—Regulation on Foreign Investment.” Meanwhile, the Implementation Rules to the Foreign Investment Law came into effect on January 1, 2020, which clarify and elaborate on the provisions of the Foreign Investment Law.
While detailed interpretation of or implementation rules under Article 177 of the PRC Securities Law have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase the difficulties you face in protecting your interests. See also “Item 3. Key Information—D.
While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. See also “Item 3. Key Information—D.
We have in the past experienced and may in the future experience component shortages and long lead time. We also expect that there may be a cost increase in source materials and shortage in chips with respect to BLE system-on-chip products.
We have in the past experienced and may in the future experience component shortages and long lead time. We also expect that there may be a cost increase in source materials and shortage in chips with respect to BLE system-on-chip products, memory, main control chips and sensors.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “—Risks Related to Doing Business in China—As the case in many other civil law jurisdictions, there are uncertainties regarding the interpretation and enforcement of laws, rules and regulations in the jurisdictions in which we operate, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” D.
Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations” and “—Risks Related to Doing Business in Jurisdictions in which We Operate—As the case in many other civil law jurisdictions, there are uncertainties regarding the interpretation and enforcement of laws, rules and regulations in the jurisdictions in which we operate, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.” D.
Abiding by the data security regulations, we currently utilize our big data technology in the following areas: ● optimize the algorithms that count the number of steps taken by eliminating the effect of certain patterns of the hand movements that are not associated with walking; ● fine-tune our algorithms for tracking sleep duration and quality and then make personalized adjustment based on users’ sleep patterns; ● enhance the performance of our built-in GPS, enabling our products to draw users’ running tracks more accurately and more quickly; ● develop insights into massive market and consumer data, empowering a more streamlined and efficient product design and optimization process; ● perform statistical analysis to identify certain characteristics that are associated with heart diseases and sleep patterns and make related practice recommendations to our users; ● perform statistical analysis to identify certain characteristics that are associated with users’ health and make related recommendations of training courses to our users; and 65 Table of Contents ● develop the capability to perform more granular analysis on the data we collect from our users and to allow our products to recognize types of activities and sports.
Abiding by the data security regulations, we currently utilize our big data technology in the following areas: ● optimize the algorithms that count the number of steps taken by eliminating the effect of certain patterns of the hand movements that are not associated with walking; ● fine-tune our algorithms for tracking sleep duration and quality and then make personalized adjustment based on users’ sleep patterns; 63 Table of Contents ● enhance the performance of our built-in GPS, enabling our products to draw users’ running tracks more accurately and more quickly; ● develop insights into massive market and consumer data, empowering a more streamlined and efficient product design and optimization process; ● perform statistical analysis to identify certain characteristics that are associated with heart diseases and sleep patterns and make related practice recommendations to our users; ● perform statistical analysis to identify certain characteristics that are associated with users’ health and make related recommendations of training courses to our users; and ● develop the capability to perform more granular analysis on the data we collect from our users and to allow our products to recognize types of activities and sports.
In addition, the Foreign Investment Law does not comment on the concept of “de facto control” or contractual arrangements with variable interest entities, however, it has a catch-all provision under definition of “foreign investment” to include investments made by foreign investors in China through means stipulated by laws or administrative regulations or other methods prescribed by the State Council.
The Foreign Investment Law does not comment on the concept of “de facto control” or contractual arrangements with variable interest entities, however, it has a catch-all provision under definition of “foreign investment” to include investments made by foreign investors in China through means stipulated by laws or administrative regulations or other methods prescribed by the State Council.
Pursuant to the Enterprise Income Tax Law of the PRC and its implementation rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.
PRC Dividend Withholding Tax Pursuant to the Enterprise Income Tax Law of the PRC and its implementation rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.
To comply with these laws and regulations, we have adopted security policies and measures to protect our cyber system and user information. 78 Table of Contents In addition, on July 7, 2022, the Cyberspace Administration of China promulgated the Measures for the Security Assessment of Cross-border Data Transfer, which took effect on September 1, 2022 and require that any data processor providing important data collected and generated during operations within the territory of the PRC or personal information that should be subject to security assessment according to law to an overseas recipient shall conduct security assessment.
To comply with these laws and regulations, we have adopted security policies and measures to protect our cyber system and user information. 74 Table of Contents In addition, on July 7, 2022, the Cyberspace Administration of China promulgated the Measures for the Security Assessment of Cross-border Data Transfer, which took effect on September 1, 2022 and require that any data processor providing important data collected and generated during operations within the territory of the PRC or personal information that should be subject to security assessment according to law to an overseas recipient shall conduct security assessment.
Regulation This section sets forth a summary of the most significant rules and regulations that affect our business activities or our shareholders’ rights to receive dividends and other distributions from us. 71 Table of Contents Regulation on Foreign Investment Investment activities in the PRC by foreign investors are principally governed by the Catalogue of Industries for Encouraging Foreign Investment, or the Encouraging Catalogue, and the Special Management Measures (Negative List) for the Access of Foreign Investment, or the Negative List, both of which were promulgated and are amended from time to time by the Ministry of Commerce, and the National Development and Reform Commission.
Regulation This section sets forth a summary of the most significant rules and regulations that affect our business activities or our shareholders’ rights to receive dividends and other distributions from us. 69 Table of Contents Regulation on Foreign Investment Investment activities in the PRC by foreign investors are principally governed by the Catalogue of Industries for Encouraging Foreign Investment, or the Encouraging Catalogue, and the Special Management Measures (Negative List) for the Access of Foreign Investment, or the Negative List, both of which were promulgated and are amended from time to time by the Ministry of Commerce, and the National Development and Reform Commission.
On March 23, 2016, the Ministry of Finance and the State Administration of Taxation jointly issued the Circular on the Pilot Program for Overall Implementation of the Collection of Value Added Tax Instead of Business Tax, which took effect on May 1, 2016.
PRC Value Added Tax On March 23, 2016, the Ministry of Finance and the State Administration of Taxation jointly issued the Circular on the Pilot Program for Overall Implementation of the Collection of Value Added Tax Instead of Business Tax, which took effect on May 1, 2016.
Zepp OS is not only a smart watch operating system but also the core of an open platform, designed with emphasis on health, user experience and privacy protection with three key characteristics, namely being light, smooth and practical. 63 Table of Contents We explored multiple ways to integrate Generative AI (GenAI) with our business, as we have identified huge potential GenAI could bring to our daily lives.
Zepp OS is not only a smart watch operating system but also the core of an open platform, designed with emphasis on health, user experience and privacy protection with three key characteristics, namely being light, smooth and practical. 61 Table of Contents We explored multiple ways to integrate Generative AI (GenAI) with our business, as we have identified huge potential GenAI could bring to our daily lives.
Our self-branded products are sold via both online and offline channels. In terms of online platforms, we operate storefront on e-commerce platforms and directly selling to certain of these e-commerce platforms who subsequently distribute to end users. For our offline network, we work with both well-established distributors to create points of purchase at their retail stores.
Our products are sold via both online and offline channels. In terms of online platforms, we operate storefront on e-commerce platforms and directly selling to certain of these e-commerce platforms who subsequently distribute to end users. For our offline network, we work with well-established distributors to create points of purchase at their retail stores.
In addition to the foregoing protections, we generally control access to and use of our proprietary and other confidential information through the use of internal and external controls, such as use of confidentiality agreement with our employees and outside consultants. 69 Table of Contents Competition We compete with other companies in every aspect of our business, particularly with companies that are in the smart wearables market.
In addition to the foregoing protections, we generally control access to and use of our proprietary and other confidential information through the use of internal and external controls, such as use of confidentiality agreement with our employees and outside consultants. 67 Table of Contents Competition We compete with other companies in every aspect of our business, particularly with companies that are in the smart wearables market.
Regulation on Advertising Business The State Administration for Market Regulation is the government agency responsible for regulating advertising activities in the PRC. 76 Table of Contents According to the PRC laws and regulations, companies that engage in advertising activities must obtain from the State Administration for Market Regulation or its local branches a business license which specifically includes operating an advertising business within its business scope.
Regulation on Advertising Business The State Administration for Market Regulation is the government agency responsible for regulating advertising activities in the PRC. 73 Table of Contents According to the PRC laws and regulations, companies that engage in advertising activities must obtain from the State Administration for Market Regulation or its local branches a business license which specifically includes operating an advertising business within its business scope.
A design patent is granted to the new design of a certain product in shape, pattern or a combination of both and in color, shape and pattern combinations aesthetically suitable for industrial application. Under the PRC Patent Law (2008 version), the term of patent protection starts from the date of application.
A design patent is granted to the new design of a certain product in shape, pattern or a combination of both and in color, shape and pattern combinations aesthetically suitable for industrial application. Under the PRC Patent Law, the term of patent protection starts from the date of application.
We actively support the ESG and we aim at achieving the ESG initiatives by utilizing the unique characteristics of our business and products. 70 Table of Contents Environmental Sustainability We leverage our technology, infrastructure and relationships with users and suppliers to reduce the environmental impacts of our business.
We actively support the ESG and we aim at achieving the ESG initiatives by utilizing the unique characteristics of our business and products. 68 Table of Contents Environmental Sustainability We leverage our technology, infrastructure and relationships with users and suppliers to reduce the environmental impacts of our business.
The PRC Patent Law (2008 version) adopts the principle of “first-to-file” system, which provides that where more than one person files a patent application for the same invention, a patent will be granted to the person who files the application first.
The PRC Patent Law adopts the principle of “first-to-file” system, which provides that where more than one person files a patent application for the same invention, a patent will be granted to the person who files the application first.
Leveraging the world’s first RISC-V open-source instruction set wearable processor, Huangshan-1 features four core artificial intelligence engines—cardiac biometrics engine, ECG, ECG Pro, and Hearth Rhythm Abnormality Monitoring Engine. Huangshan-1 operates alongside an always-on (AON) module designed to transfer sensor data to internal static random access memory without waking the primary processor, with dedicated accelerators for neural network workloads.
Leveraging the world’s first RISC-V open-source instruction set wearable processor, Huangshan-1 features four core artificial intelligence engines—cardiac biometrics engine, ECG, ECG Pro, and Hearth Rhythm Abnormality Monitoring Engine. 60 Table of Contents Huangshan-1 operates alongside an always-on (AON) module designed to transfer sensor data to internal static random access memory without waking the primary processor, with dedicated accelerators for neural network workloads.
The term of the Loan Agreement is ten years from the date of the loan agreement and will be extended on a yearly basis unless otherwise instructed by our WFOE until the loan is repaid. Agreements that allow us to receive economic benefits from the VIEs Exclusive Consultation and Service Agreements.
The term of the Loan Agreement is ten years from the date of the loan agreement and will be extended on a yearly basis unless otherwise instructed by our WFOE until the loan is repaid. 84 Table of Contents Agreements that allow us to receive economic benefits from the VIEs Exclusive Consultation and Service Agreements .
Because of these contractual arrangements, we are the primary beneficiary of the VIEs in China and hence consolidate their financial results as the consolidated affiliated entities. 90 Table of Contents Agreements that provide us with effective control over the VIEs Shareholder Voting Proxy Agreements and Powers of Attorney.
Because of these contractual arrangements, we are the primary beneficiary of the VIEs in China and hence consolidate their financial results as the consolidated affiliated entities. Agreements that provide us with effective control over the VIEs Shareholder Voting Proxy Agreements and Powers of Attorney.
The provisions apply to both domestic issuer applying to or having completed direct overseas offering or listing and domestic operating entity of the issuer applying to or having completed indirect overseas offering or listing. 89 Table of Contents C.
The provisions apply to both domestic issuer applying to or having completed direct overseas offering or listing and domestic operating entity of the issuer applying to or having completed indirect overseas offering or listing. ​ 82 Table of Contents C.
All of our products utilize the then-latest AI chipset and sensor array with important differentiating benefits for our data analytics service offerings, which provides consistent biometric data and allows users to connect with different terminals to improve the IoT application scenarios. In 2023, we sold our own branded products under the Amazfit and Zepp brand names.
All of our products utilize the then-latest AI chipset and sensor array with important differentiating benefits for our data analytics service offerings, which provides consistent biometric data and allows users to connect with different terminals to improve the IoT application scenarios. We sell our own branded products under the Amazfit and Zepp brand names.
Combined with the upgraded heart rate tracking algorithm of the GT 4 series, the BioTracker TM 4 could efficiently distinguish heart rate signal from that contaminated by various motion noises, which almost reaches the tracking level of heart rate belts. In September 2023, we announced our latest generation of biosensor array, BioTracker TM 5, on Amazfit Balance.
Combined with the upgraded heart rate tracking algorithm of the GT 4 series, the BioTracker TM 4 could efficiently distinguish heart rate signal from that contaminated by various motion noises, which almost reaches the tracking level of heart rate belts. In September 2023, we announced our latest generation of biosensor array, BioTracker TM 5, on Amazfit Balance and T-Rex 3.
On February 24, 2023, the CSRC, the National Administration of State Secrets Protection, the National Archives Administration of China and the Ministry of Finance jointly promulgated the Provisions on Strengthening the Confidentiality and Archives Administration Related to Overseas Issuance and Listing of Securities by Domestic Enterprises, which came into effect on March 31, 2023, together with the set of regulations and supporting guidelines promulgated on February 17, 2023, and replaced the Provisions on Strengthening Confidentiality and Archives Administration in Overseas Issuance and Listing of Securities issued in 2009.
On February 24, 2023, the CSRC, the National Administration of State Secrets Protection, the National Archives Administration of China and the Ministry of Finance jointly promulgated the Provisions on Strengthening the Confidentiality and Archives Administration Related to Overseas Issuance and Listing of Securities by Domestic Enterprises, which came into effect on March 31, 2023, together with the set of regulations and supporting guidelines promulgated on February 17, 2023.
Hearables and Others Smart ear buds, ear phones and other personal listening devices have become a fast-growing segment of the smart wearables industry in the last several years. 61 Table of Contents We introduced our first two smart hearable products, Amazfit PowerBuds and Amazfit ZenBuds, which incorporate true health monitoring and health benefits, in 2020.
Earphone and Others Smart ear buds, ear phones and other personal listening devices have become a fast-growing segment of the smart wearables industry in the last several years. 59 Table of Contents We introduced our first two smart hearable products, Amazfit PowerBuds and Amazfit ZenBuds, which incorporate true health monitoring and health benefits, in 2020.
In addition, we have quality assurance personnel stationed at the facilities of our key manufacturers to perform sampling inspection to ensure that our manufacturers fully adhere to our quality standards in the production process. 68 Table of Contents Sales, Branding and Marketing Since September 2015, we have started to use the brand name “Amazfit” to market our self-branded products.
In addition, we have quality assurance personnel stationed at the facilities of our key manufacturers to perform sampling inspection to ensure that our manufacturers fully adhere to our quality standards in the production process. 66 Table of Contents Sales, Branding and Marketing Since September 2015, we have started to use the brand name “Amazfit” to market our products.
The determination as to whether or not an overseas offering and listing by domestic companies is indirect, shall be made on a substance over form basis. 88 Table of Contents Under these regulations and guidelines, a filing-based regulatory system would be implemented covering both direct and indirect overseas offering and listing.
The determination as to whether or not an overseas offering and listing by domestic companies is indirect, shall be made on a substance over form basis. Under these regulations and guidelines, a filing-based regulatory system would be implemented covering both direct and indirect overseas offering and listing.
Both direct and indirect overseas securities offering and listing by domestic companies will be regulated, of which the former refers to securities offering and listing in an overseas market made by a joint-stock company incorporated domestically, and the latter refers to overseas offering and listing by a company in the name of an overseas incorporated entity, whereas the company’s major business operations are located domestically and such offering and listing is based on the underlying equity, assets, earnings or other similar rights of a domestic company.
Both direct and indirect overseas securities offering and listing by domestic companies will be regulated, of which the latter refers to overseas offering and listing by a company in the name of an overseas incorporated entity, whereas the company’s major business operations are located domestically and such offering and listing is based on the underlying equity, assets, earnings or other similar rights of a domestic company.
Our research and development team has responded effectively to technological changes, and is driving continued innovation to unleash the potential of the wearable devices industry. As of December 31, 2023, our total research and development staff consisted of 493 employees. Our global research and development team supports the design and development of our new products.
Our research and development team has responded effectively to technological changes, and is driving continued innovation to unleash the potential of the wearable devices industry. As of December 31, 2024, our total research and development staff consisted of 467 employees. Our global research and development team supports the design and development of our new products.
The PRC Enterprise Income Tax Law and its implementation rules which was promulgated on December 6, 2007 and amended on April 23, 2019, permit certain “high and new technology enterprises strongly supported by the state” that independently own core intellectual property and meet statutory criteria, to enjoy a reduced 15% enterprise income tax rate.
The PRC Enterprise Income Tax Law and its implementation rules which was latest amended on April 23, 2019, permit certain “high and new technology enterprises strongly supported by the state” that independently own core intellectual property and meet statutory criteria, to enjoy a reduced 15% enterprise income tax rate.
These circumstances include: (i) where the data to be transferred to an overseas recipient contain important data collected and generated by data processors; (ii) where the data to be transferred to an overseas recipient are personal information collected and generated by operators of critical information infrastructure or data processors processing over one million users’ individual information; (iii) where the personal information of more than 100,000 people or sensitive personal information of more than 10,000 people are transferred overseas accumulatively since January 1 of the previous year; or (iv) other circumstances under which security assessment of cross-border data transfer is required as prescribed by the national cyberspace administration.
These circumstances include: (i) where the data to be transferred to an overseas recipient contain important data collected and generated by data processors; (ii) where the data to be transferred to an overseas recipient are important data or personal information collected and generated by operators of critical information infrastructure; (iii) where the personal information of more than 1 million individuals or sensitive personal information of more than 10,000 individuals are transferred overseas accumulatively since January 1 of the previous year; or (iv) other circumstances under which security assessment of cross-border data transfer is required as prescribed by the national cyberspace administration.
Under the current regulatory regime of the PRC, foreign-invested enterprises in the PRC may pay dividends only out of their retained earnings, if any, determined in accordance with PRC accounting standards and regulations.
Regulation on Dividend Distributions Under the current regulatory regime of the PRC, foreign-invested enterprises in the PRC may pay dividends only out of their retained earnings, if any, determined in accordance with PRC accounting standards and regulations.
Our telephone number is +86 010-5940-3251. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited at PO Box 309 Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711.
Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited at PO Box 309 Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711.
Our research and development facilities, including those for hardware engineering, structure design and mobile app development, and our management and operations facilities, including those for accounting, supply chain management, quality assurance and customer services, are located at our headquarters.
Our research and development facilities, including those for hardware engineering, structure design and mobile app development, and our management and operations facilities, including those for accounting, supply chain management, quality assurance and customer services, are located in China.
To comply with these laws and regulations, we have required our users to consent to our collecting and using their personal information, and established information security systems to protect users’ privacy. 82 Table of Contents Regulation on Employment The Labor Law of the PRC, effective on January 1, 1995 and subsequently amended on August 27, 2009 and December 29, 2018, the PRC Labor Contract Law, effective on January 1, 2008 and subsequently amended on December 28, 2012 and the Implementing Regulations of the Employment Contract Law, effective on September 18, 2008, provide requirements concerning employment contracts between an employer and its employees.
To comply with these laws and regulations, we have required our users to consent to our collecting and using their personal information, and established information security systems to protect users’ privacy. 76 Table of Contents Regulation on Employment The Labor Law of the PRC, latest amended on December 29, 2018, the PRC Labor Contract Law, latest amended on December 28, 2012 and the Implementing Regulations of the Employment Contract Law, effective on September 18, 2008, provide requirements concerning employment contracts between an employer and its employees.
Personal information processors can process sensitive personal information only if they have a specific purpose and sufficient necessity, and take strict protective measures. In addition, the law provides rules for cross-border provision of personal information.
Personal information processors can process sensitive personal information only if they have obtained separate consent from individual for processing sensitive personal information, have a specific purpose and sufficient necessity, and take strict protective measures. In addition, the law provides rules for cross-border provision of personal information.
A utility model is granted to a new technical solution that is practicable for application and proposed in respect of the shape, structure or a combination of both of a product.
An invention patent is granted to a new technical solution proposed in respect of a product or method or an improvement of a product or method. A utility model is granted to a new technical solution that is practicable for application and proposed in respect of the shape, structure or a combination of both of a product.
As of February 29, 2024, we had registered 79 computer software copyrights. 75 Table of Contents Regulation on Domain Name The domain names are protected under the Administrative Measures on the Internet Domain Names promulgated by the Ministry of Industry and Information Technology, effective on November 1, 2017.
As of February 28, 2025, we had registered 79 computer software copyrights. Regulation on Domain Name The domain names are protected under the Administrative Measures on the Internet Domain Names promulgated by the Ministry of Industry and Information Technology, effective on November 1, 2017.
Violations of SAFE Circular 19 or Circular 16 could result in administrative penalties. On October 23, 2019, the State Administration of Foreign Exchange issued the SAFE Circular No. 28, pursuant to which all foreign-invested enterprises are allowed to make domestic equity investments with their capital funds in accordance with laws and regulations.
On October 23, 2019, the State Administration of Foreign Exchange issued the SAFE Circular No. 28, pursuant to which all foreign-invested enterprises are allowed to make domestic equity investments with their capital funds in accordance with laws and regulations.
Representatives of our distribution channels and Xiaomi, especially those that manage our e-commerce channels, also provide customer services to users who purchased our products through their channels during normal working hours. These representatives are required to complete mandatory training on product knowledge, complaint handling and communication skills.
Representatives of our distribution channels, especially those that manage our e-commerce channels, also provide customer services to users who purchased our products through their channels during normal working hours. These representatives are required to complete mandatory training on product knowledge, complaint handling and communication skills. In addition, we also maintain a call center to provide support to our users.
The State Administration of Taxation issued the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits on October 14, 2019, which became effective on January 1, 2020. The announcement further simplified the procedures for enjoying treaty benefits and replaced the SAT Circular No. 60.
Furthermore, the State Administration of Taxation issued the Announcement of State Taxation Administration on Promulgation of the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits on October 14, 2019, which became effective on January 1, 2020. The announcement further simplified the procedures for enjoying treaty benefits.
Related Party Transactions—Other Transactions with Related Parties.” BioTracker TM Sensor Array We develop our own proprietary biosensor array for our smart devices. Like the Huangshan chipset, we believe this provides significant development and cost competitive advantages for our company.
BioTracker TM Sensor Array We develop our own proprietary biosensor array for our smart devices. Like the Huangshan chipset, we believe this provides significant development and cost competitive advantages for our company.
Data Analytics Capability We had approximately 27.4 million Mobile App MAUs as of December 31, 2023, contributing to a large data set for health related data analytics.
Data Analytics Capability We had approximately 20.9 million Mobile App MAUs as of December 31, 2024, contributing to a large data set for health related data analytics.
The issuer shall report to the CSRC within 3 working days after the overseas offering and listing application documents become public. In addition, subsequent securities offerings of an issuer in the same overseas market where it has previously offered or listed securities shall be filed with the CSRC within 3 working days after the offering is completed.
Subsequent securities offerings of an issuer in the same overseas market where it has previously offered or listed securities shall be filed with the CSRC within 3 working days after the offering is completed.
Article 20 of the PRC Patent Law (2008 version) provides that, for an invention or utility model completed in China, any applicant (not just Chinese companies and individuals), before filing a patent application outside of China, must first submit it to the State Intellectual Property Office for a confidential examination.
Patents in China are filed with the China National Intellectual Property Administration.Article 19 of the PRC Patent Law provides that, for an invention or utility model completed in China, any applicant (not just Chinese companies and individuals), before filing a patent application outside of China, must first submit it to the China National Intellectual Property Administration for a confidential examination.
We are also opening the Mini Program framework for developers to create new apps that leverage the high-quality data and intelligence from our company’s proprietary biosensor array and AI chip, creating a global open IoT ecosystem for smart wearable users. Our inclusive and innovative Zepp OS ecosystem has now launched over 280 mini apps.
We are also opening the Mini Program framework for developers, enabling them to create new apps that leverage the high-quality data and intelligence from our proprietary biosensor array and AI chip, creating a global open IoT ecosystem for smart wearable users.
On December 22, 2022, the Ministry of Industry and Information Technology promulgated the Provisions on the Administration of Radio Transmission Equipment, which took effect on July 1, 2023.
On December 22, 2022, the Ministry of Industry and Information Technology promulgated the Provisions on the Administration of Radio Transmission Equipment, which took effect on July 1, 2023. On May 20, 2024, the Ministry of Industry and Information Technology promulgated the Measures for the Supervision and Inspection of Radio Transmission Equipment, which took effect on September 1, 2024.
Patents relating to invention are effective for twenty years, and utility models and designs are effective for ten years from the date of application.
Patents relating to invention are effective for twenty years, and design patents are valid for fifteen years and utility model patents are valid for ten years from the date of application.
Regulations Relating to Overseas Issuance and Listing of Securities by Domestic Enterprises On February 17, 2023, the CSRC promulgated a new set of regulations consisting of the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines, which came into effect on March 31, 2023, to regulate overseas securities offering and listing activities by domestic companies either in direct or indirect form.
Regulations Relating to Overseas Issuance and Listing of Securities by Domestic Enterprises On February 17, 2023, the CSRC promulgated a new set of regulations consisting of the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines, which came into effect on March 31, 2023, to regulate overseas securities offering and listing activities by domestic companies either in direct or indirect form. ​ 81 Table of Contents The new set of regulations and supporting guidelines promulgated on February 17, 2023 apply to overseas securities offering and listing activities by domestic companies, the “securities” under these regulations and guidelines refer to equity shares, depository receipts, corporate bonds convertible to equity shares and other equity securities.
Our board is composed of highly reputable members, including a female director. We have also established a Privacy and Ethics Committee and appointed Mr. Hongjiang Zhang as the chair, who has been selected as an international member of the U.S. National Academy of Engineering.
Our board is composed of highly reputable members. We have also established a Privacy and Ethics Committee and appointed Mr. Hongjiang Zhang as the chair, who has been selected as an international member of the U.S. National Academy of Engineering. We have been continually improving our environmental, social and governance initiatives under the guidance of our sustainability framework.
The Measures for the Security Assessment of Cross-border Data Transfer provide four circumstances, under any of which data processors shall, through the local cyberspace administration at the provincial level, apply to the national cyberspace administration for security assessment of cross-border data transfer.
These regulations provide four circumstances, under any of which data processors shall apply to the national cyberspace administration for security assessment of cross-border data transfer.
We offer products in different styles, such as round versus rectangular, and specific functions targeting various audiences, such as ruggedized versus every day, or sports versus fashion, to address the different needs of our consumers.
We offer products in different styles, such as round versus rectangular, and specific functions targeting various audiences, such as ruggedized versus every day, or sports versus fashion, to address the different needs of our consumers. We pursue a strategy of fast development and replacement cycles with shorter manufacturing runs.
We also partner with several leading social networks worldwide. With the consent of our users, we allow them to import certain activity data we collect to their platforms so that our users can utilize certain interactive functions offered on these social networks.
With the consent of our users, we allow certain social network platform to import certain activity data into their platforms so that our users can utilize certain interactive functions offered on these social networks.
Software Copyright Law In order to further implement the Computer Software Protection Regulations promulgated by the State Council on December 20, 2001, and latest amended on January 30, 2013, the National Copyright Administration issued the Computer Software Copyright Registration Procedures on February 20, 2002, which apply to software copyright registration, exclusive licensing contract registration and transfer contract registration.
The infringing party may also be held liable for the right holder’s damages. 72 Table of Contents Software Copyright Law In order to further implement the Computer Software Protection Regulations promulgated by the State Council on December 20, 2001, and latest amended on January 30, 2013, the National Copyright Administration issued the Computer Software Copyright Registration Procedures on February 20, 2002, which apply to software copyright registration, exclusive licensing contract registration and transfer contract registration.
Wang Wayne Huang, Yunfen Lu, Meihui Fan, Bin Fan, Yi Zhang and Xiaojun Zhang, our PRC resident shareholders, have completed all necessary registrations with the local branch of the State Administration of Foreign Exchange or qualified banks as required by SAFE Circular 37 in connection with their direct or indirect offshore investment related to our company.
Wang Wayne Huang, Yunfen Lu, Meihui Fan, Bin Fan, Yi Zhang and Xiaojun Zhang, our PRC resident shareholders, have completed all necessary registrations with the local branch of the State Administration of Foreign Exchange or qualified banks as required by SAFE Circular 37 in connection with their direct or indirect offshore investment related to our company. ​ 80 Table of Contents Regulation on Employee Share Options On December 25, 2006, the People’s Bank of China promulgated the Administrative Measures for Individual Foreign Exchange.
Core Technology for Our Products and Services We design and develop our own core technology for smart devices, which we deem as a key competitive edge of our company as compared to many competitors who outsource their key components.
Core Technology for Our Products and Services We design and develop our own core technology for smart devices, which we deem as a key competitive edge of our company as compared to many competitors who outsource their key components. We believe this give us an edge in product design for current and future products, as well as cost advantages.
In February 2021, we, through Anhui Shunyuan Xinke Management Consulting Partnership (Limited Partnership), one of our subsidiaries in China, acquired 29.99% of the total outstanding shares of Jiangsu Yitong, a PRC company listed in Shenzhen Stock Exchange, for an aggregate consideration of RMB959.7 million in cash to expand the healthcare ecosystem for Chinese market in the long term.
On February 8, 2018, our ADSs commenced trading on the NYSE under the symbol “HMI.” 57 Table of Contents In February 2021, we, through Anhui Shunyuan Xinke Management Consulting Partnership (Limited Partnership), one of our subsidiaries in China, acquired 29.99% of the total outstanding shares of Jiangsu Yitong, a PRC company listed in Shenzhen Stock Exchange, for an aggregate consideration of US$144.89 million in cash to expand the healthcare ecosystem for Chinese market in the long term.
In the opinion of Zhong Lun Law Firm, our PRC legal counsel: ● the ownership structures of the VIEs in China and our WFOE comply with all existing PRC laws and regulations; and ● the contractual arrangements between our WFOE, the VIEs and their respective shareholders governed by PRC law are legal, valid and binding, and do not result in any violation of PRC laws or regulations currently in effect.
In the opinion of Zhong Lun Law Firm, our PRC legal counsel: ● the ownership structures of the VIEs in China and our WFOE comply with all existing PRC laws and regulations; and ● the contractual arrangements between our WFOE, the VIEs and their respective shareholders governed by PRC law are legal, valid and binding, and do not result in any violation of PRC laws or regulations currently in effect. 85 Table of Contents However, our PRC legal counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules.
Both of our mobile apps sync automatically with, and display real-time data from our devices. They use charts and graphs to display analysis of the activity and biometric data collected from users. Our “Zepp Life” mobile app is designed with a focus on sports and fitness functions while our “Zepp” mobile app emphasizes functions relating to health.
They use charts and graphs to display analysis of the activity and biometric data collected from users. Our “Zepp Life” mobile app is designed with a focus on sports and fitness functions while our “Zepp” mobile app emphasizes functions relating to health. In October 2024, we launched the enhanced Zepp App 9.
Zepp Coach TM Launched in October 2022, the Amazfit Falcon debuted the Zepp Coach TM , a smart coaching solution developed by us in-house, driven by both domain knowledge and AI.
Subsequently, we integrated the certified software into our products launched in the Chinese market in 2024. Zepp Coach TM Launched in October 2022, the Amazfit Falcon debuted the Zepp Coach TM , a smart coaching solution developed by us in-house, driven by both domain knowledge and AI.
In August 2020, we introduced a new brand name, “Zepp,” for our self-branded products. Since 2020, we have engaged in various marketing and branding activities, both in China and globally, to promote our Amazfit brand and Zepp brand.
In August 2020, we introduced a new brand name, “Zepp”. Since 2020, we have engaged in various marketing and branding activities to promote our Amazfit brand and Zepp brand.
On February 15, 2012, the State Administration of Foreign Exchange issued the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, which replaced the Application Procedures of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Ownership Plans or Stock Option Plans of Overseas Publicly-Listed Companies issued by the State Administration of Foreign Exchange on March 28, 2007.
On February 15, 2012, the State Administration of Foreign Exchange issued the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies.
In addition, we also maintain a call center to provide support to our users. Additionally, we have set up mobile chat groups to connect with users who are also enthusiastic followers of our products, and conduct focus group study periodically to better understand what our users desire from our products.
Additionally, we have set up mobile chat groups to connect with users who are also enthusiastic followers of our products, and conduct focus group study periodically to better understand what our users desire from our products. Intellectual Property Protection of our intellectual property is a strategic priority for our business.
Quality Assurance We are committed to maintaining the highest level of quality in our products. We have designed and implemented a quality management system that provides the framework for continual improvement of products and processes.
We have designed and implemented a quality management system that provides the framework for continual improvement of products and processes.
Our Amazfit Smart Scale, which was first introduced in 2020, tracks metrics for 16 key body heath indicators with high measurement accuracy, and recognizes family members sharing the same account to facilitate user experience.
We introduced Amazfit Smart Scale in 2020, which tracks metrics for 16 key body heath indicators with high measurement accuracy, and recognizes family members sharing the same account to facilitate user experience. In addition, we offer a selection of sportswear, home appliances and various smart watch accessories.
In addition, the PRC agents shall file each quarter the form for record-filing of information of the Domestic Individuals Participating in the Stock Incentive Plans of Overseas Listed Companies with the State Administration of Foreign Exchange or its local branches. 87 Table of Contents Our PRC citizen employees who have been granted share options or restricted shares are subject to the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies.
Our PRC citizen employees who have been granted share options or restricted shares are subject to the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies.
The consumers whose interests have been damaged due to their purchase of goods or acceptance of services on online marketplace platforms may claim damages from sellers or service providers. 73 Table of Contents Regulation on Torts Under the Civil Code of the PRC, which was issued by the National Congress on May 28, 2020, and became effective on January 1, 2021, where damages to other persons are caused by defective products, the infringed person may claim compensation against the producers or the sellers of the product.
Regulation on Torts Under the Civil Code of the PRC, which was issued by the National Congress on May 28, 2020, and became effective on January 1, 2021, where damages to other persons are caused by defective products, the infringed person may claim compensation against the producers or the sellers of the product.
In addition to the aforementioned general rules, the PRC Personal Information Protection Law also introduces the rules for processing sensitive personal information, which refers to the personal information that, once leaked or illegally used, can easily lead to the infringement of the personal dignity of natural persons or harm personal and property safety, including biometrics, religious beliefs, specific identities, medical health, financial accounts, and whereabouts, as well as personal information of minors under the age of fourteen.
In addition to the aforementioned general rules, the PRC Personal Information Protection Law also introduces the rules for processing sensitive personal information, including biometrics, religious beliefs, specific identities, medical health, financial accounts, and whereabouts, as well as personal information of minors under the age of fourteen.
In addition, our products have international versions that are manufactured for sales and distribution in overseas markets. In 2023, we expanded international sales and marketing channels for our Amazfit products and Zepp products on our own, and we plan to keep doing so in the foreseeable future.
In addition, as a global company, we manufacture localized versions of our products specifically tailored for sales and distribution in various international markets. In 2023, we expanded international sales and marketing channels for our Amazfit products and Zepp products on our own, and we plan to keep doing so in the foreseeable future.
Although our WFOE is currently wholly owned by Hong Kong Zepp Holding Limited, we cannot assure you that we will be able to enjoy the preferential withholding tax rate of 5% under the China-HK Taxation Arrangement.
Although our WFOE is currently wholly owned by Hong Kong Zepp Holding Limited, we cannot assure you that we will be able to enjoy the preferential withholding tax rate of 5% under the China-HK Taxation Arrangement. ​ 79 Table of Contents Regulation on Foreign Exchange The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, most recently amended on August 5, 2008.
Backed by the Zepp OS architecture which benefits users from the comprehensive health insights to improve their health through “24/7 health monitoring,” we continue to provide innovative features and functionalities to users through our mobile apps.
Backed by the Zepp OS architecture which benefits users from the comprehensive health insights to improve their health through “24/7 health monitoring,” we continue to provide innovative features and functionalities to users through our mobile apps. The Zepp App is a powerful, all-in-one health and fitness platform that transforms every Amazfit device into a personalized performance coach.
However, the industry in which we compete is evolving rapidly and is becoming increasingly competitive. For additional information, see “Item 3. Key Information—D.
We primarily expand sales channels for our Amazfit products and Zepp products on our own, both in China and globally. However, the industry in which we compete is evolving rapidly and is becoming increasingly competitive. For additional information, see “Item 3. Key Information—D.
We also licensed Zepp OS technologies, including patents and technical secrets, to Whale Microelectronics Co., Ltd., a subsidiary of Jiangsu Yitong. PumpBeats TM Blood Pressure Measurement System In July 2021, we introduced PumpBeats TM , a non-invasive and sleeveless blood pressure measurement system on Amazfit smart watches, which enables both spot measurement during day time and continuous monitoring during sleep.
PumpBeats TM Blood Pressure Measurement System In July 2021, we introduced PumpBeats TM , a non-invasive and sleeveless blood pressure measurement system on Amazfit smart watches, which enables both spot measurement during day time and continuous monitoring during sleep.
Pursuant to the Administrative Measures on the Internet Domain Names and the Implementation Rules of Registration of Country Code Top-level Domain Name, the registration of domain names adopts the “first to file” principle and the registrant shall complete the registration via the domain name registration service institutions.
The registration of domain names adopts the “first to file” principle and the registrant shall complete the registration via the domain name registration service institutions.
The transaction was completed in February 2021. In May 2022, we, through Anhui Shunyuan Xinke Management Consulting Partnership (Limited Partnership), acquired another 0.01% of the total outstanding shares of Jiangsu Yitong for an aggregate consideration of RMB232,847.
The transaction was completed in February 2021. In May 2022, we, through Anhui Shunyuan Xinke Management Consulting Partnership (Limited Partnership), acquired another 0.01% of the total outstanding shares of Jiangsu Yitong for an aggregate consideration of US$35,238. In February 2021, we rebranded ourselves from “Huami Corporation” to “Zepp Health Corporation” to emphasize our global recognition and expansion efforts.
It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
Accordingly, the PRC regulatory authorities may take a view that is contrary to the opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide.
If the products are produced or sold with known defects, causing deaths or severe adverse health issues, the infringed party has the right to claim punitive damages in addition to compensatory damages. Regulation on Intellectual Property Rights The PRC has adopted comprehensive legislation governing intellectual property rights, including patents, trademarks, copyrights and domain names.
If the products are produced or sold with known defects, causing deaths or severe adverse health issues, the infringed party has the right to claim punitive damages in addition to compensatory damages.
Through close coordination with our customers and manufacturers and frequent purchases of components from suppliers, we are able to carry a few raw material and in-process inventories and achieve prompt production, minimizing inventory risk. For our self-branded products, we procure components based on our internal sales and production plan at the beginning of each month.
In general, prices for our raw materials have been relatively stable. Through close coordination with our customers and manufacturers and frequent purchases of components from suppliers, we are able to carry a few raw material and in-process inventories and achieve prompt production, minimizing inventory risk.
We pursue a strategy of fast development and replacement cycles with shorter manufacturing runs. This brings new products to market fast, stimulating new purchase by delivering compelling newly launched or updated offerings throughout the year.
This brings new products to market fast, stimulating new purchase by delivering compelling newly launched or updated offerings throughout the year.
Big Data Technology The real-time iteration of our big data model is enabled by our big data infrastructure and algorithms. Our data platform can extract multi-dimensional features from multi-source data in a highly efficient and secure way to support modeling.
Our data platform can extract multi-dimensional features from multi-source data in a highly efficient and secure way to support modeling.
The State establishes a working mechanism for the security review of foreign investments to be responsible for organizing, coordinating and guiding the security review of foreign investments.
Pursuant to the measures, for foreign investments which affect or may affect national security, security review shall be conducted in accordance with the provisions of the measures. The State establishes a working mechanism for the security review of foreign investments to be responsible for organizing, coordinating and guiding the security review of foreign investments.
Our manufacturers produce our products using design specifications and standards that we establish. We evaluate on an ongoing basis our current contract manufacturers and component suppliers, including whether or not to utilize new or alternative contract manufacturers or component suppliers. We do not maintain purchase commitments with our suppliers.
We evaluate on an ongoing basis our current contract manufacturers and component suppliers, including whether or not to utilize new or alternative contract manufacturers or component suppliers. We do not maintain purchase commitments with our suppliers. The terms of the supply agreements with our suppliers generally are two to three years.
In circumstances involving serious violations, the State Administration for Market Regulation or its local branches may revoke violators’ licenses or permits for their advertising business operations. On February 25, 2023, the State Administration for Market Regulation issued the Measures for the Administration of Internet Advertising to regulate internet advertising activities, which became effective on May 1, 2023.
On February 25, 2023, the State Administration for Market Regulation issued the Measures for the Administration of Internet Advertising to regulate internet advertising activities, which became effective on May 1, 2023.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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General and administrative expenses primarily consist of salaries and benefits (including employee benefit expenses and share-based compensation expenses) for administrative personnel, as well as other expenses primarily relating to professional services and our facilities and other administrative expenses. Selling and Marketing Expenses.
General and Administrative Expenses. General and administrative expenses primarily consist of salaries and benefits (including employee benefit expenses and share-based compensation expenses) for administrative personnel, as well as other expenses primarily relating to professional services and our facilities and other administrative expenses. Selling and Marketing Expenses.
Under PRC law, each of our subsidiaries and the VIEs in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital.
Under PRC law, each of our PRC subsidiaries and the VIEs in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital.
Our future success is significantly dependent on our ability to continually launch products and services that are popular among consumers, particularly relative to those offered by our competitors. The popularity of our products and services in turn affects users’ engagement on our platform, the data of which form a critical foundation of our research and development efforts.
Our future success is significantly dependent on our ability to continually launch new products and services that are popular among consumers, particularly relative to those offered by our competitors. The popularity of our products and services in turn affects users’ engagement on our platform, the data of which form a critical foundation of our research and development efforts.
In 2023, we recorded RMB29.1 million (US$4.1 million) in valuation allowance for deferred tax asset which is a non-cash in nature and does not materially affect our operation.
In 2023, we recorded US$4.1 million in valuation allowance for deferred tax asset which is a non-cash in nature and does not materially affect our operation.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events since January 1, 2024 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events since January 1, 2025 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Other Income Other income primarily consists of subsidies received from local government authorities to encourage technology innovation and investment. 95 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of our total revenues.
Other Income Other income primarily consists of subsidies received from local government authorities to encourage technology innovation and investment. 88 Table of Contents Results of Operations The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of our total revenues.
PRC Generally, our PRC subsidiaries, VIEs and their subsidiaries are subject to enterprise income tax on their taxable income in China at a statutory rate of 25%. A “high and new technology enterprise” is entitled to a favorable statutory tax rate of 15% and such qualification is reassessed by governmental authorities every three years.
Mainland China Generally, our PRC subsidiaries, the VIEs and their subsidiaries are subject to enterprise income tax on their taxable income in China at a statutory rate of 25%. A “high and new technology enterprise” is entitled to a favorable statutory tax rate of 15% and such qualification is reassessed by governmental authorities every three years.
Cost is determined using the weighted average method. We assess the valuation of inventory and periodically write down and write off the value for estimated excess and obsolete inventory based upon the product life cycle. 105 Table of Contents Inventories are written down if the estimated net realizable value is less than the recorded value.
Cost is determined using the weighted average method. We assess the valuation of inventory and periodically write down and write off the value for estimated excess and obsolete inventory based upon the product life cycle. 97 Table of Contents Inventories are written down if the estimated net realizable value is less than the recorded value.
Anhui Huami Health Technology Co., Ltd. began to qualify as a high and new technology enterprise since 2020, and successfully renewed its high and new technology enterprise certificate in November 2023. Shunyuan Kaihua began to qualify as a high and new technology enterprise since 2021.
Anhui Huami Health Technology Co., Ltd. began to qualify as a high and new technology enterprise since 2020, and successfully renewed its high and new technology enterprise certificate in November 2023. Shunyuan Kaihua began to qualify as a high and new technology enterprise since 2021, and successfully renewed its high and new technology enterprise certificate in October 2024.
Risk Factors—Risks Related to Doing Business in China—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.” If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
Risk Factors—Risks Related to Doing Business in Jurisdictions in which We Operate—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have an adverse effect on our ability to conduct our business.” If our holding company in the Cayman Islands or any of our subsidiaries outside of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%.
We will monitor the regulatory developments and continue to evaluate the impact, if any, on our financial results. Netherlands Our subsidiaries, Zepp Europe Holding B.V. and Zepp Netherlands Trading B.V., are located in Netherlands and are subject to a two-tiered income tax rates for taxable income earned as determined in accordance with tax rules and regulations in Netherlands.
We will monitor the regulatory developments and continue to evaluate the impact, if any, on our financial results. 92 Table of Contents Netherlands Our subsidiaries, Zepp Europe Holding B.V. and Zepp Netherlands Trading B.V., are located in Netherlands and are subject to a two-tiered income tax rates for taxable income earned as determined in accordance with tax rules and regulations in Netherlands.
Anhui Huami began to qualify as a high and new technology enterprise since 2015 and renewed the high and new technology enterprise certificate in July 2018 and in September 2021.
Anhui Huami began to qualify as a high and new technology enterprise since 2015 and renewed the high and new technology enterprise certificate in July 2018, September 2021 and November 2024.
Material cash requirements Our material cash requirements as of December 31, 2023 and any subsequent interim period primarily include bank borrowings and operating lease obligations. Bank borrowings.
Material cash requirements Our material cash requirements as of December 31, 2024 and any subsequent interim period primarily include bank borrowings and operating lease obligations. Bank borrowings.
The difference between our net loss of RMB289.0 million and the net cash used in operating activities was primarily due to additional used in working capital, partially offset by the adjustment of non-cash items, which primarily consisted of shared-based compensation, depreciation and amortization expenses, non-cash lease expenses, and provision and write off for excess and obsolete inventories.
The difference between our net loss of US$43.3 million and the net cash used in operating activities was primarily due to additional used in working capital, partially offset by the adjustment of non-cash items, which primarily consisted of shared-based compensation, depreciation and amortization expenses, non-cash lease expenses, and provision and write off for excess and obsolete inventories.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F. A.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F. Historically, we presented our financial results in Renminbi.
Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. ​
Moreover, we do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us. ​ 98 Table of Contents
The difference between our net loss of RMB212.6 million (US$29.9 million) and the net cash provided by operating activities was primarily due to additional cash provided by working capital, as well as the adjustment of non-cash items, which primarily consisted of shared-based compensation, depreciation and amortization expenses, non-cash lease expenses, and provision and write off for excess and obsolete inventories.
The difference between our net loss of US$31.1 million and the net cash provided by operating activities was primarily due to additional cash provided by working capital, as well as the adjustment of non-cash items, which primarily consisted of shared-based compensation, depreciation and amortization expenses, non-cash lease expenses, and provision and write off for excess and obsolete inventories.
We have the obligation to either repair or replace the defect product for the customers if the product is still under warranty. At the time revenue is recognized, an estimate of warranty costs in relation to the products sold is recorded as a component of cost of revenues.
We offer a warranty ranging from one to three years. We have the obligation to either repair or replace the defect product for the customers if the product is still under warranty. At the time revenue is recognized, an estimate of warranty costs in relation to the products sold is recorded as a component of cost of revenues.
See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” B.
See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in Jurisdictions in which We Operate—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.” 93 Table of Contents B.
Investing activities Net cash provided by investing activities was RMB54.7 million (US$7.7 million) for the year ended December 31, 2023, primarily due to disposal of intangible assets of RMB22.2 million (US$3.1 million), disposal of long-term investments of RMB33.0 million (US$4.7 million), disposal of property, plant and equipment of RMB11.3 million (US$1.6 million), partially offset by purchase of property, plant and equipment of RMB11.3 million (US$1.6 million) and loans provided to related parties of RMB9.9 million (US$1.4 million).
Net cash provided by investing activities was US$7.7 million for the year ended December 31, 2023, primarily due to disposal of long-term investments of US$4.7 million, disposal of intangible assets of US$3.1 million, disposal of property, plant and equipment of US$1.6 million, partially offset by purchase of property, plant and equipment of US$1.6 million and loans provided to related parties of US$1.4 million.
Research and development expenses Research and development expenses decreased by 30.0% from RMB517.1 million for the year ended December 31, 2022 to RMB361.8 million (US$51.0 million) for the year ended December 31, 2023, primarily due to a decrease of RMB190.0 million (US$26.8 million) in expenses as we refined our research and development approaches to consistently evaluate resource efficiency to ensure maximum return on research and development activities in 2023, partially offset by a decrease of RMB32.4 million (US$4.6 million) in government subsidies that we received in 2023.
Research and development expenses Research and development expenses decreased by 33.4% from US$77.3 million for the year ended December 31, 2022 to US$51.5 million for the year ended December 31, 2023, primarily due to a decrease of US$26.8 million in expenses as we refined our research and development approaches to consistently evaluate resource efficiency to ensure maximum return on research and development activities in 2023, partially offset by a decrease of US$4.6 million in government subsidies that we received in 2023.
Operating lease. We have operating lease arrangements for administrative office spaces in various cities in the PRC and overseas, and financial lease that is immaterial. As of December 31, 2023, we had RMB28.3 million of payables within the next 12 months.
Operating lease. We have operating lease arrangements for administrative office spaces in various cities in the PRC and overseas, and financial lease that is immaterial. As of December 31, 2024, we had US$1.4 million of payables within the next 12 months.
General and administrative expenses General and administrative expenses decreased by 20.1% from RMB235.9 million for the year ended December 31, 2022 to RMB188.5 million (US$26.6 million) for the year ended December 31, 2023, primarily due to a decrease of RMB40.6 million (US$5.7 million) in salary and benefits as we implemented strict expense control measures.
General and administrative expenses General and administrative expenses decreased by 23.7% from US$35.1 million for the year ended December 31, 2022 to US$26.8 million for the year ended December 31, 2023, primarily due to a decrease of US$5.7 million in salary and benefits as we implemented strict expense control measures.
Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. 104 Table of Contents The table below sets forth the respective revenues contribution and assets of Zepp and our wholly-owned subsidiaries and the VIEs as of the dates and for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues (1) ​ Total assets (1) ​ ​ For the Year Ended December 31, ​ As of December 31, ​ 2021 2022 2023 2022 2023 Zepp and its wholly-owned subsidiaries 16.5 % 38.8 % 60.2 % 46.2 % 53.1 % VIEs 83.5 % 61.2 % 39.8 % 53.8 % 46.9 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Note: (1) The percentages exclude the inter-company transactions and balances between our subsidiaries and the VIEs.
Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. 96 Table of Contents The table below sets forth the respective revenues contribution and assets of Zepp and our wholly-owned subsidiaries and the VIEs as of the dates and for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues (1) ​ Total assets (1) ​ ​ For the Year Ended December 31, ​ As of December 31, ​ 2022 2023 2024 2023 2024 Zepp and its wholly-owned subsidiaries 38.7 % 59.9 % 82.0 % 53.1 % 54.8 % VIEs 61.3 % 40.1 % 18.0 % 46.9 % 45.2 % Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Note: (1) The percentages exclude the inter-company transactions and balances between our subsidiaries and the VIEs.
Our capital expenditures were RMB53.1 million, RMB9.9 million and RMB11.9 million (US$1.7 million) in the years ended December 31, 2021, 2022 and 2023, respectively. We will continue to make capital expenditures to meet the expected growth of our business.
Our capital expenditures were US$1.5 million, US$1.7 million and US$1.5 million in the years ended December 31, 2022, 2023 and 2024, respectively. We will continue to make capital expenditures to meet the expected growth of our business.
Financing activities Net cash used in financing activities for the year ended December 31, 2023 was RMB295.0 million (US$41.6 million), primarily due to the repayment of bank borrowings of RMB735.0 million (US$103.5 million), partially offset by the bank borrowings received of RMB400.0 million (US$56.3 million).
Net cash used in financing activities for the year ended December 31, 2023 was US$41.7 million, primarily due to the repayment of bank borrowings of US$103.8 million, partially offset by the bank borrowings received of US$56.5 million.
Changes in working capital for the year ended December 31, 2022 primarily consisted of RMB904.9 million accounts payable payment settlement cash outflow, partially offset and optimize by RMB187.9 million better inventory management cash inflow and RMB210.8 million cash saving in prepaid expenses and other current assets due to better expense control.
Changes in working capital for the year ended December 31, 2022 primarily consisted of US$135.3 million accounts payable payment settlement cash outflow, partially offset and optimized by US$27.9 million better inventory management cash inflow and US$33.9 million cash saving in prepaid expenses and other current assets due to better expense control.
Selling and marketing expenses Selling and marketing expenses decreased by 31.7% from RMB460.3 million for the year ended December 31, 2022 to RMB314.6 million (US$44.3 million) for the year ended December 31, 2023, primarily due to (i) a decrease of RMB82.3 million (US$11.6 million) in advertisement promotion expenses related to our ongoing efforts to enhance our retail profitability and optimize our mix of sales channels, and (ii) a decrease of RMB56.7 million (US$8.0 million) in salary and benefits as we implemented strategic staff allocations across our various sales regions. 97 Table of Contents Operating income/(loss) As a result of the factors set out above, we recorded an operating loss of RMB410.2 million for the year ended December 31, 2022, and an operating loss of RMB207.1 million (US$29.2 million) for the year ended December 31, 2023.
Selling and marketing expenses Selling and marketing expenses decreased by 34.8% from US$68.3 million for the year ended December 31, 2022 to US$44.5 million for the year ended December 31, 2023, primarily due to (i) a decrease of US$11.6 million in advertisement promotion expenses related to our ongoing efforts to enhance our retail profitability and optimize our mix of sales channels, and (ii) a decrease of US$8.0 million in salary and benefits as we implemented strategic staff allocations across our various sales regions. 91 Table of Contents Operating loss As a result of the factors set out above, we recorded an operating loss of US$61.9 million for the year ended December 31, 2022, and an operating loss of US$30.5 million for the year ended December 31, 2023.
For the years ended December 31, 2021, 2022 and 2023, research and development expenses accounted for 42.5%, 42.6% and 41.8% of our total operating expenses and 8.2%, 12.5% and 14.5% of our revenues, respectively.
For the years ended December 31, 2022, 2023 and 2024, research and development expenses accounted for 42.8%, 41.9% and 39.3% of our total operating expenses and 12.6%, 14.6% and 25.3% of our revenues, respectively.
Research and Development Expenses. Research and development expenses primarily consist of salaries and benefits (including employee benefit expenses and share-based compensation expenses) for research and development personnel and other expenses associated with our research and development activities. General and Administrative Expenses.
Operating Expenses We classify our operating expenses into three categories: research and development, general and administrative, and selling and marketing. Research and Development Expenses. Research and development expenses primarily consist of salaries and benefits (including employee benefit expenses and share-based compensation expenses) for research and development personnel and other expenses associated with our research and development activities.
Other income/(expenses), net We had other income of RMB43.8 million in 2022 and other expenses of RMB3.7 million (US$0.5 million) in 2023. Income taxes benefits We recorded income taxes benefit in the amount of RMB65.9 million in 2022 and income taxes benefit in the amount of RMB15.8 million (US$2.2 million) in 2023.
Other income/(expenses), net We had other income of US$6.5 million in 2022 and other expenses of US$0.5 million in 2023. Income taxes benefits We recorded income taxes benefit in the amount of US$9.9 million in 2022 and income taxes benefit in the amount of US$2.4 million in 2023.
Net loss attributable to Zepp Health Corporation As a result of the foregoing, we recorded a net loss of RMB288.3 million for the year ended December 31, 2022, and a net loss of RMB212.1 million (US$29.9 million) for the year ended December 31, 2023.
Net loss attributable to Zepp Health Corporation As a result of the foregoing, we recorded a net loss of US$43.2 million for the year ended December 31, 2022, and a net loss of US$31.0 million for the year ended December 31, 2023.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2023. Holding Company Structure Zepp Health Corporation is a holding company with no material operations of its own. We conduct our operations in China primarily through our PRC subsidiaries, the VIEs and their subsidiaries in China.
Other than as discussed above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of December 31, 2024. Holding Company Structure Zepp Health Corporation is a holding company with no material operations of its own.
Interest income Interest income represents interest earned on bank deposits. We had interest income of RMB12.3 million in 2022 and RMB21.9 million (US$3.1 million) in 2023. Interest expenses Interest expense represents interest charges for bank borrowings. We had interest expense of RMB57.0 million in 2022 and RMB47.7 million (US$6.7 million) in 2023.
Interest income Interest income represents interest earned on bank deposits. We had interest income of US$1.8 million in 2022 and US$3.1 million in 2023. Interest expenses Interest expense represents interest charges for bank borrowings. We had interest expense of US$8.4 million in 2022 and US$6.8 million in 2023.
As of December 31, 2023, the balance of the notes payable and others is RMB475.6 million, which includes RMB212.2 million payables for short-term bank acceptance notes and RMB263.4 million payable for the letter of credits factored in the bank. The short-term bank acceptance notes and the letter of credit are normally settled within three months and twelve months, respectively.
As of December 31, 2024, the balance of the notes payable and others is US$61.7 million, which includes US$25.1 million payables for short-term bank acceptance notes and US$36.6 million payable for the letter of credits factored in the bank. The short-term bank acceptance notes and the letter of credit are normally settled within three months and twelve months, respectively.
As of December 31, 2023, we had outstanding bank loans with terms of one to seven years for an aggregate balance of RMB864.1 million, including RMB12.0 million short-term bank loans and RMB537.1 million long-term bank loans used for our daily operations and RMB315.0 million long-term bank loans for the Jiangsu Yitong acquisition with the shares we hold in Jiangsu Yitong as collateral, compared to our outstanding bank loans for an aggregate balance of RMB1.2 billion as of December 31, 2022.
As of December 31, 2024, we had outstanding bank loans with terms of one to seven years for an aggregate balance of US$117.1 million, including US$39.2 million short-term bank loans and US$35.5 million long-term bank loans used for our daily operations, and US$2.7 million short-term bank loans and US$39.7 million long-term bank loans for the Jiangsu Yitong acquisition with the shares we hold in Jiangsu Yitong as collateral, compared to our outstanding bank loans for an aggregate balance of US$121.7 million as of December 31, 2023.
Changes in working capital for the year ended December 31, 2023 primarily consisted of RMB367.6 million (US$51.8 million) of cash inflow from improved inventory management and a decrease of RMB250.9 million (US$35.3 million) in accounts receivable, partially offset by a decrease of RMB191.9 million (US$ 27.0 million) in accounts payable, which was due to our effective management in raw material and component procurement and manufacturing. 102 Table of Contents Net cash used in operating activities for the year ended December 31, 2022 was RMB787.6 million.
Changes in working capital for the year ended December 31, 2023 primarily consisted of US$51.9 million of cash inflow from improved inventory management and a decrease of US$36.4 million in accounts receivable, partially offset by a decrease of US$27.8 million in accounts payable, which was due to our effective management in raw material and component procurement and manufacturing.
We expect our self-branded products to contribute to a more portion of our revenues in the future. Cost of Revenues Our cost of revenues is comprised of the following: ● material costs; ● manufacturing and fulfillment costs of our products; ● an estimate of warranty costs; and ● related expenses that are directly attributable to the production of products.
Cost of Revenues Our cost of revenues is comprised of the following: ● material costs; ● manufacturing and fulfillment costs of our products; ● an estimate of warranty costs; and ● related expenses that are directly attributable to the production of products.
Net cash used in investing activities was RMB42.3 million for the year ended December 31, 2022, primarily due to purchase of short-term investments of RMB16.3 million, loans provided to related parties of RMB15.5 million, and purchase of long-term investments of RMB12.7 million.
Net cash used in investing activities was US$6.2 million for the year ended December 31, 2022, primarily due to purchase of short-term investments of US$2.4 million, loans provided to related parties of US$2.3 million, and purchase of long-term investments of US$1.9 million.
As a result, Zepp Health Corporation’s ability to pay dividends depends upon dividends paid by our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.
If our existing subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us.
The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. 100 Table of Contents We are subject to VAT at a rate of 17% (before May 1, 2018), 16% (on and after May 1, 2018 and before April 1, 2019), and 13% (on and after April 1, 2019) on sales and/or import goods and at a rate of 6% on the services (research and development services, technology services, information technology services and/or culture and creativity services), in each case less any deductible VAT we have already paid or borne.
We are subject to VAT at a rate of 17% (before May 1, 2018), 16% (on and after May 1, 2018 and before April 1, 2019), and 13% (on and after April 1, 2019) on sales and/or import goods and at a rate of 6% on the services (research and development services, technology services, information technology services and/or culture and creativity services), in each case less any deductible VAT we have already paid or borne.
For raw materials and components procured overseas, our suppliers cover the shipping costs from place of origin to China, and we are responsible for the additional logistics costs if we consign these raw materials and components to our contract manufacturers. 94 Table of Contents We offer a warranty ranging from one to three years.
Shipping costs for raw materials and components from domestic locations are borne by our suppliers and contract manufacturers. For raw materials and components procured overseas, our suppliers cover the shipping costs from place of origin to China, and we are responsible for the additional logistics costs if we consign these raw materials and components to our contract manufacturers.
The difference between our net income of RMB137.0 million and the net cash used in operating activities was primarily due to additional used in working capital, partially offset by the adjustment of non-cash items, which primarily consisted of shared-based compensation, depreciation and amortization expenses, and provision and write off for excess and obsolete inventories.
The difference between our net loss of US$75.8 million and the net cash used in operating activities was primarily due to additional cash used in working capital, partially offset by the adjustment of non-cash items, which primarily consisted of deferred income taxes, impairment loss from long-term investments, provision for excess and obsolete inventories, and depreciation and amortization expenses.
Net cash used in operating activities for the year ended December 31, 2021 was RMB232.4 million.
Net cash used in operating activities for the year ended December 31, 2022 was US$117.1 million.
Inventories, net Inventories consist of raw materials, finished goods and work in process. Inventories are stated at the lower of cost or net realizable value on a weighted average basis.
Inventories are stated at the lower of cost or net realizable value on a weighted average basis.
The decrease was primarily attributable to our repayments of RMB735.0 million in short-term and long-term bank loans in 2023. Notes payable and others.
The decrease was primarily attributable to our repayments of US$12.6 million in short-term and long-term bank loans in 2024, partially offset by bank borrowings received of US$11.0 million. Notes payable and others.
Net cash provided by financing activities for the year ended December 31, 2022 was RMB289.2 million, primarily due to proceeds from letter of credit factoring of RMB310.3 million, bank borrowings of RMB838.9 million, partially offset by the repayment of bank borrowings of RMB727.5 million.
Financing activities Net cash provided by financing activities for the year ended December 31, 2024 was US$0.5 million, primarily due to bank borrowings received of US$11.0 million and proceeds from letter of credit factoring of US$5.1 million, partially offset by repayment of bank borrowings of US$12.6 million.
Any significant changes in those estimates would result in changes in the in allocation of revenue which could have an impact on revenue. ​ 106 Table of Contents Recent Accounting Pronouncements For a summary of recently issued accounting pronouncements, see Note 2 to the consolidated financial statements of Zepp Health Corporation and its subsidiaries pursuant to Item 17 of Part III of this annual report.
Recent Accounting Pronouncements For a summary of recently issued accounting pronouncements, see Note 2 to the consolidated financial statements of Zepp Health Corporation and its subsidiaries pursuant to Item 17 of Part III of this annual report.
For example: ● capital contributions to our PRC subsidiaries must be approved by the Ministry of Commerce or its local counterparts; and ● our loans to our PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the State Administration of Foreign Exchange or its local branches. See “Item 4. Information on the Company—B.
For example: ● capital contributions to our PRC subsidiaries must be approved by the Ministry of Commerce or its local counterparts; and ● our loans to our PRC subsidiaries to finance their activities cannot exceed statutory limits and must be registered with the State Administration of Foreign Exchange or its local branches. 94 Table of Contents Operating activities Net cash used in operating activities for the year ended December 31, 2024 was US$24.4 million.
Accordingly, Anhui Huami, Anhui Huami Health Technology Co., Ltd. and Shunyuan Kaihua were subject to a tax rate of 15% during the years ended December 31, 2021, 2022 and 2023.
Accordingly, Anhui Huami, Anhui Huami Health Technology Co., Ltd. and Shunyuan Kaihua were subject to a tax rate of 15% during the years ended December 31, 2022, 2023 and 2024. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards.
We may decide to enhance our liquidity position or increase our cash reserve for future investments through additional capital and finance funding. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations.
The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations.
However, given our efficient supply chain management and industry leading market share, we believe we have the ability to control the overall level of material and manufacturing costs as percentage of revenues. 93 Table of Contents Relationship with Xiaomi Xiaomi is our exclusive distribution channel for all Xiaomi Wearable Products.
However, given our efficient supply chain management and industry leading market share, we believe we have the ability to control the overall level of material and manufacturing costs as percentage of revenues. 87 Table of Contents Key Line Items and Specific Factors Affecting Our Results of Operations Revenues We generate substantially all of our revenues from sales of smart wearable devices.
Xiaomi Wearable Products. Costs of revenues for our Xiaomi Wearable Products segment decreased by 58.7% from RMB1,394.5 million for the year ended December 31, 2022 to RMB576.1 million (US$81.1 million) for the year ended December 31, 2023. The decrease was in line with the decrease in the sales of our Xiaomi Wearable Products.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenues Our revenues decreased by 42.5% from US$613.6 million for the year ended December 31, 2022 to US$352.9 million for the year ended December 31, 2023. The decrease was primarily resulted from a 63.7% decline in the sales of Xiaomi Wearable Products.
Net cash used in investing activities was RMB1,069.3 million for the year ended December 31, 2021, primarily due to purchase of long-term investments of RMB1,072.8 million mainly used in acquiring equity interests in Jiangsu Yitong, and purchase of property, plant and equipment of RMB46.1 million, partially offset by disposal of long-term investments of RMB20.0 million.
Investing activities Net cash used in investing activities was US$1.6 million for the year ended December 31, 2024, primarily due to purchase of long-term investments of US$7.0 million, partially offset by disposal of long-term investments of US$4.9 million.
Gross profit Our gross profit decreased by 18.1% from RMB803.1 million for the year ended December 31, 2022 to RMB657.8 million (US$92.6 million) for the year ended December 31, 2023.
Cost of revenues Our cost of revenues decreased by 47.4% from US$494.8 million for the year ended December 31, 2022 to US$260.5 million for the year ended December 31, 2023. Gross profit Our gross profit decreased by 22.3% from US$118.9 million for the year ended December 31, 2022 to US$92.4 million for the year ended December 31, 2023.
(2) Includes RMB2,760.0 million, RMB1,399.5 million and RMB576.1 million (US$81.1 million) resulting from related parties sales for the years ended December 31, 2021, 2022 and 2023, respectively. (3) Share-based compensation expenses were included in operating expenses.
(2) Includes US$208.0 million, US$82.2 million and US$9.4 million resulting from related parties sales for the years ended December 31, 2022, 2023 and 2024, respectively. (3) Share-based compensation expenses were included in operating expenses. Our share-based compensation expenses were the result of our grants of options, restricted shares and restricted share units under our share incentive plans to our employees.
Net cash provided by financing activities for the year ended December 31, 2021 was RMB551.1 million, primarily due to bank borrowings of RMB1,473.6 million, including an RMB540.0 million loan with a term of seven years used in acquiring equity interests in Jiangsu Yitong, partially offset by the repayment of bank borrowings of RMB953.4 million. 103 Table of Contents Capital expenditures Our capital expenditures primarily consist of purchases of property, plant and equipment and intangible assets.
Net cash provided by financing activities for the year ended December 31, 2022 was US$42.4 million, primarily due to proceeds from letter of credit factoring of US$46.1 million, bank borrowings received of US$124.7 million, partially offset by the repayment of bank borrowings of US$108.1 million. 95 Table of Contents Capital expenditures Our capital expenditures primarily consist of purchases of property, plant and equipment and intangible assets.
Liquidity and Capital Resources The following table sets forth the movements of our cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ RMB RMB RMB US$ ​ ​ (in thousands) Selected Consolidated Cash Flow Data: ​ ​ ​ ​ Net cash (used in)/provided by operating activities ​ (232,435) (787,643) 298,674 42,067 Net cash (used in)/provided by investing activities ​ (1,069,289) (42,258) 54,718 7,706 Net cash provided by/(used in) financing activities ​ 551,077 289,198 (295,038) (41,555) Net (decrease)/increase in cash and cash equivalents and restricted cash ​ (750,647) (540,703) 58,354 8,218 Exchange rate effect on cash and cash equivalents ​ (15,564) 4,504 (34,376) (4,841) Cash, cash equivalents and restricted cash at the beginning of year ​ 2,275,750 1,509,539 973,340 137,092 Cash, cash equivalents and restricted cash at end of year ​ 1,509,539 973,340 997,318 140,469 ​ As of December 31, 2021, 2022 and 2023, our cash, cash equivalents and restricted cash were RMB1,509.5 million, RMB973.3 million and RMB997.3 million (US$140.5 million), respectively, out of which RMB435.2 million, RMB263.4 million and RMB412.1 million (US$58.0 million) were held in U.S. dollars, and RMB1,030.7 million, RMB651.8 million and RMB546.0 million (US$76.9 million) were held in Renminbi, as of December 31, 2021, 2022 and 2023, respectively.
Liquidity and Capital Resources The following table sets forth the movements of our cash flows for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ US$ US$ US$ ​ ​ (in thousands) Selected Consolidated Cash Flow Data: ​ ​ ​ Net cash (used in)/provided by operating activities ​ (117,114) 42,602 (24,392) Net cash (used in)/provided by investing activities ​ (6,237) 7,727 (1,579) Net cash provided by/(used in) financing activities ​ 42,366 (41,676) 477 Net (decrease)/increase in cash and cash equivalents and restricted cash ​ (80,985) 8,653 (25,494) Exchange rate effect on cash and cash equivalents ​ (14,774) (9,305) (4,240) Cash, cash equivalents and restricted cash at the beginning of year ​ 236,880 141,121 140,469 Cash, cash equivalents and restricted cash at end of year ​ 141,121 140,469 110,735 ​ As of December 31, 2022, 2023 and 2024, our cash, cash equivalents and restricted cash were US$141.1 million, US$140.5 million and US$110.7 million, respectively, out of which US$38.2 million, US$58.0 million and US$63.0 million were held in U.S. dollars, and US$94.5 million, US$76.9 million and US$39.3 million were held in Renminbi, as of December 31, 2022, 2023 and 2024, respectively.
Cost of revenues for our self-branded products and others segment decreased by 35.2% from RMB1,945.3 million for the year ended December 31, 2022 to RMB1,261.4 million (US$177.7 million) for the year ended December 31, 2023. The decrease was largely in line with the decrease in shipment volume of our self-branded products, and partially attributable to our effective gross profit strategy.
The decrease was primarily in line with the decrease in the sales of our products. Gross profit Our gross profit decreased by 24.0% from US$92.4 million for the year ended December 31, 2023 to US$70.2 million for the year ended December 31, 2024.
General and administrative expenses General and administrative expenses decreased by 8.7% from RMB258.3 million for the year ended December 31, 2021 to RMB235.9 million for the year ended December 31, 2022, primarily due to a decrease of RMB23.4 million in external service fees as we implemented strict expense control measures in 2022.
We are committed to investing in new technologies and AI to maintain our competitive edge against our peers. General and administrative expenses General and administrative expenses decreased by 7.2% from US$26.8 million for the year ended December 31, 2023 to US$24.9 million for the year ended December 31, 2024, primarily due to strict administrative expense control.
Our Xiaomi Wearable Products segment revenues decreased by 62.0% from RMB1,697.1 million for the year ended December 31, 2022 to RMB644.9 million (US$90.8 million) for the year ended December 31, 2023. The decrease was primarily attributable to a decrease in shipment volume of our Xiaomi Wearable Products from approximately 14.0 million in 2022 to approximately 7.9 million in 2023.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenues Our revenues decreased by 48.3% from US$352.9 million for the year ended December 31, 2023 to US$182.6 million for the year ended December 31, 2024. The decrease in total revenues mainly resulted from an 88.0% decline in the sales of Xiaomi wearable products.
Our cash, cash equivalents and restricted cash primarily consist of cash at banks and on hand. 83.2% of our cash, cash equivalents and restricted cash as of December 31, 2023 were held in China, and 79.9% of our cash, cash equivalents and restricted cash were held by the VIEs. 101 Table of Contents We believe our current cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our current and anticipated needs for general corporate purposes for at least the next 12 months.
Our cash, cash equivalents and restricted cash primarily consist of cash at banks and on hand. 73.2% of our cash, cash equivalents and restricted cash as of December 31, 2024 were held in China, and 70.4% of our cash, cash equivalents and restricted cash were held by the VIEs.
Operating Results Key Factors Affecting Our Results of Operations Our research and development of innovative products and services We have dedicated and will continue to dedicate significant research and development efforts in developing innovative products and services, especially our self-branded products and new services as part of our healthcare initiatives.
We have a diversified product portfolio that caters to the various demands of our users and addresses different scenarios. We have dedicated and will continue to dedicate significant research and development efforts in developing innovative products and services.
Increase of brand recognition and sales of our self-branded products One of our key growth strategies is to attract new users and increase sales of our self-branded products through enhancing the brand recognition for our self-branded products. We expect our self-branded products to contribute increasingly to in the future.
Operating Results Key Factors Affecting Our Results of Operations Increase of brand recognition and sales of our products Our results of operations depend significantly on our ability to increase sales of our products. One of our key growth strategies to increase sales of our products is to enhance the brand recognition for our products.
Operating activities Net cash provided by operating activities for the year ended December 31, 2023 was RMB298.7 million (US$42.1 million).
We continued to manage working capital and inventory efficiently and recorded inventory of US$56.8 million as of December 31, 2024, the lowest level since 2018. We will continue to manage working capital tightly. Net cash provided by operating activities for the year ended December 31, 2023 was US$42.6 million.
In 2022, we recorded RMB35.2 million in valuation allowance for deferred tax asset which is a non-cash in nature and does not materially affect our operation. 99 Table of Contents Net income/(loss) attributable to Zepp Health Corporation As a result of the foregoing, we recorded a net income of RMB137.8 million for the year ended December 31, 2021, and a net loss of RMB288.3 million for the year ended December 31, 2022.
Net loss attributable to Zepp Health Corporation As a result of the foregoing, we recorded a net loss of US$31.0 million for the year ended December 31, 2023, and a net loss of US$75.7 million for the year ended December 31, 2024.
Operating income/(loss) As a result of the factors set out above, we recorded an operating income of RMB93.9 million for the year ended December 31, 2021, and an operating loss of RMB410.2 million for the year ended December 31, 2022. Interest income Interest income represents interest earned on bank deposits.
Operating loss As a result of the factors set out above, we recorded an operating loss of US$30.5 million for the year ended December 31, 2023, and an operating loss of US$47.3 million for the year ended December 31, 2024. The loss was mainly due to lower sales volume, which resulted in an inability to fully cover operating expenses.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2021 ​ 2022 ​ 2023 ​ RMB % RMB % RMB US$ % ​ ​ (in thousands, except for percentages) Summary of Consolidated Statements of Operating Data: ​ ​ ​ ​ ​ ​ ​ Revenues (1) 6,250,109 100.0 4,142,862 100.0 2,495,322 351,459 100.0 Cost of revenues (2) 4,944,467 79.1 3,339,746 80.6 1,837,543 258,813 73.6 Gross profit 1,305,642 20.9 803,116 19.4 657,779 92,646 26.4 Operating expenses: ​ ​ ​ ​ ​ ​ ​ Research and development (3) 515,081 8.2 517,122 12.5 361,812 50,960 14.5 General and administrative (3) 258,346 4.1 235,932 5.7 188,508 26,551 7.6 Selling and marketing (3) 438,273 7.1 460,304 11.1 314,563 44,305 12.6 Total operating expenses 1,211,700 19.4 1,213,358 29.3 864,883 121,816 34.7 Operating income/(loss) 93,942 1.5 (410,242) (9.9) (207,104) (29,170) (8.3) Realized gain from investments 13,507 0.2 597 — 777 109 — Interest income 16,686 0.3 12,334 0.3 21,917 3,087 0.9 Interest expenses ​ (44,884) ​ (0.7) ​ (57,001) ​ (1.4) ​ (47,704) ​ (6,719) ​ (1.9) Gain from fair value change of long-term investments — — 51,817 1.3 1,249 176 0.1 Impairment loss from long-term investments — — (13,858) (0.3) (2,263) (319) (0.1) Other income/(expenses), net 27,418 0.4 43,820 1.0 (3,658) (515) (0.1) Income/(Loss) before income tax and income/(loss) from equity method investments 106,669 1.7 (372,533) (9.0) (236,786) (33,351) (9.4) Income taxes (provision)/benefit (10,745) (0.2) 65,875 1.6 15,822 2,228 0.6 Income/(Loss) before income/(loss) from equity method investments 95,924 1.5 (306,658) (7.4) (220,964) (31,123) (8.8) Income/ (loss) from equity method investments 41,028 0.7 17,657 0.4 8,382 1,181 0.3 Net income/(loss) 136,952 2.2 (289,001) (7.0) (212,582) (29,942) (8.5) Notes: (1) Includes RMB3,350.0 million, RMB1,704.0 million and RMB644.9 million (US$90.8 million) with related parties for the years ended December 31, 2021, 2022 and 2023, respectively.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ 2022 ​ 2023 ​ 2024 ​ US$ % US$ % US$ % ​ ​ (in thousands, except for percentages) Summary of Consolidated Statements of Operating Data: ​ ​ ​ ​ ​ ​ Revenues (1) 613,641 100.0 352,860 100.0 182,603 100.0 Cost of revenues (2) 494,784 80.6 260,502 73.8 112,369 61.5 Gross profit 118,857 19.4 92,358 26.2 70,234 38.5 Operating expenses: ​ ​ ​ ​ ​ ​ Research and development (3) 77,296 12.6 51,503 14.6 46,159 25.3 General and administrative (3) 35,109 5.7 26,778 7.6 24,854 13.6 Selling and marketing (3) 68,309 11.1 44,527 12.6 46,471 25.4 Total operating expenses 180,714 29.4 122,808 34.8 117,484 64.3 Operating loss (61,857) (10.1) (30,450) (8.6) (47,250) (25.9) Realized gain from investments 84 0.01 109 0.03 — — Interest income 1,818 0.3 3,089 0.9 3,672 2.0 Interest expenses ​ (8,444) ​ (1.4) ​ (6,752) ​ (1.9) ​ (5,552) ​ (3.0) Gain from fair value change of long-term investments 8,051 1.3 213 0.1 2,011 1.1 Impairment loss from long-term investments (2,000) (0.3) (313) (0.1) (10,129) (5.5) Other income/(expenses), net 6,454 1.1 (525) (0.1) (656) (0.4) Loss before income tax and income/(loss) from equity method investments (55,894) (9.1) (34,629) (9.8) (57,904) (31.7) Income taxes benefit/(provision) 9,865 1.6 2,430 0.7 (13,693) (7.5) Loss before income/(loss) from equity method investments (46,029) (7.5) (32,199) (9.1) (71,597) (39.2) Income/(loss) from equity method investments 2,683 0.4 1,113 0.3 (4,211) (2.3) Net loss (43,346) (7.1) (31,086) (8.8) (75,808) (41.5) Notes: (1) Includes US$253.8 million, US$92.0 million and US$11.0 million with related parties for the years ended December 31, 2022, 2023 and 2024, respectively.
We had interest income of RMB16.7 million in 2021 and RMB12.3 million in 2022. Interest expenses Interest expense represents interest charges for bank borrowings. We had interest expense of RMB44.9 million in 2021 and RMB57.0 million in 2022. Other income, net We had other income of RMB27.4 million in 2021 and other income of RMB43.8 million in 2022.
Interest income Interest income represents interest earned on bank deposits. We had interest income of US$3.1 million for the year ended December 31, 2023 and US$3.7 million for the year ended December 31, 2024. Interest expenses Interest expense represents interest charges for bank borrowings.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenues Our revenues decreased by 39.8% from RMB4,142.9 million for the year ended December 31, 2022 to RMB2,495.3 million (US$351.5 million) for the year ended December 31, 2023.
Selling and marketing expenses Selling and marketing expenses increased by 4.4% from US$44.5 million for the year ended December 31, 2023 to US$46.5 million for the year ended December 31, 2024.
Removed
To achieve the goal, we have engaged in a variety of marketing and brand promotion campaigns both in China and globally, including collaboration with several renowned marathon runners for the launch of our new products, which may cause our selling and marketing expenses to increase in the near future.
Added
Starting from the second quarter of 2024, we changed our reporting currency from Renminbi to U.S. dollars, to reduce the impact of increased volatility of the Renminbi to U.S. dollars exchange rate on our reported operating results.
Removed
International expansion also represents a significant opportunity to further grow our business. We are building our own distribution network and promoting our own brand in various markets across the world, which requires us to dedicate additional time and resources.
Added
Since our products sales is more heavily exposed to U.S. dollar or quasi-U.S. dollar denominated markets, we believe changing the reporting currency to US$ will more accurately reflect our performance and underlying nature of our operations.
Removed
Historically, we derived a substantial majority of our revenues from the sales of Xiaomi Wearable Products. However, over the recent years, we have observed a continuous decline in revenues from this segment. Specifically, for the years ended December 31, 2021, 2022 and 2023, revenues from our Xiaomi Wearable Products segment represented 53.5%, 41.0% and 25.8% of our total revenues, respectively.
Added
We have applied the change of reporting currency retrospectively to our historical results of operations and financial statements included in this annual report. 86 Table of Contents A.
Removed
We have been gradually shifting our focus towards our self-branded products, which we believe represent a significant growth opportunity. Despite this shift, our relationship with Xiaomi remains important to our business operations. In February 2023, we entered into a new business cooperation agreement with Xiaomi for the next two years, which will end in January 2025.
Added
To achieve the goal, we have engaged in a variety of marketing and brand promotion campaigns around the world. In particular, we have expanded the Amazfit athletes team by onboarding high-profile Athlete Ambassadors, including five-time Olympic medalist Gabby Thomas and Italian tennis professional Jasmine Polini.
Removed
For future product collaborations with Xiaomi, we will continue to adopt a disciplined approach, focusing on the profitability and return on investment. Key Line Items and Specific Factors Affecting Our Results of Operations Revenues We derive our revenues from two operating segments, (i) our self-branded products and others, and (ii) Xiaomi Wearable Products.
Added
Additionally, we are enhancing our partnership with HYROX, with plans to introduce more advanced HYROX products and features. These strategic collaborations have increased confidence among key offline retail partners in the US and Europe. This development is expected to drive our growth in the future.

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Item 6. [Reserved]

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

56 edited+11 added−25 removed96 unchanged
The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award grant. Award Agreement.
The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award grant. Award Agreement.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Mr. Wang Wayne Huang, Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Mr. Huang is the chairperson of our nominating and corporate governance committee. Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr.
Our nominating and corporate governance committee consists of Mr. Wang Wayne Huang, Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Mr. Huang is the chairperson of our nominating and corporate governance committee. Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr.
HHtech Holdings Limited is wholly owned by Wayne Holding Limited, which in turn is wholly owned by a trust established for the benefit of Mr. Wang Wayne Huang and his family members. Mr. Huang is the sole director of HHtech Holdings Limited, and also the settlor and investment decision maker of the abovementioned trust. Therefore, Mr.
HHtech Holdings Limited is wholly owned by Wayne Holding Limited, which in turn is wholly owned by a trust established for the benefit of Mr. Wang Wayne Huang and his family members. Mr. Huang is the sole director of HHtech Holdings Limited, and also the settlor and investment decision maker of the abovementioned trust. Therefore, Mr.
(10) Represents (i) 3,800,000 Class A ordinary shares in the form of ADSs and 65,836,680 Class B ordinary shares held by HHtech Holdings Limited, a British Virgin Islands company; and (ii) 3,520,000 Class A ordinary shares (including 400,000 Class A ordinary shares in the form of ADSs) and 15,510,447 Class B ordinary shares beneficially owned by HHtech Holdings Limited as a result of the voting agreement dated January 12, 2018 by and among HHtech Holdings Limited, Fandler Holding Limited, Forest Mountain Holding Limited, Haiyu Holding Limited, Shu Hill Holding Limited and Wenshui Holding Limited.
(8) Represents (i) 3,800,000 Class A ordinary shares in the form of ADSs and 65,836,680 Class B ordinary shares held by HHtech Holdings Limited, a British Virgin Islands company; and (ii) 3,520,000 Class A ordinary shares (including 400,000 Class A ordinary shares in the form of ADSs) and 15,510,447 Class B ordinary shares beneficially owned by HHtech Holdings Limited as a result of the voting agreement dated January 12, 2018 by and among HHtech Holdings Limited, Fandler Holding Limited, Forest Mountain Holding Limited, Haiyu Holding Limited, Shu Hill Holding Limited and Wenshui Holding Limited.
Our PRC subsidiaries and VIEs are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. 110 Table of Contents 2015 Share Incentive Plan In October 2015, our shareholders and board of directors approved the 2015 Share Incentive Plan, which we refer to as the 2015 Plan in this annual report, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants, and promote the success of our business.
Our PRC subsidiaries and the VIEs are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund. 2015 Share Incentive Plan In October 2015, our shareholders and board of directors approved the 2015 Share Incentive Plan, which we refer to as the 2015 Plan in this annual report, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants, and promote the success of our business.
(11) Based on the statement on Schedule 13G filed on February 1, 2019 jointly by (i) People Better Limited, a British Virgin Islands company, (ii) Fast Pace Limited, a British Virgin Island company and (iii) Xiaomi, pursuant to which 35,861,112 Class B ordinary shares are held by People Better Limited.
(9) Based on the statement on Schedule 13G filed on February 1, 2019 jointly by (i) People Better Limited, a British Virgin Islands company, (ii) Fast Pace Limited, a British Virgin Island company and (iii) Xiaomi, pursuant to which 35,861,112 Class B ordinary shares are held by People Better Limited.
However, without the prior written consent of the participant, no such action may adversely affect in any material way any award previously granted pursuant to the 2015 Plan. 2018 Share Incentive Plan In January 2018, our shareholders and board of directors adopted the 2018 Share Incentive Plan, which we refer to as the 2018 Plan in this annual report, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants, and promote the success of our business.
However, without the prior written consent of the participant, no such action may adversely affect in any material way any award previously granted pursuant to the 2015 Plan. ​ 102 Table of Contents 2018 Share Incentive Plan In January 2018, our shareholders and board of directors adopted the 2018 Share Incentive Plan, which we refer to as the 2018 Plan in this annual report, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants, and promote the success of our business.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. 114 Table of Contents Compensation Committee.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; ● meeting separately and periodically with management and the independent auditors; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
As of March 31, 2024, awards to purchase 13,564,827 Class A ordinary shares have been granted and are outstanding under the 2015 Plan, excluding awards that were forfeited or cancelled after the relevant grant dates.
As of March 31, 2025, awards to purchase 13,564,827 Class A ordinary shares have been granted and are outstanding under the 2015 Plan, excluding awards that were forfeited or cancelled after the relevant grant dates.
However, no such action may adversely affect in any material way any awards previously granted unless agreed by the recipient. 2023 Share Incentive Plan In January 2023, our board of directors approved the 2023 Share Incentive Plan, which we refer to as the 2023 Plan in this annual report, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants, and promote the success of our business.
However, no such action may adversely affect in any material way any awards previously granted unless agreed by the recipient. 103 Table of Contents 2023 Share Incentive Plan In January 2023, our board of directors approved the 2023 Share Incentive Plan, which we refer to as the 2023 Plan in this annual report, to attract and retain the best available personnel, provide additional incentives to employees, directors and consultants, and promote the success of our business.
The non-compete restricted period typically expires two years after the termination of employment, and we agree to compensate the employee with a certain percentage of his or her pre-departure salary during the restricted period. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes. 116 Table of Contents E.
The non-compete restricted period typically expires two years after the termination of employment, and we agree to compensate the employee with a certain percentage of his or her pre-departure salary during the restricted period. We believe that we maintain a good working relationship with our employees, and we have not experienced any major labor disputes. E.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; 115 Table of Contents ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of shares in our company, including the registration of such shares in our share register.
The functions and powers of our board of directors include, among others: ● convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; ● declaring dividends and distributions; ● appointing officers and determining the term of office of the officers; ● exercising the borrowing powers of our company and mortgaging the property of our company; and ● approving the transfer of shares in our company, including the registration of such shares in our share register.
Lai serves as an independent director on the board of directors of PPDAI Group Inc., an NYSE-listed company and an online consumer finance provider in China. Prior to joining China Online Education Group, Mr. Lai served as the chief financial officer of Chukong Technologies Corp., a mobile entertainment platform company in China, from 2013 to 2015. Mr.
Lai serves as an independent director on the board of directors of FinVolution Group, an NYSE-listed company and an online consumer finance provider in China. Prior to joining China Online Education Group, Mr. Lai served as the chief financial officer of Chukong Technologies Corp., a mobile entertainment platform company in China, from 2013 to 2015. Mr.
Wang received his bachelor’s degree in electronic and information engineering and Ph.D. in communication and information system from the University of Science and Technology of China in 2000 and 2005, respectively. 109 Table of Contents Mr. Pengtao Yu has served as our chief industrial designer since October 2014. Prior to joining us, Mr.
Wang received his bachelor’s degree in electronic and information engineering and Ph.D. in communication and information system from the University of Science and Technology of China in 2000 and 2005, respectively. Mr. Pengtao Yu has served as our chief industrial designer since October 2014. Prior to joining us, Mr.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company. B.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company. 101 Table of Contents B.
Lai received his bachelor’s degree in statistics from the National Cheng Kung University in Taiwan and his MBA from the University of Texas in Dallas. Mr. Lai is a certified public accountant licensed in the State of Texas. 108 Table of Contents Dr. Hongjiang Zhang has served as our director since February 2018. Currently, Dr.
Lai received his bachelor’s degree in statistics from the National Cheng Kung University in Taiwan and his MBA from the University of Texas in Dallas. Mr. Lai is a certified public accountant licensed in the State of Texas. Dr. Hongjiang Zhang has served as our director since February 2018. Currently, Dr.
We may grant awards to our employees, directors and consultants of our company. 112 Table of Contents Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement.
We may grant awards to our employees, directors and consultants of our company. Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement. Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement.
The compensation committee is responsible for, among other things: ● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; ● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; ● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.
The compensation committee is responsible for, among other things: ● reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; ● reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; ● reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and ● selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. 106 Table of Contents Nominating and Corporate Governance Committee.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 29, 2024 by: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5% or more of our total outstanding shares.
Share Ownership The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of February 28, 2025 by: ● each of our directors and executive officers; and ● each person known to us to own beneficially 5% or more of our total outstanding shares.
To our knowledge, as of February 29, 2024, 137,357,820 of our Class A ordinary shares were held by one record holder in the United States, which was Deutsche Bank Trust Company Americas, the depositary of our ADS program.
To our knowledge, as of February 28, 2025, 137,357,820 of our Class A ordinary shares were held by one record holder in the United States, which was Deutsche Bank Trust Company Americas, the depositary of our ADS program.
As of March 31, 2024, awards to purchase 7,591,456 Class A ordinary shares under the 2023 Plan have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates. The following paragraphs describe the principal terms of the 2023 Plan. Types of Awards.
As of March 31, 2025, awards to purchase 7,741,264 Class A ordinary shares under the 2023 Plan have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates. The following paragraphs describe the principal terms of the 2023 Plan. Types of Awards.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees.
None of our non-executive directors has a service contract with us that provides for benefits upon termination of service. 105 Table of Contents Committees of the Board of Directors We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee.
Compensation For the fiscal year ended December 31, 2023, we paid an aggregate of approximately RMB15.5 million (US$2.2 million) in cash to our executive officers and RMB2.1 million (US$0.3 million) to our non-executive directors. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers.
Compensation For the fiscal year ended December 31, 2024, we paid an aggregate of US$1.8 million in cash to our executive officers and US$0.3 million to our non-executive directors. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers.
Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Mr. Lai is the chairman of our audit committee. We have determined that Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr.
We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Mr. Lai is the chairman of our audit committee. We have determined that Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr.
Enforceability of Civil Liabilities A majority of our operations are conducted outside of the United States, and a majority of our assets are located outside of the United States. A majority of our directors and executive officers are nationals or residents of jurisdictions other than the United States and most of their assets are located outside the United States.
A majority of our directors and executive officers are nationals or residents of jurisdictions other than the United States and most of their assets are located outside the United States.
Meihui Fan; and (ii) the 3,450,746 Class B ordinary shares held by Fandler Holding Limited, a British Virgin Islands company. Fandler Holding Limited is wholly owned by Telomere Holding Limited, which in turn is wholly owned by a trust established for the benefit of Mr. Meihui Fan and his family members. Mr.
Mike Yan Yeung. (3) Represents (i) the Class A ordinary shares held by Mr. Meihui Fan; and (ii) the 3,450,746 Class B ordinary shares held by Fandler Holding Limited, a British Virgin Islands company. Fandler Holding Limited is wholly owned by Telomere Holding Limited, which in turn is wholly owned by a trust established for the benefit of Mr.
F. Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. ​ 120 Table of Contents
F. Disclosure of Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. ​
Pursuant to the currently effective memorandum and articles of association, People Better Limited will be entitled to appoint one director so long as it continues to beneficially own no less than 10% of the issued and outstanding shares of our company. Ms. Yunfen Lu has served as our director since April 2015. Ms.
Pursuant to the currently effective memorandum and articles of association, People Better Limited will be entitled to appoint one director so long as it continues to beneficially own no less than 10% of the issued and outstanding shares of our company. Mr.
Pursuant to the Memorandum and Articles, the Co-Founders Entities will be entitled to appoint three directors so long as they continue to beneficially own no less than 60% of the shares they beneficially owned as of January 12, 2018. 107 Table of Contents Mr. De Liu has served as our director since April 2015. Mr.
Pursuant to the Memorandum and Articles, the Co-Founders Entities will be entitled to appoint three directors so long as they continue to beneficially own no less than 60% of the shares they beneficially owned as of January 12, 2018. Mr. Alain Lam has served as our director since September 2024.
As of March 31, 2024, awards to purchase 23,312,826 Class A ordinary shares under the 2018 Plan have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates. 111 Table of Contents The following paragraphs describe the principal terms of the 2018 Plan. Types of Awards.
As of March 31, 2025, awards to purchase 25,701,010 Class A ordinary shares under the 2018 Plan have been granted and outstanding, excluding awards that were forfeited or cancelled after the relevant grant dates. The following paragraphs describe the principal terms of the 2018 Plan. Types of Awards.
Yeung held several positions in Monster.com, TGC Inc., China.com Corp., Netscape Communications Corporation and Oracle Corporation from 1992 to 2012. Mr. Yeung received his bachelor’s degree and master’s degree in computer science from the University of California, Berkeley in 1992 and Stanford University in 1994, respectively. Mr. Meihui Fan has gained extensive experience in the information technology industry.
Yeung held several positions in Monster.com, TGC Inc., China.com Corp., Netscape Communications Corporation and Oracle Corporation from 1992 to 2012. Mr. Yeung received his bachelor’s degree and master’s degree in computer science from the University of California, Berkeley in 1992 and Stanford University in 1994, respectively. 99 Table of Contents Mr.
Fan is the sole director of Fandler Holding Limited, and also the settlor and investment decision maker of the abovementioned trust. Therefore, Mr. Fan is entitled to exercise voting and dispositive power over the shares held by Fandler Holding Limited. The registered address of Fandler Holding Limited is at NovaSage Chambers, P.O. Box 4389, Road Town, Tortola, British Virgin Islands.
Meihui Fan and his family members. Mr. Fan is the sole director of Fandler Holding Limited, and also the settlor and investment decision maker of the abovementioned trust. Therefore, Mr. Fan is entitled to exercise voting and dispositive power over the shares held by Fandler Holding Limited. The registered address of Fandler Holding Limited is at NovaSage Chambers, P.O.
The number of Class A ordinary shares available for future issuance upon the exercise of future grants under the 2018 Share Incentive Plan was 23,899,017 as of January 1, 2024.
The number of Class A ordinary shares available for future issuance upon the exercise of future grants under the 2018 Share Incentive Plan was 26,288,918 as of January 1, 2025.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares ​ ​ Beneficially Owned ​ ​ ​ ​ ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ Percentage ​ of ​ ​ Class A ​ Class B ​ Total ​ of total ​ aggregate ​ ​ ordinary ​ ordinary ​ ordinary ​ ordinary ​ voting ​ ​ shares ​ shares ​ shares ​ shares ​ power † Directors and Executive Officers:** ​ Wang Wayne Huang (1) 7,380,076 81,347,127 88,727,203 37.0 % 63.4 % De Liu — — — — — ​ Yunfen Lu (2) * 3,450,746 3,970,746 1.7 % 2.7 % Xiaojun Zhang (3) * 2,107,463 2,707,463 1.1 % 1.7 % Jimmy Lai (4) * — * * * ​ Hongjiang Zhang — — — — — ​ Bing Xie ​ — ​ — ​ — ​ — ​ — ​ Leon Cheng Deng (5) * — * * * ​ Mike Yan Yeung (6) 2,609,116 — 2,609,116 1.1 % 0.2 % Meihui Fan (7) ​ * ​ 3,450,746 ​ 4,410,746 ​ 1.8 % 2.7 % Hui Wang (8) * — * * * ​ Pengtao Yu (9) * — * * * ​ All Directors and Executive Officers as a Group 15,014,476 81,347,127 96,361,603 39.9 % 63.8 % Principal Shareholders: ​ ​ ​ ​ ​ ​ HHtech Holdings Limited (10) 7,320,000 81,347,127 88,667,127 37.0 % 63.4 % People Better Limited (11) — 35,861,112 35,861,112 14.9 % 27.7 % Allspring Entities (12) 20,018,936 — 20,018,936 8.3 % 1.5 % Shunwei High Tech Limited (13) ​ 16,598,560 — 16,598,560 6.9 % 1.3 % Notes: † For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
These shares, however, are not included in the computation of the percentage ownership of any other person. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares ​ ​ Beneficially Owned ​ ​ ​ ​ ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ Percentage ​ of ​ ​ Class A ​ Class B ​ Total ​ of total ​ aggregate ​ ​ ordinary ​ ordinary ​ ordinary ​ ordinary ​ voting ​ ​ shares ​ shares ​ shares ​ shares ​ power † Directors and Executive Officers:** ​ Wang Wayne Huang (1) 7,380,076 81,347,127 88,727,203 38.6 % 63.9 % Alain Lam — — — — — ​ Mike Yan Yeung (2) 2,609,108 — 2,609,108 1.1 % * ​ Meihui Fan (3) 1,160,000 3,450,746 4,610,746 2.0 % 2.7 % Jimmy Lai (4) * — * * * ​ Hongjiang Zhang — — — — — ​ Bing Xie ​ — ​ — ​ — ​ — ​ — ​ Leon Cheng Deng (5) * — * * * ​ Hui Wang (6) * — * * * ​ Pengtao Yu (7) * — * * * ​ All Directors and Executive Officers as a Group 16,152,468 81,347,127 97,499,595 42.2 % 64.5 % Principal Shareholders: ​ ​ ​ ​ ​ ​ HHtech Holdings Limited (8) 7,320,000 81,347,127 88,667,127 38.6 % 63.9 % People Better Limited (9) — 35,861,112 35,861,112 15.6 % 27.9 % Allspring Entities (10) ​ 13,669,456 ​ — ​ 13,669,456 ​ 5.9 % 1.1 % Notes: † For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class.
C. Board Practices Our board of directors consists of seven directors. A director is not required to hold any shares in our company to qualify to serve as a director.
A director is not required to hold any shares in our company to qualify to serve as a director.
We have appointed Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711, as our agent upon whom process may be served in any action brought against us under the securities laws of the United States. 119 Table of Contents We have been informed by our Cayman Islands legal counsel that the United States and the Cayman Islands do not have a treaty providing for reciprocal recognition and enforcement of judgments of U.S. courts in civil and commercial matters and that a final judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon the U.S. federal securities laws, would not be automatically enforceable in the Cayman Islands.
We have been informed by our Cayman Islands legal counsel that the United States and the Cayman Islands do not have a treaty providing for reciprocal recognition and enforcement of judgments of U.S. courts in civil and commercial matters and that a final judgment for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not predicated solely upon the U.S. federal securities laws, would not be automatically enforceable in the Cayman Islands.
Our compensation committee consists of Mr. Wang Wayne Huang, Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Dr. Zhang is the chairman of our compensation committee. We have determined that Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr. Bing Xie satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange.
Compensation Committee. Our compensation committee consists of Mr. Wang Wayne Huang, Mr. Jimmy Lai, Dr. Hongjiang Zhang and Mr. Bing Xie. Dr. Zhang is the chairman of our compensation committee. We have determined that Mr. Jimmy Lai, Dr. Hongjiang Zhang, and Mr.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; or (ii) dies or is found by our company to be or becomes of unsound mind. D. Employees We had 1,227, 987 and 839 employees as of December 31, 2021, 2022 and 2023, respectively.
A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; or (ii) dies or is found by our company to be or becomes of unsound mind. 107 Table of Contents D.
(8) Represents the Class A ordinary shares held by Mr. Hui Wang. 118 Table of Contents (9) Represents the Class A ordinary shares in the form of ADSs held by Mr. Pengtao Yu.
(7) Represents the Class A ordinary shares in the form of ADSs held by Mr. Pengtao Yu.
The following table summarizes, as of March 31, 2024, the awards granted under our 2015 Plan, 2018 Plan and 2023 Plan to several of our executive officers, excluding awards that were forfeited or cancelled after the relevant grant dates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Underlying ​ ​ ​ ​ ​ Options and ​ ​ ​ ​ ​ ​ ​ ​ Restricted Shares ​ Exercise Price ​ ​ ​ ​ Name ​ Units ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Mike Yan Yeung * (1) — March 3, 2015 — ​ * 0.79 March 3, 2015 February 28, 2019 ​ ​ * (1) ​ — ​ August 18, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — ​ ​ * (1) ​ — ​ February 29, 2024 ​ — Leon Cheng Deng ​ * (1) ​ — ​ August 31, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — ​ ​ * (1) ​ — ​ February 29, 2024 ​ — Hui Wang ​ * ​ — ​ August 20, 2014 ​ August 20, 2024 ​ ​ * ​ — ​ August 18, 2020 ​ August 18, 2030 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ February 29, 2024 ​ February 28, 2034 Pengtao Yu ​ * (1) ​ — ​ March 3, 2015 ​ — ​ ​ * (1) ​ — ​ August 18, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — ​ ​ * (1) ​ — ​ February 29, 2024 ​ — Yunfen Lu * — August 18, 2020 August 18, 2030 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ February 29, 2024 ​ February 28, 2034 Xiaojun Zhang * — August 18, 2020 August 18, 2030 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ February 29, 2024 ​ February 28, 2034 Meihui Fan ​ * ​ — ​ May 13, 2021 ​ May 6, 2031 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ February 29, 2024 ​ February 28, 2034 Total 11,994,700 ​ Notes: * Less than one percent of our total outstanding shares. 113 Table of Contents (1) Restricted share units As of March 31, 2024, other employees as a group held outstanding options to purchase 16,495,525 Class A ordinary shares of our company, at a weighted average exercise price of US$0.03 per share, 2,076,217 restricted shares, and 4,149,014 restricted share units.
However, without the prior written consent of the participant, no such action may adversely affect in any material way any award previously granted pursuant to the 2023 Plan. 104 Table of Contents The following table summarizes, as of March 31, 2025, the awards granted under our 2015 Plan, 2018 Plan and 2023 Plan to several of our executive officers, excluding awards that were forfeited or cancelled after the relevant grant dates: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ordinary Shares Underlying ​ ​ ​ ​ ​ Options and ​ ​ ​ ​ ​ ​ ​ ​ Restricted Shares ​ Exercise Price ​ ​ ​ ​ Name ​ Units ​ (US$/Share) ​ Date of Grant ​ Date of Expiration Mike Yan Yeung * (1) ​ — March 3, 2015 — ​ * 0.79 March 3, 2015 February 28, 2019 ​ ​ * (1) ​ — ​ August 18, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — ​ ​ * (1) ​ — ​ February 29, 2024 ​ — Meihui Fan ​ * ​ — ​ May 13, 2021 ​ May 6, 2031 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ February 29, 2024 ​ February 28, 2034 Leon Cheng Deng ​ * (1) ​ — ​ August 31, 2020 ​ — ​ ​ * (1) ​ — ​ January 3, 2023 ​ — ​ ​ * (1) ​ — ​ February 29, 2024 ​ — Hui Wang ​ * ​ — ​ August 20, 2014 ​ August 20, 2024 ​ ​ * ​ — ​ August 18, 2020 ​ August 18, 2030 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ January 3, 2023 ​ January 3, 2033 ​ ​ * ​ — ​ February 29, 2024 ​ February 28, 2034 ​ * — February 29, 2024 February 28, 2034 Pengtao Yu ​ * (1) ​ — ​ March 3, 2015 ​ — ​ ​ * (1) ​ — ​ August 18, 2020 ​ — ​ * (1) ​ — January 3, 2023 — ​ ​ * (1) ​ — ​ February 29, 2024 ​ — Total ​ 10,274,700 ​ ​ ​ ​ ​ ​ Notes: * Less than one percent of our total outstanding shares.
The calculations in the table below are based on 122,712,060 Class A ordinary shares (excluding the 4,355,880 Class A ordinary shares issued to the depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under the 2015 Share Incentive Plan, the 2018 Share Incentive Plan and the 2023 Share Incentive Plan, and the 21,275,192 treasury shares in the form of ADSs that we repurchased under our share repurchase program) and 117,208,247 Class B ordinary shares outstanding as of February 29, 2024.
The calculations in the table below are based on 112,680,748 Class A ordinary shares (excluding the 3,572,300 Class A ordinary shares issued to the depositary bank for bulk issuance of ADSs reserved for future issuances upon the exercise or vesting of awards granted under the 2015 Share Incentive Plan, the 2018 Share Incentive Plan and the 2023 Share Incentive Plan, and the 32,090,084 treasury shares in the form of ADSs that we repurchased under our share repurchase program) and 117,208,247 Class B ordinary shares outstanding as of February 28, 2025. 108 Table of Contents Beneficial ownership is determined in accordance with the rules and regulations of the SEC.
Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis. 117 Table of Contents * Less than 1% of our total outstanding ordinary shares and aggregate voting power. ** Each of Mr.
Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis. * Less than 1% of our total outstanding ordinary shares and aggregate voting power. ** Mr. Wang Wayne Huang’s business address is 3090 Bristol Street, Suite 400, Costa Mesa, CA 92626. Mr.
Directors and Executive Officers Age Position/Title Wang Wayne Huang ​ 48 ​ Chairman of the Board of Directors and Chief Executive Officer ​ De Liu ​ 50 ​ Director ​ Yunfen Lu ​ 58 ​ Director ​ Xiaojun Zhang ​ 52 ​ Director ​ Jimmy Lai ​ 67 ​ Independent Director ​ Hongjiang Zhang ​ 63 ​ Independent Director ​ Bing Xie ​ 56 ​ Independent Director ​ Leon Cheng Deng ​ 41 ​ Chief Financial Officer ​ Mike Yan Yeung ​ 53 ​ Chief Operating Officer ​ Meihui Fan ​ 45 ​ Chief Technology Officer ​ Hui Wang ​ 46 ​ Vice President of Corporate Strategy and General Manager of Beijing Operations ​ Pengtao Yu ​ 42 ​ Chief Industrial Designer ​ ​ Mr.
Directors and Executive Officers Age Position/Title Wang Wayne Huang ​ 49 ​ Chairman of the Board of Directors and Chief Executive Officer ​ Alain Lam ​ 51 ​ Director ​ Mike Yan Yeung ​ 54 ​ Director and Chief Operating Officer ​ Meihui Fan ​ 46 ​ Director and Chief Technology Officer ​ Jimmy Lai ​ 68 ​ Independent Director ​ Hongjiang Zhang ​ 64 ​ Independent Director ​ Bing Xie ​ 57 ​ Independent Director ​ Leon Cheng Deng ​ 42 ​ Chief Financial Officer ​ Hui Wang ​ 47 ​ Vice President of Corporate Strategy ​ Pengtao Yu ​ 43 ​ Chief Industrial Designer ​ ​ Mr.
Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against a company in China for disputes if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit.
Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against a company in China for disputes if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit. 111 Table of Contents It will be, however, difficult for U.S. shareholders to originate actions against us in the PRC in accordance with PRC laws because we are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding the ADSs or our ordinary shares, to establish a connection to the PRC for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.
De Liu’s business address is Keliyuan Building, No.72 Anningzhuang East Road, Haidian District, Beijing, 100085, People’s Republic of China. Mr. Jimmy Lai’s business address is 9th Floor, No. 8 Zhongyuan Street, Zhonghe District, New Taipei City, Taiwan. Dr. Hongjiang Zhang’s business address is 627 Jurong West St 65, #14-380, Singapore 640627.
Meihui Fan’s business address is Huami Global Innovation Center, Building B2, Zhong’an Chuanggu Technology Park, No. 900 Wangjiang West Road, Hefei, 230088, People’s Republic of China. Mr. Jimmy Lai’s business address is 9th Floor, No. 8 Zhongyuan Street, Zhonghe District, New Taipei City, Taiwan. Dr. Hongjiang Zhang’s business address is 627 Jurong West St 65, #14-380, Singapore 640627. Mr.
Huang is entitled to exercise voting and dispositive power over the shares held by HHtech Holdings Limited. The registered address of HHtech Holdings Limited is at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
Huang is entitled to exercise voting and dispositive power over the shares held by HHtech Holdings Limited. The registered address of HHtech Holdings Limited is at Aegis Chambers, 1st Floor, Ellen Skelton Building, 3076 Sir Francis Drake's Highway, Road Town, Tortola Virgin Islands, British.
The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States.
Deng holds a CPA certificate in Australia, and a Chartered Global Management Accountant certification from CIMA. He earned a Bachelor of Finance degree from Shanghai International Studies University, and a Master of International Finance degree from the University of Amsterdam. Mr. Mike Yan Yeung has served as our chief operating officer since January 2015. Prior to joining us, Mr.
Deng holds a CPA certificate in Australia, and a Chartered Global Management Accountant certification from CIMA. He earned a Bachelor of Finance degree from Shanghai International Studies University, and a Master of International Finance degree from the University of Amsterdam. 100 Table of Contents Dr.
Huang is entitled to exercise voting and dispositive power over the shares held by HHtech Holdings Limited. The registered address of HHtech Holdings Limited is at Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. (2) Represents (i) the Class A ordinary shares held by Ms.
Huang is entitled to exercise voting and dispositive power over the shares held by HHtech Holdings Limited. The registered address of HHtech Holdings Limited is at Aegis Chambers, 1st Floor, Ellen Skelton Building, 3076 Sir Francis Drake's Highway, Road Town, Tortola Virgin Islands, British. (2) Represents the Class A ordinary shares in the form of ADSs held by Mr.
The compensation committee assists the board 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 his compensation is deliberated.
Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2023: ​ ​ ​ ​ As of ​ ​ December 31, ​ ​ 2023 Function: Research and development 493 Selling and marketing 170 Administrative 122 Supply chain management 54 Total 839 ​ As of December 31, 2023, we had 300 employees in Shenzhen, 234 employees in Hefei, 116 employees in Beijing, 74 employees in Nanjing, 25 employees in other cities in mainland China, 43 employees in North America, 41 employees in Europe, 6 employees in other countries in Asia.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2024: ​ ​ ​ ​ As of ​ ​ December 31, ​ ​ 2024 Function: Research and development 467 Selling and marketing 136 Administrative 105 Supply chain management 57 Total 765 ​ As of December 31, 2024, we had 655 employees in mainland China, 51 employees in North America, 50 employees in Europe, 1 employee in South America and 8 employees in other countries in Asia.
Fan obtained a Bachelor’s Degree with a Double Major in Molecular Biology & Cell Biology and Signal & Information Systems at the University of Science and Technology of China. Dr. Hui Wang has served as our vice president of corporate strategy group and general manager of Beijing operations since August 2014. Prior to joining us, Dr.
Fan obtained a Bachelor’s Degree with a Double Major in Molecular Biology & Cell Biology and Signal & Information Systems at the University of Science and Technology of China. Mr. Jimmy Lai has served as our director since February 2018. In addition to this role, Mr.
(5) Represents the Class A ordinary shares held by Mr. Leon Cheng Deng. (6) Represents the Class A ordinary shares in the form of ADSs held by Mr. Mike Yan Yeung. (7) Represents (i) the Class A ordinary shares held by Mr.
Box 4389, Road Town, Tortola, British Virgin Islands. (4) Represents the Class A ordinary shares in the form of ADSs held by Mr. Jimmy Lai. (5) Represents the Class A ordinary shares held by Mr. Leon Cheng Deng. (6) Represents the Class A ordinary shares held by Mr. Hui Wang.
Bing Xie’s business address is 10005 Meadowbrook Drive, Dallas, Texas, U.S. 75229. (1) Represents (i) 60,076 Class A ordinary shares in the form of ADSs held by Mr.
Pengtao Yu’s business address is 1551 McCarthy Blvd., Suite 107, Milpitas, CA 95035. 109 Table of Contents (1) Represents (i) 60,076 Class A ordinary shares in the form of ADSs held by Mr.
(12) Based on the statement on Schedule 13G/A filed on January 12, 2024 jointly by Allspring Global Investments Holdings, LLC, Allspring Global Investments, LLC and Allspring Funds Management, LLC, each of which is a Delaware limited liability company with the address of 1415 Vantage Park Drive, 3 rd Floor, Charlotte, NC, 28203, 20,018,936 Class A ordinary shares in the form of ADSs are held by Allspring Global Investments Holdings LLC.
(10) Based on the statement on Schedule 13G/A filed on April 11, 2025 by Allspring Global Investments Holdings, LLC., a Delaware limited liability company with the address of 1415 Vantage Park Drive, Charlotte, 28203, North Carolina, United States.
Liu received his bachelor’s degree in industrial design and master’s degree in mechanical design and theory from Beijing Institute of Technology in 1996 and 2001, respectively, and his master’s degree in industrial design from the Art Center College of Design in 2010. Mr. Liu is appointed as a director to our board by People Better Limited.
Lam worked at Morgan Stanley in various locations, including London, New York, Menlo Park and Hong Kong. Mr. Lam received a Master’s degree in Engineering from the University of Oxford. Mr. Lam is appointed as a director to our board by People Better Limited.
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Liu is one of the co-founders and a senior vice president of Xiaomi, a mobile internet company, where he is responsible for the organization department. Mr.
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He is the Vice President and CFO of Xiaomi Group and Chairman of Airstar Digital Technology. Before joining Xiaomi in October 2020, Mr. Lam served as a Managing Director and Head of Technology Media and Telecom in the Investment Banking and Capital Markets department of Credit Suisse between January 2016 and October 2020. Between July 1997 and December 2015, Mr.
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Liu is a leading figure in industrial design in China and has received numerous industrial design awards together with his team, including 5 Red Dot Design Awards (Germany), 18 iF Design Awards (Germany) and 10 Red Star Design Awards (Mainland, China). Mr.
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Mike Yan Yeung has served as our director since September 2024 and our chief operating officer since January 2015. Prior to joining us, Mr.
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Liu also holds various positions, including the vice-chairman of China Industrial Design Association and a member of National Manufacturing Strategy Advisory Committee. He also serves as the director at several other technology companies, such as Viomi Technology Co., Ltd. (Nasdaq: VIOT), Shanghai Longcheer Technology Co., Ltd. (Shanghai: 603341) and Ninebot Limited (Shanghai: 689009). Mr.
Added
Meihui Fan has served as our director since September 2024 and our chief technology officer since July 2021. He has gained extensive experience in the information technology industry.
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Liu has received many honors in the business world as well. To name a few, he was awarded “Zhongguancun Top Talent” in 2015 and “Beijing Top Innovative and Entrepreneurial Leading Talent” in 2016. Mr.
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Hui Wang has served as our vice president of corporate strategy group since March 2020 and vice president of Zepp North America since March 2024. He was also the general manager of Beijing operations from August 2014 to March 2024. Prior to joining us, Dr.
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Lu also serves as the director of Huami (Shenzhen) Information Technology Co., Ltd., Beijing Huami Intelligent Technology Co., Ltd., Hong Kong Zepp Holding Limited, Shenzhen Yunding Information Technology Co., Ltd., Jiangsu Yitong High-tech Co., Ltd. (Shenzhen: 300211), Hefei Zhongan Huami Investment Management Co., Ltd. and Shanghai Shengyin Technology Co., Ltd. From April 2009 to December 2013, Ms.
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(1) Restricted share units As of March 31, 2025, other employees as a group held outstanding options to purchase 17,634,093 Class A ordinary shares of our company, at a weighted average exercise price of US$0.03 per share, 2,076,217 restricted shares, and 5,491,218 restricted share units. C. Board Practices Our board of directors consists of seven directors.
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Lu served as the financial controller of Hefei Huaheng Electronic Technology Co., Ltd. From November 2002 to March 2009, Ms. Lu worked at Hefei Huakai Yuanheng Information Technology Co., Ltd, where she was responsible for overseeing financial accounting, procurement, administrative affairs and manufacturing management. Prior to that, Ms.
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Bing Xie satisfy the “independence” requirements of Section 303A of the Corporate Governance Rules of the New York Stock Exchange. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers.
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Lu worked at the Logistics Group of the University of Science and Technology of China, where she was in charge of financial accounting and manufacturing management, from 1999 to 2002. Ms. Lu received her secondary vocational degree in accounting from Shanghai Lixin Vocational School of Accounting (now Shanghai Lixin University of Accounting and Finance) in 1986. Ms.
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Employees We had 987, 839 and 765 employees as of December 31, 2022, 2023 and 2024, respectively.
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Lu is appointed as a director to our board by the Co-Founder Entities. Pursuant to the Memorandum and Articles, the Co-Founders Entities will be entitled to appoint three directors so long as they continue to beneficially own no less than 60% of the shares they beneficially owned as of January 12, 2018. Mr.
Added
Alain Lam’s business address is Keliyuan Building, No.72 Anningzhuang East Road, Haidian District, Beijing, 100085, People’s Republic of China. Mr. Mike Yan Yeung’s business address is 1551 McCarthy Blvd, Suite 107, Milpitas, CA, 95035. Mr.
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Xiaojun Zhang has served as our director since April 2015. In addition to this role, Mr. Zhang has also served as vice president of Anhui Huami since January 2014, where he is responsible for overseeing human resources. Prior to joining us, Mr.
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Bing Xie’s business address is 10005 Meadowbrook Drive, Dallas, Texas, U.S. 75229. Mr. Leon Cheng Deng’s business address is Edisonweg 44 - B08, 4207 HG Gorinchem, The Netherlands. Dr. Hui Wang’s business address is 3090 Bristol Street, Suite 400, Costa Mesa, CA 92626. Mr.
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Zhang served as the vice president of Hefei Huaheng Electronic Technology Co., Ltd from October 2011 to December 2013. From September 2010 to October 2011, Mr. Zhang served as deputy general manager of Anhui Mei Bang Investment Management Co., Ltd. From July 2009 to September 2010, Mr.
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We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. ​ 110 Table of Contents Enforceability of Civil Liabilities A majority of our operations are conducted outside of the United States, and a majority of our assets are located outside of the United States.
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Zhang served as head of the human resources and administrative affairs department at the Anhui branch of Sunshine Insurance Group Corporation Limited. Prior to that, Mr. Zhang worked at the Immigration Office of Anhui Provincial Public Security Department, where he held multiple positions including clerk, deputy chief officer and chief officer, from July 1994 to July 2009. Mr.
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We have appointed Puglisi & Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711, as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.
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Zhang received his bachelor’s degree in Chinese language and literature from Anhui University in 1994. Mr. Zhang is appointed as a director to our board by the Co-Founder Entities.
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Pursuant to the Memorandum and Articles, the Co-Founders Entities will be entitled to appoint three directors so long as they continue to beneficially own no less than 60% of the shares they beneficially owned as of January 12, 2018. Mr. Jimmy Lai has served as our director since February 2018. In addition to this role, Mr.

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Item 7. Management's Discussion & Analysis

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

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In 2023, we transferred the technologies related to Huangshan-2/2S smart wearable chips to Whale Microelectronics Co., Ltd., a subsidiary of Jiangsu Yitong, an affiliate of our company, for a total consideration of RMB21.9 million. C. Interests of Experts and Counsel Not applicable. ​
In 2023, we transferred the technologies related to Huangshan-2/2S smart wearable chips to Whale Microelectronics Co., Ltd., a subsidiary of Jiangsu Yitong, an affiliate of our company, for a total consideration of US$3.0 million. 112 Table of Contents C. Interests of Experts and Counsel Not applicable. ​
Directors and Senior Management— Employment Agreements and Indemnification Agreements.” Share Incentive Plan See “Item 6. Directors, Senior Management and Employees—B. Compensation—2015 Share Incentive Plan,” “2018 Share Incentive Plan” and “2023 Share Incentive Plan.” Our Relationship with Xiaomi As of February 29, 2024, Xiaomi held 14.9% of our total outstanding shares, and has appointed one director to our board.
Directors and Senior Management— Employment Agreements and Indemnification Agreements.” Share Incentive Plan See “Item 6. Directors, Senior Management and Employees—B. Compensation—2015 Share Incentive Plan,” “—2018 Share Incentive Plan” and “—2023 Share Incentive Plan.” Our Relationship with Xiaomi As of February 28, 2025, Xiaomi held 15.6% of our total outstanding shares, and has appointed one director to our board.
In the year ended December 31, 2022, we recorded RMB1,704.0 million in revenues from Xiaomi and its affiliate primarily for the sales of Xiaomi Wearable Products and self-branded products and others. As of December 31, 2022, the amount due from Xiaomi and its affiliates was RMB118.3 million.
In the year ended December 31, 2022, we recorded US$253.8 million in revenues from Xiaomi and its affiliate primarily for the sales of Xiaomi Wearable Products and self-branded products and others. As of December 31, 2022, the amount due from Xiaomi and its affiliates was US$17.2 million.
Transactions with Xiaomi In the year ended December 31, 2023, we recorded RMB644.9 million (US$90.8 million) in revenues from Xiaomi and its affiliate primarily for the sales of Xiaomi Wearable Products. As of December 31, 2023, the amount due from Xiaomi and its affiliates was RMB38.3 million (US$5.4 million).
As of December 31, 2024, the amount due from Xiaomi and its affiliates was US$0.5 million. In the year ended December 31, 2023, we recorded US$92.0 million in revenues from Xiaomi and its affiliate primarily for the sales of Xiaomi Wearable Products. As of December 31, 2023, the amount due from Xiaomi and its affiliates was US$5.4 million.
In 2021, 2022 and 2023, we purchased raw materials from Whale Microelectronics Co., Ltd., a subsidiary of Jiangsu Yitong, an affiliate of our company, with total transaction amount of RMB146.8 million, RMB222.2 million and RMB86.8 million, respectively.
Other Transactions with Related Parties In 2022, 2023 and 2024, we purchased raw materials from Whale Microelectronics Co., Ltd., a subsidiary of Jiangsu Yitong, an affiliate of our company, with total transaction amount of US$33.0 million, US$12.3 million and US$3.3 million, respectively.
In February 2023, we entered into a new business cooperation agreement with Xiaomi for the next two years, which will end in January 2025.
In February 2023, we entered into a new business cooperation agreement with Xiaomi for the next two years, which had expired in January 2025. Transactions with Xiaomi In the year ended December 31, 2024, we recorded US$11.0 million in revenues from Xiaomi and its affiliate primarily for the sales of Xiaomi Wearable Products.
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In October 2017, we entered into a strategic cooperation agreement with Xiaomi, which granted us the most-preferred-partner status globally to develop subsequent Xiaomi Wearable Products. In October 2020, we extended the strategic cooperation agreement with Xiaomi for three years, which ended in October 2023.
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Strategic Cooperation Agreement Under our strategic cooperation agreement with a subsidiary of Xiaomi, (i) we were Xiaomi’s most preferred partner for Xiaomi-branded smart bands, smart watches (excluding children watches and quartz watches) and smart scales products, and (ii) if any other smart band, smart watch or smart scale is sold on any sales platform or channel operated by Xiaomi (including its official website, Mi.com, offline retail stores and online mobile apps), Xiaomi was required to provide better or equally prominent displays for our products.
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This strategic cooperation agreement expired in October 2023. Business Cooperation Agreement In February 2023, we entered into a business cooperation agreement with a subsidiary of Xiaomi for the sale of Xiaomi Wearable Products, including Mi Band series and Mi Smart Scale series. The business cooperation agreement is set to have a term of two years.
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Pursuant to this agreement we and Xiaomi agree that (i) Xiaomi is the exclusive distributor for Xiaomi Wearable Products, (ii) Xiaomi will purchase Xiaomi Wearable Products subject to the latest purchase order in force (including costs of raw materials, OEM fees, mold amortization fees (if shared and confirmed by both parties), and logistics expenses) in connection with the manufacturing and shipment of Xiaomi Wearable Products, (iii) Xiaomi and we will share all profits or losses, normally on a share ratio or proportion agreed by both parties in writing, derived from sales of Xiaomi Wearable Products, and (iv) we and Xiaomi shall jointly set the retail price of Xiaomi Wearable Products.
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During the year ended December 31, 2023, we sold several Xiaomi Wearable Products, which we and Xiaomi have standard selling prices and do not include installment payments.
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With respect to intellectual properties, we and Xiaomi will have joint ownership over patents generated from the process of design, development, manufacturing and sales of Xiaomi Wearable Products as well as intellectual properties relating to certain industrial design of Xiaomi Wearable Products.
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We by ourselves own all other intellectual properties generated from the design, development, manufacturing and sales of Xiaomi Wearable Products. 121 Table of Contents On user data, we and Xiaomi agree that both parties have access to and can collect and utilize user data of Xiaomi Wearable Products.
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In addition, unless our users instruct us or Xiaomi to disclose or transfer our data in a particular way, we need to obtain consent from Xiaomi if we want to disclose or license third parties to use user data of Xiaomi Wearable Products, and after user data of Xiaomi Wearable Products reaches certain volume threshold, Xiaomi will also need to obtain consent from us before it discloses or licenses other parties to the same user data.
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In the year ended December 31, 2021, we recorded RMB3,350.0 million in revenues from Xiaomi and its affiliate primarily for the sales of Xiaomi Wearable Products and self-branded products and others. As of December 31, 2021, the amount due from Xiaomi and its affiliates was RMB287.2 million.
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Other Transactions with Related Parties We have invested in a number of companies as a strategy to expand our business partner network. In 2021, we sold 5% equity interest in Shenzhen Yunding Information Technology Co., Ltd. for a cash consideration of RMB20.0 million to Gongqingcheng Yunding Ruiheng Investment L.P.

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