☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of Each Class | Trading Symbol (1 ) | Name of Each Exchange On Which Registered (1 ) | ||
American depositary shares, each American depositary share representing one fourteen Class A ordinary Class A ordinary shares , par valueUS$0.001 per share* | LAIX | New York Stock Exchange | ||
* | Not trading, but only in connection with the listing on the New York Stock Exchange and quoting on the OTC Market, as applicable, of the American depositary shares. |
(1) | On April 22, 2022, the New York Stock Exchange, or the NYSE, applied to the SEC by filing a Form 25 to delist the American depository shares of LAIX Inc., which is expected to be effective ten days after filing the Form 25. The American depository shares of LAIX Inc. are expected to be delisted from the NYSE and have been quoted on the OTC Market under the symbol “LAIXY” after the NYSE suspended the trading of LAIX Inc’s American depositary shares in April 2022. |
Large accelerated filer | ☐ | Accelerated filer | Non-accelerated filer | |||||||
Emerging growth company | ☒ |
† | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
U.S. GAAP ☒ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other | ☐ |
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ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. | KEY INFORMATION |
LAIX Inc. is not an operating company in China but a Cayman Islands holding company with no equity ownership in the variable interest entities. We conduct our operations in China through (i) our PRC subsidiaries, and (ii) the variable interest entities with which we have maintained contractual arrangements and their subsidiaries in China. PRC laws and regulations prohibit foreign investment in internet and other-related businesses. Accordingly, we conduct substantially all of our operations in China through the variable interest entities and we rely on contractual arrangements among our PRC subsidiaries, the variable interest entities and their shareholders to control the business operations of the variable interest entities and their subsidiaries. Revenues contributed by the variable interest entities accounted for 100.0%, 100.0% and 100.0% of our total revenues for the year ended December 31, 2019, 2020 and 2021, respectively. As used in this annual report, “we,” “us,” “our company” and “our” refers to LAIX Inc., its subsidiaries, and, in the context of describing our operations and consolidated financial information, also include the variable interest entities in China, primarily including Shanghai Liulishuo Information Technology Co., Ltd., Shanghai Mengfan Education Technology Co., Ltd. and Shanghai Mengfan Cultural Communication Co., Ltd. Investors in our ADSs are not purchasing equity interest in the variable interest entities in China but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands. A series of contractual agreements, including powers of attorney, exclusive technology service agreements, equity pledge agreements, exclusive call option agreements, and loan agreements (applicable to Shanghai Mengfan Education Technology Co., Ltd. only), have been entered into by and among our subsidiaries, the variable interest entities and their respective shareholders. Terms contained in each set of contractual arrangements with the variable interest entities and their respective shareholders are substantially similar. As a result of the contractual arrangements, we have effective control over and are considered the primary beneficiary of these companies, and we have consolidated the financial results of these companies in our consolidated financial statements. For more details of these contractual arrangements, see “Item 4. Information on the Company – C. Organizational Structure – Contractual Arrangements with the VIEs and Their Respective Shareholders.” However, the contractual arrangements may not be as effective as direct ownership in providing us with control over the variable interest entities and we may incur substantial costs to enforce the terms of the arrangements. In addition, these agreements have not been tested in China courts. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—We rely on contractual arrangements with the VIEs and their respective shareholders to exercise control over a significant part of our business, which may not be as effective as direct ownership in providing operational control” and “Item 3. Key Information—D. Risk Factors—Risks Relating 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.” 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 variable interest entities and their shareholders. 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 we or any of the variable interest entities is 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 relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government deems that our contractual arrangements with the VIEs do not comply with PRC regulatory restrictions on foreign investment in 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 “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and Double Alleviating Opinions and how they may impact the viability of our current corporate structure, corporate governance and business operations.” 3 Our corporate structure is subject to risks associated with our contractual arrangements with the variable interest entities. If the PRC government deems that our contractual arrangements with the variable interest entities do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiaries and variable interest entities, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the variable interest entities and, consequently, significantly affect the financial performance of the variable interest entities and our company as a whole. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.” We face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, as well as the lack of inspection by the Public Company Accounting Oversight Board, or the PCAOB, on our auditors, which may impact our ability to conduct certain businesses, accept foreign investments, or list on a United States or other foreign exchange. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline or be of little or no value. For a detailed description of risks related to doing business in China, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China.” PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations, including data security or anti-monopoly related regulations, in this nature may cause the value of such securities to significantly decline or be of little or no value. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations and the value of our ADSs and ordinary shares.” Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and Double Alleviating Opinions and how they may impact the viability of our current corporate structure, corporate governance and business operations” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us.” Permissions Required from the PRC Authorities for our Operations We conduct our business in China primarily through our subsidiaries and the variable interest entities in China. Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, our PRC subsidiaries and the variable interest entities have obtained the necessary licenses and permits from the PRC government authorities that are material for the business operations of our subsidiaries and the variable interest entities in China, including, among others, the value-added telecommunications business operating license with the approved business scope of “internet information service” and filing of multi-level protection of cyber security (level three). In addition, in response to the Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education, or the Double Alleviating Opinions, issued by the General Office of the CPC Central Committee and the General Office of the State Council on July 24, 2021, which is intended to strengthen the supervision of discipline training institutions for the compulsory education stage and also mandates management of off-campus training for preschool children and high school students, we ceased the operations of our “Kids Liulishuo” for the avoidance of being deemed as an institution that might be subject to the restrictive requirements of the Double Alleviating Opinions due to our content offering on Kids Liulishuo and started to collaborate with Shanghai Yangpu District Liuli Education and Training Center, or Yangpu Liuli, a privatenon-profit institution established by our three founders with a private school operating permit, to have Yangpu Liuli operate Kids Liulishuo.Due to the development of our businesses, and also given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we are required and may further be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China— Our failure to obtain, maintain or renew other licenses, approvals, permits, registrations or filings necessary to conduct our operations in China could have a material adverse impact on our business, financial conditions and results of operations.” 4 Furthermore, in connection with our historical listing on the New York Stock Exchange and the current quoting on the OTC Market of our securities, under current PRC laws, regulations and regulatory rules, as of the date of this annual report, we, our PRC subsidiaries and the variable interest entities, (i) are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) are not required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority. However, the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The 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 obtain such approval.” Cash and Asset Flows through Our Organization LAIX Inc. is a holding company with no material operations of its own. We conduct our operations primarily through our PRC subsidiaries, the variable interest entities and their subsidiaries in China. As a result, LAIX Inc.’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. In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by SAFE. Under PRC law, each of our subsidiaries and the variable interest entities in China is required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. For more details, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Holding Company Structure.” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—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.” Pursuant to the applicable PRC laws and regulations, our PRC subsidiaries and variable interest entities are currently not eligible to pay dividends or otherwise transfer any of their net assets to us. Under PRC laws, LAIX Inc. may, through its intermediary holding companies, provide funding to our PRC subsidiaries only through capital contributions or loans, and to the variable interest entities only through loans, subject to satisfaction of applicable government registration and approval requirements. For the years ended December 31, 2019, 2020 and 2021, LAIX Inc., through its intermediate holding companies, provided capital contributions of RMB71.3 million, RMB172.4 million and RMB186.7 million (US$29.3 million), respectively, to its PRC subsidiaries. For the years ended December 31, 2019, 2020 and 2021, no loans were provided by LAIX Inc. or its intermediary holding companies to its PRC subsidiaries or the variable interest entities. For the years ended December 31, 2019, 2020 and 2021, the service fee charged by the primary beneficiary of the variable interest entities to the variable interest entities was RMB601.0 million, RMB426.9 million and RMB233.9 million (US$36.7 million), respectively. For details of the financial position, cash flows and results of operations of the variable interest entities, see “—Financial Information Related to the Variable Interest Entities” and pages F-12 toF-13 of this annual report on Form20-F. For the years ended December 31, 2019, 2020 and 2021, no assets other than cash were transferred between the Cayman Islands holding company and a subsidiary, a variable interest entity or its subsidiary of our Group, and no subsidiaries paid dividends or made other distributions to the holding company. LAIX Inc. has not declared or paid any cash dividends, nor does it has any present plan to pay any cash dividends on its ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” For the material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our ADSs or ordinary shares, see “Item 10. Additional Information—E. Taxation.” Financial Information Related to the Variable Interest Entities The following table presents the condensed consolidating schedule of financial information of LAIX Inc., its subsidiaries, and the variable interest entities and other entities as of the dates presented. 5 Selected Condensed Consolidated Statements of Operations and Comprehensive (Loss)/Income Data
6 Selected Condensed Consolidated Balance Sheets Data
7
Selected Condensed Consolidated Cash Flows Data
8
9 |
Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2016 | 2017 | 2018 | 2019 | 2020 | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | US$ | RMB | RMB | RMB | RMB | RMB | US$ | |||||||||||||||||||||||||||||||||||||
(in thousands, except for share and per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||
Selected Consolidated Statement of Comprehensive Loss | ||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except for share and per share data) | ||||||||||||||||||||||||||||||||||||||||||||||||
Selected Consolidated Statement of Comprehensive (Loss)/Income | ||||||||||||||||||||||||||||||||||||||||||||||||
Net revenues | 12,332 | 165,561 | 637,224 | 1,023,213 | 972,628 | 149,062 | 165,561 | 637,224 | 1,023,213 | 972,628 | 684,928 | 107,480 | ||||||||||||||||||||||||||||||||||||
Cost of revenues (1) | (27,503 | ) | (57,691 | ) | (174,731 | ) | (273,515 | ) | (277,240 | ) | (42,489 | ) | (57,691 | ) | (174,731 | ) | (273,515 | ) | (277,240 | ) | (140,439 | ) | (22,038 | ) | ||||||||||||||||||||||||
Gross (loss)/profit | (15,171 | ) | 107,870 | 462,493 | 749,698 | 695,388 | 106,573 | |||||||||||||||||||||||||||||||||||||||||
Gross profit | 107,870 | 462,493 | 749,698 | 695,388 | 544,489 | 85,442 | ||||||||||||||||||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||
Sales and marketing expenses (1) | (28,534 | ) | (283,055 | ) | (705,414 | ) | (969,401 | ) | (801,362 | ) | (122,814 | ) | (283,055 | ) | (705,414 | ) | (969,401 | ) | (801,362 | ) | (325,007 | ) | (51,001 | ) | ||||||||||||||||||||||||
Research and development expenses (1) | (30,013 | ) | (53,162 | ) | (155,154 | ) | (213,866 | ) | (190,711 | ) | (29,228 | ) | (53,162 | ) | (155,154 | ) | (213,866 | ) | (190,711 | ) | (105,066 | ) | (16,487 | ) | ||||||||||||||||||||||||
General and administrative expenses (1) | (8,754 | ) | (19,807 | ) | (65,423 | ) | (153,507 | ) | (111,004 | ) | (17,012 | ) | (19,807 | ) | (65,423 | ) | (153,507 | ) | (111,004 | ) | (84,154 | ) | (13,206 | ) | ||||||||||||||||||||||||
Total operating expenses | (67,301 | ) | (356,024 | ) | (925,991 | ) | (1,336,774 | ) | (1,103,077 | ) | (169,054 | ) | (356,024 | ) | (925,991 | ) | (1,336,774 | ) | (1,103,077 | ) | (514,227 | ) | (80,694 | ) | ||||||||||||||||||||||||
Other operating income | — | — | — | 2,390 | 43 | 7 | — | — | 2,390 | 43 | 14,206 | 2,229 | ||||||||||||||||||||||||||||||||||||
Loss from operations | (82,472 | ) | (248,154 | ) | (463,498 | ) | (584,686 | ) | (407,646 | ) | (62,474 | ) | ||||||||||||||||||||||||||||||||||||
(Loss)/Income from operations | (248,154 | ) | (463,498 | ) | (584,686 | ) | (407,646 | ) | 44,468 | 6,977 | ||||||||||||||||||||||||||||||||||||||
Other (expenses)/income: | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 2,671 | 934 | 2,732 | 11,283 | 904 | 139 | ||||||||||||||||||||||||||||||||||||||||||
Foreign exchange related (losses)/gains, net | (9,840 | ) | 7,144 | (4,156 | ) | (2,533 | ) | 4,671 | 716 | |||||||||||||||||||||||||||||||||||||||
Change in fair value of short-term investment | 59 | 750 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Interest income/(expenses) | 1,684 | 2,732 | 11,283 | 904 | (3,790 | ) | (594 | ) | ||||||||||||||||||||||||||||||||||||||||
Foreign exchange related gains/(losses), net | 7,144 | (4,156 | ) | (2,533 | ) | 4,671 | (63 | ) | (10 | ) | ||||||||||||||||||||||||||||||||||||||
Other income, net | 413 | 2,172 | 1,016 | 3,055 | 9,146 | 1,402 | 2,172 | 1,016 | 3,055 | 9,146 | 21,001 | 3,295 | ||||||||||||||||||||||||||||||||||||
Net loss before tax | (89,169 | ) | (237,154 | ) | (463,906 | ) | (572,881 | ) | (392,925 | ) | (60,217 | ) | ||||||||||||||||||||||||||||||||||||
Net (loss)/income before tax | (237,154 | ) | (463,906 | ) | (572,881 | ) | (392,925 | ) | 61,616 | 9,668 | ||||||||||||||||||||||||||||||||||||||
Income tax expense | — | (5,606 | ) | (24,160 | ) | (1,900 | ) | (1,902 | ) | (291 | ) | (5,606 | ) | (24,160 | ) | (1,900 | ) | (1,902 | ) | (1,709 | ) | (268 | ) | |||||||||||||||||||||||||
Net loss | (89,169 | ) | (242,760 | ) | (488,066 | ) | (574,781 | ) | (394,827 | ) | (60,508 | ) | ||||||||||||||||||||||||||||||||||||
Net (loss)/income | (242,760 | ) | (488,066 | ) | (574,781 | ) | (394,827 | ) | 59,907 | 9,400 | ||||||||||||||||||||||||||||||||||||||
Series A preferred share redemption value accretion | (3,601 | ) | (3,105 | ) | (1,978 | ) | — | — | — | (3,105 | ) | (1,978 | ) | — | — | — | — |
Year Ended December 31, | ||||||||||||||||||||||||
2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | US$ | |||||||||||||||||||
(in thousands, except for share and per share data) | ||||||||||||||||||||||||
Series B preferred share redemption value accretion | (11,548 | ) | (12,565 | ) | (10,140 | ) | — | — | — | |||||||||||||||
Series C preferred share redemption value accretion | — | (11,147 | ) | (15,899 | ) | — | — | — | ||||||||||||||||
Net loss attributable to LAIX Inc.’s ordinary shareholders | (104,318 | ) | (269,577 | ) | (516,083 | ) | (574,781 | ) | (394,827 | ) | (60,508 | ) | ||||||||||||
Foreign currency translation adjustment, net of nil tax | 12,995 | (24,982 | ) | 16,403 | 13,165 | (19,227 | ) | (2,947 | ) | |||||||||||||||
Comprehensive loss | (76,174 | ) | (267,742 | ) | (471,663 | ) | (561,616 | ) | (414,054 | ) | (63,455 | ) | ||||||||||||
Net loss per ordinary share attributable to ordinary shareholders —Basic and diluted | (5.28 | ) | (13.59 | ) | (19.17 | ) | (11.64 | ) | (7.99 | ) | (1.22 | ) | ||||||||||||
Weighted average number of ordinary shares used in per share calculation —Basic and diluted | 19,770,990 | 19,834,535 | 26,921,735 | 49,364,429 | 49,430,696 | 49,430,696 |
Year Ended December 31, | ||||||||||||||||||||||||
2017 | 2018 | 2019 | 2020 | 2021 | ||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | US$ | |||||||||||||||||||
(in thousands, except for share and per share data) | ||||||||||||||||||||||||
Series B preferred share redemption value accretion | (12,565 | ) | (10,140 | ) | — | — | — | — | ||||||||||||||||
Series C preferred share redemption value accretion | (11,147 | ) | (15,899 | ) | — | — | — | — | ||||||||||||||||
Net (loss)/income attributable to LAIX Inc.’s ordinary shareholders | (269,577 | ) | (516,083 | ) | (574,781 | ) | (394,827 | ) | 59,907 | 9,400 | ||||||||||||||
Foreign currency translation adjustment, net of nil tax | (24,982 | ) | 16,403 | 13,165 | (19,227 | ) | (2,237 | ) | (351 | ) | ||||||||||||||
Comprehensive (loss)/income | (267,742 | ) | (471,663 | ) | (561,616 | ) | (414,054 | ) | 57,670 | 9,049 | ||||||||||||||
Net (loss)/income per ordinary share attributable to ordinary shareholders | ||||||||||||||||||||||||
—Basic | (13.59 | ) | (19.17 | ) | (11.64 | ) | (7.99 | ) | 1.20 | 0.19 | ||||||||||||||
—Diluted | (13.59 | ) | (19.17 | ) | (11.64 | ) | (7.99 | ) | 1.19 | 0.19 | ||||||||||||||
Weighted average number of ordinary shares used in per share calculation | ||||||||||||||||||||||||
—Basic | 19,834,535 | 26,921,735 | 49,364,429 | 49,430,696 | 50,022,094 | 50,022,094 | ||||||||||||||||||
—Diluted | 19,834,535 | 26,921,735 | 49,364,429 | 49,430,696 | 50,277,973 | 50,277,973 |
(1) | Including share-based compensation expenses as follows: |
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||||||||||||||||
2016 | 2017 | 2018 | 2019 | 2020 | RMB | RMB | RMB | RMB | RMB | US$ | ||||||||||||||||||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | US$ | |||||||||||||||||||||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
Cost of revenues | 1,257 | 1,341 | 667 | 1,657 | 7,154 | 1,096 | 1,341 | 667 | 1,657 | 7,154 | 2,176 | 341 | ||||||||||||||||||||||||||||||||||||
Sales and marketing expenses | 839 | 2,380 | 6,637 | 590 | 3,282 | 503 | 2,380 | 6,637 | 590 | 3,282 | 1,060 | 166 | ||||||||||||||||||||||||||||||||||||
Research and development expenses | 2,285 | 3,800 | 27,114 | 13,966 | 14,432 | 2,212 | 3,800 | 27,114 | 13,966 | 14,432 | 13,355 | 2,096 | ||||||||||||||||||||||||||||||||||||
General and administrative expenses | 139 | 997 | 11,055 | 10,470 | 4,159 | 637 | 997 | 11,055 | 10,470 | 4,159 | 5,454 | 856 | ||||||||||||||||||||||||||||||||||||
Total | 4,520 | 8,518 | 45,473 | 26,683 | 29,027 | 4,448 | 8,518 | 45,473 | 26,683 | 29,027 | 22,045 | 3,459 | ||||||||||||||||||||||||||||||||||||
As of December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, | 2017 | 2018 | 2019 (1) | 2020 (2) | 2021 | |||||||||||||||||||||||||||||||||||||||||||
2016 | 2017 | 2018 | 2019 (1) | 2020 (2) | RMB | RMB | RMB | RMB | RMB | US$ | ||||||||||||||||||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | US$ | |||||||||||||||||||||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
Selected Consolidated Balance Sheet: | ||||||||||||||||||||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash, cash equivalents and restricted cash | 41,301 | 416,483 | 344,722 | 282,982 | 138,507 | 21,227 | 416,483 | 344,722 | 282,982 | 138,507 | 63,556 | 9,973 | ||||||||||||||||||||||||||||||||||||
Short-term investments | 121,336 | 35,422 | 403,107 | 269,643 | 91,049 | 13,954 | 35,422 | 403,107 | 269,643 | 91,049 | 6,759 | 1,061 | ||||||||||||||||||||||||||||||||||||
Accounts receivable, net | — | 7,236 | 14,403 | 7,360 | 5,892 | 903 | 7,236 | 14,403 | 7,360 | 5,892 | 2,898 | 455 | ||||||||||||||||||||||||||||||||||||
Prepayments and other current assets | 2,959 | 21,907 | 109,552 | 86,787 | 58,272 | 8,931 | 21,907 | 109,552 | 86,787 | 58,272 | 42,731 | 6,705 | ||||||||||||||||||||||||||||||||||||
Total current assets | 165,596 | 481,048 | 871,784 | 646,772 | 293,720 | 45,015 | 481,048 | 871,784 | 646,772 | 293,720 | 115,944 | 18,194 | ||||||||||||||||||||||||||||||||||||
Total assets | 167,214 | 494,325 | 950,383 | 919,177 | 445,747 | 68,314 | 494,325 | 950,383 | 919,177 | 445,747 | 163,850 | 25,712 | ||||||||||||||||||||||||||||||||||||
Total current liabilities | 44,807 | 288,500 | 730,457 | 1,114,417 | 1,033,888 | 158,450 | 288,500 | 730,457 | 1,114,417 | 1,033,888 | 763,012 | 119,733 | ||||||||||||||||||||||||||||||||||||
Total liabilities | 46,307 | 290,408 | 731,489 | 1,243,982 | 1,158,310 | 177,519 | 290,408 | 731,489 | 1,243,982 | 1,158,310 | 795,836 | 124,883 | ||||||||||||||||||||||||||||||||||||
Total mezzanine equity | 286,946 | 651,904 | — | — | — | — | 651,904 | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total shareholders’ equity (deficits) | (166,039 | ) | (447,987 | ) | 218,894 | (324,805 | ) | (712,563 | ) | (109,205 | ) | (447,987 | ) | 218,894 | (324,805 | ) | (712,563 | ) | (631,986 | ) | (99,171 | ) |
(1) | Effective from January 1, 2019, we adopted ASC 842, a new accounting standard on the recognition of right-of-use |
(2) | Effective from January 1, 2020, we adopted ASU 2016-13, a new guidance for credit losses on instruments issued by FASB in June 2016. The adoption did not have a material impact on our consolidated financial statements and related disclosures. See Note 2(i) to our audited consolidated financial statements included elsewhere in this annual report for further information. |
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | 2017 | 2018 | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||||||||||||||||
2016 | 2017 | 2018 | 2019 | 2020 | RMB | RMB | RMB | RMB | RMB | US$ | ||||||||||||||||||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | US$ | |||||||||||||||||||||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
Selected Consolidated Cash Flow Data: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net cash used in operating activities | (38,591 | ) | (60,120 | ) | (112,942 | ) | (148,164 | ) | (302,598 | ) | (46,375 | ) | (60,120 | ) | (112,942 | ) | (148,164 | ) | (302,598 | ) | (155,152 | ) | (24,346 | ) | ||||||||||||||||||||||||
Net cash (used in)/provided by investing activities | (121,677 | ) | 69,901 | (417,716 | ) | 100,246 | 164,667 | 25,236 | ||||||||||||||||||||||||||||||||||||||||
Net cash provided by/(used in) investing activities | 69,901 | (417,716 | ) | 100,246 | 164,667 | 81,672 | 12,815 | |||||||||||||||||||||||||||||||||||||||||
Net cash provided by/(used in) financing activities | — | 377,191 | 443,978 | (16,344 | ) | 4,285 | 657 | 377,191 | 443,978 | (16,344 | ) | 4,285 | 1,145 | 180 | ||||||||||||||||||||||||||||||||||
Net (decrease)/increase in cash, cash equivalents and restricted cash | (160,268 | ) | 386,972 | (86,680 | ) | (64,262 | ) | (133,646 | ) | (20,482 | ) | 386,972 | (86,680 | ) | (64,262 | ) | (133,646 | ) | (72,335 | ) | (11,351 | ) | ||||||||||||||||||||||||||
Exchange rate effect on cash, cash equivalents and restricted cash | 2,312 | (11,790 | ) | 14,919 | 2,522 | (10,829 | ) | (1,660 | ) | (11,790 | ) | 14,919 | 2,522 | (10,829 | ) | (2,616 | ) | (411 | ) | |||||||||||||||||||||||||||||
Cash, cash equivalents and restricted cash at the beginning of year | 199,257 | 41,301 | 416,483 | 344,722 | 282,982 | 43,369 | 41,301 | 416,483 | 344,722 | 282,982 | 138,507 | 21,735 | ||||||||||||||||||||||||||||||||||||
Cash, cash equivalents and restricted cash at the end of year | 41,301 | 416,483 | 344,722 | 282,982 | 138,507 | 21,227 | 416,483 | 344,722 | 282,982 | 138,507 | 63,556 | 9,973 |
A. | Reserved |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
ITEM 4. | INFORMATION ON THE COMPANY |
A. | History and Development of the Company |
B. | Business Overview |
DongNi English (standard subscription) | DongNi English A+ (standard subscription) | DongNi Select (premium services) | Authentic Pronunciation | LiuLi Reading | Kids Course (1) | LingoChamp | ||||||||
Fee Scale | • RMB499 for 180-day access • up to RMB998 for 12-month access | • RMB698 for 180-day access • up to RMB1,298 for 12-month access | • RMB4,399 for 12-month access • RMB8,980 for 12-month access | • 180-day access• up to 12-month access | • RMB199 for 100-day access • 180-day access• 12-month access | • 12-month access to Phonics Courses• 12-month access to AIX courses• RMB3,898 for 24-month access to AIX courses• 36-month access to AIX courses | • US$24.99 for 1-month subscription• US$124.99 for 6-month subscription• US$164.99 for 12-month subscription |
(1) | The fee scale for Kids Course represented the one for the year ended December 31, 2021 to the extent we operated the K-12 business in 2021. In light of the Double Alleviating Opinions, we ceased offering the Kids Course from January 1, 2022. We granted Yangpu Liuli, a privatenon-profit institution that holds a private school operating permit established under the laws of China by our three founders with their personal donations as registered capital, the right to utilize and operate “Kids Liulishuo.” Yangpu Liuli has gradually resumed the operations of Kids Liulishuo and started to offer Kids Courses in the first quarter of 2022 for which Yangpu Liuli records all the revenues generated from operating Kids Liulishuo. In order for Yangpu Liuli to operate Kids Liulishuo, we, through Shanghai Liulishuo, entered into a software licensing agreement and service agreement with Yangpu Liuli, pursuant to which we will charge Yangpu Liuli a portion of its revenues on a monthly basis as our royalty fees for the licensing of “Kids Liulishuo” and our service fees for the provision of administrative supporting services, including legal, human resources, financial and managerial supporting services by us to Yangpu Liuli. |
C. | Organizational Structure |
(1) | As of the date of this annual report, Dr. Yi Wang, Mr. Zheren Hu and Dr. Hui Lin collectively hold a majority of the equity interests in Shanghai Liulishuo and Shanghai Mengfan, respectively. |
(2) | As of the date of this annual report, Dr. Yi Wang, Mr. Zheren Hu and Dr. Hui Lin collectively hold all of the equity interests in Mengfan Education. |
D. | Property, Plant and Equipment |
ITEM 4A. | UNRESOLVED STAFF COMMENTS |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
A. | Operating Results |
2018 | 2019 | 2020 | 2019 | 2020 | 2021 | |||||||||||||||||||
Gross billings | RMB986.6 million | RMB1,294.3 million | RMB1,087.1 million | RMB1,294.3 million | RMB1,087.1 million | RMB533.7 million | ||||||||||||||||||
Net revenues | RMB637.2 million | RMB1,023.2 million | RMB972.6 million | RMB1,023.2 million | RMB972.6 million | RMB684.9 million | ||||||||||||||||||
Paying users | 2.5 million | 3.0 million | 2.4 million | |||||||||||||||||||||
Paying users for our domestic English learning business | 3.0 million | 2.4 million | 1.1 million |
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2019 | 2020 | RMB | % | RMB | % | RMB | US$ | % | |||||||||||||||||||||||||||||||||||||||||||||||
RMB | % | RMB | % | RMB | US$ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except for percentages) | (in thousands, except for percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales and marketing expenses | (705,414 | ) | (110.7 | ) | (969,401 | ) | (94.7 | ) | (801,362 | ) | (122,814 | ) | (82.4 | ) | (969,401 | ) | (94.7 | ) | (801,362 | ) | (82.4 | ) | (325,007 | ) | (51,001 | ) | (47.5 | ) | ||||||||||||||||||||||||||||
Research and development expenses | (155,154 | ) | (24.3 | ) | (213,866 | ) | (20.9 | ) | (190,711 | ) | (29,228 | ) | (19.6 | ) | (213,866 | ) | (20.9 | ) | (190,711 | ) | (19.6 | ) | (105,066 | ) | (16,487 | ) | (15.3 | ) | ||||||||||||||||||||||||||||
General and administrative expenses | (65,423 | ) | (10.3 | ) | (153,507 | ) | (15.0 | ) | (111,004 | ) | (17,012 | ) | (11.4 | ) | (153,507 | ) | (15.0 | ) | (111,004 | ) | (11.4 | ) | (84,154 | ) | (13,206 | ) | (12.3 | ) | ||||||||||||||||||||||||||||
Total operating expenses | (925,991 | ) | (145.3 | ) | (1,336,774 | ) | (130.6 | ) | (1,103,077 | ) | (169,054 | ) | (113.4 | ) | (1,336,774 | ) | (130.6 | ) | (1,103,077 | ) | (113.4 | ) | (514,227 | ) | (80,694 | ) | (75.1 | ) |
Date of Options Grant | Share Options Granted | Exercise Price (US$/ Share) | Fair Value of Option (US$) | Fair Value of Ordinary Shares (US$) | DLOM | Discount Rate | Type of Valuation | |||||||||||||||||||||
July 1, 2016 | 722,070 | 0.20 | 3.32 | 3.52 | 26 | % | 25 | % | Retrospective | |||||||||||||||||||
January 1, 2017 | 69,500 | 0.20 | 3.52 | 3.72 | 24 | % | 25 | % | Retrospective | |||||||||||||||||||
June 1, 2017 | 609,500 | 0.20 | 5.54 | 5.74 | 18 | % | 24 | % | Retrospective | |||||||||||||||||||
December 31, 2017 | 558,584 | 0.60 | 7.39 | 7.99 | 15 | % | 24 | % | Retrospective | |||||||||||||||||||
April 25, 2018 | 646,000 | 0.60 | 10.90 | 11.50 | 10 | % | 23 | % | Contemporaneous | |||||||||||||||||||
July 31, 2018 | 1,489,000 | 0.60 | 12.79 | 13.39 | 5 | % | 22 | % | Contemporaneous |
Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | 2019 | 2020 | RMB | % | RMB | % | RMB | US$ | % | |||||||||||||||||||||||||||||||||||||||||||||||
RMB | % | RMB | % | RMB | US$ | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except for percentages) | (in thousands, except for percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net revenues | 637,224 | 100.0 | 1,023,213 | 100.0 | 972,628 | 149,062 | 100.0 | 1,023,213 | 100.0 | 972,628 | 100.0 | 684,928 | 107,480 | 100.0 | ||||||||||||||||||||||||||||||||||||||||||
Cost of revenues (1) | (174,731 | ) | (27.4 | ) | (273,515 | ) | (26.7 | ) | (277,240 | ) | (42,489 | ) | (28.5 | ) | (273,515 | ) | (26.7 | ) | (277,240 | ) | (28.5 | ) | (140,439 | ) | (22,038 | ) | (20.5 | ) | ||||||||||||||||||||||||||||
Gross profit | 462,493 | 72.6 | 749,698 | 73.3 | 695,388 | 106,573 | 71.5 | 749,698 | 73.3 | 695,388 | 71.5 | 544,489 | 85,442 | 79.5 | ||||||||||||||||||||||||||||||||||||||||||
Operating expenses: | 0.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales and marketing expenses (1) | (705,414 | ) | (110.7 | ) | (969,401 | ) | (94.7 | ) | (801,362 | ) | (122,814 | ) | (82.4 | ) | (969,401 | ) | (94.7 | ) | (801,362 | ) | (82.4 | ) | (325,007 | ) | (51,001 | ) | (47.5 | ) | ||||||||||||||||||||||||||||
Research and development expenses (1) | (155,154 | ) | (24.3 | ) | (213,866 | ) | (20.9 | ) | (190,711 | ) | (29,228 | ) | (19.6 | ) | (213,866 | ) | (20.9 | ) | (190,711 | ) | (19.6 | ) | (105,066 | ) | (16,487 | ) | (15.3 | ) | ||||||||||||||||||||||||||||
General and administrative expenses (1) ` | (65,423 | ) | (10.3 | ) | (153,507 | ) | (15.0 | ) | (111,004 | ) | (17,012 | ) | (11.4 | ) | ||||||||||||||||||||||||||||||||||||||||||
General and administrative expenses (1)` | (153,507 | ) | (15.0 | ) | (111,004 | ) | (11.4 | ) | (84,154 | ) | (13,206 | ) | (12.3 | ) | ||||||||||||||||||||||||||||||||||||||||||
Total operating expenses | (925,991 | ) | (145.3 | ) | (1,336,774 | ) | (130.6 | ) | (1,103,077 | ) | (169,054 | ) | (113.4 | ) | (1,336,774 | ) | (130.6 | ) | (1,103,077 | ) | (113.4 | ) | (514,227 | ) | (80,694 | ) | (75.1 | ) | ||||||||||||||||||||||||||||
Other operating income | — | — | 2,390 | 0.2 | 43 | 7 | 0.0 | 2,390 | 0.2 | 43 | 0.0 | 14,206 | 2,229 | 2.1 | ||||||||||||||||||||||||||||||||||||||||||
Other income/(expenses): | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income | 2,732 | 0.4 | 11,283 | 1.1 | 904 | 139 | 0.1 | |||||||||||||||||||||||||||||||||||||||||||||||||
Interest income/(expenses) | 11,283 | 1.1 | 904 | 0.1 | (3,790 | ) | (594 | ) | (0.6 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange related (losses)/gains, net | (4,156 | ) | (0.7 | ) | (2,533 | ) | (0.2 | ) | 4,671 | 716 | 0.5 | (2,533 | ) | (0.2 | ) | 4,671 | 0.5 | (63 | ) | (10 | ) | (0.0 | ) | |||||||||||||||||||||||||||||||||
Change in fair value of short-term investment | — | — | — | 0.0 | — | — | 0.0 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other income, net | 1,016 | 0.2 | 3,055 | 0.3 | 9,146 | 1,402 | 0.9 | 3,055 | 0.3 | 9,146 | 0.9 | 21,001 | 3,295 | 3.1 | ||||||||||||||||||||||||||||||||||||||||||
Net loss before tax | (463,906 | ) | (72.8 | ) | (572,881 | ) | (56.0 | ) | (392,925 | ) | (60,217 | ) | (40.4 | ) | ||||||||||||||||||||||||||||||||||||||||||
Net income/(loss) before tax | (572,881 | ) | (56.0 | ) | (392,925 | ) | (40.4 | ) | 61,616 | 9,668 | 9.0 | |||||||||||||||||||||||||||||||||||||||||||||
Income tax expense | (24,160 | ) | (3.8 | ) | (1,900 | ) | (0.2 | ) | (1,902 | ) | (291 | ) | (0.2 | ) | (1,900 | ) | (0.2 | ) | (1,902 | ) | (0.2 | ) | (1,709 | ) | (268 | ) | (0.2 | ) | ||||||||||||||||||||||||||||
Net loss | (488,066 | ) | (76.6 | ) | (574,781 | ) | (56.2 | ) | (394,827 | ) | (60,508 | ) | (40.6 | ) | ||||||||||||||||||||||||||||||||||||||||||
Net income/(loss) | (574,781 | ) | (56.2 | ) | (394,827 | ) | (40.6 | ) | 59,907 | 9,400 | 8.8 |
(1) | Including share-based compensation expenses as follows: |
Year Ended December 31, | ||||||||||||||||||||||||||||||||
Year Ended December 31, | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||
2018 | 2019 | 2020 | RMB | RMB | RMB | US$ | ||||||||||||||||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
Cost of revenues | 667 | 1,657 | 7,154 | 1,096 | 1,657 | 7,154 | 2,176 | 341 | ||||||||||||||||||||||||
Sales and marketing expenses | 6,637 | 590 | 3,282 | 503 | 590 | 3,282 | 1,060 | 166 | ||||||||||||||||||||||||
Research and development expenses | 27,114 | 13,966 | 14,432 | 2,212 | 13,966 | 14,432 | 13,355 | 2,096 | ||||||||||||||||||||||||
General and administrative expenses | 11,055 | 10,470 | 4,159 | 637 | 10,470 | 4,159 | 5,454 | 856 | ||||||||||||||||||||||||
Total | 45,473 | 26,683 | 29,027 | 4,448 | 26,683 | 29,027 | 22,045 | 3,459 | ||||||||||||||||||||||||
B. | Liquidity and Capital Resources |
Year Ended December 31, | ||||||||||||||||||||||||||||||||
Year Ended December 31, | 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||
2018 | 2019 | 2020 | RMB | RMB | RMB | US$ | ||||||||||||||||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
Net cash used in operating activities | (112,942 | ) | (148,164 | ) | (302,598 | ) | (46,375 | ) | (148,164 | ) | (302,598 | ) | (155,152 | ) | (24,346 | ) | ||||||||||||||||
Net cash (used in)/provided by investing activities | (417,716 | ) | 100,246 | 164,667 | 25,236 | 100,246 | 164,667 | 81,672 | 12,815 | |||||||||||||||||||||||
Net cash provided by/(used in) financing activities | 443,978 | (16,344 | ) | 4,285 | 657 | �� | (16,344 | ) | 4,285 | 1,145 | 180 | |||||||||||||||||||||
Net decrease in cash, cash equivalents and restricted cash | (86,680 | ) | (64,262 | ) | (133,646 | ) | (20,482 | ) | (64,262 | ) | (133,646 | ) | (72,335 | ) | (11,351 | ) | ||||||||||||||||
Exchange rate effect on cash, cash equivalents and restricted cash | 14,919 | 2,522 | (10,829 | ) | (1,660 | ) | 2,522 | (10,829 | ) | (2,616 | ) | (411 | ) | |||||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of the year | 416,483 | 344,722 | 282,982 | 43,369 | 344,722 | 282,982 | 138,507 | 21,735 | ||||||||||||||||||||||||
Cash, cash equivalents and restricted cash at end of the year | 344,722 | 282,982 | 138,507 | 21,227 | 282,982 | 138,507 | 63,556 | 9,973 | ||||||||||||||||||||||||
Payment Due by Period | ||||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||
(RMB in thousands) | ||||||||||||||||||||
Operating lease obligations | 10,367 | 10,137 | 230 | — | — |
C. | Research and Development |
D. | Trend Information |
E. |
Payment Due by Period | ||||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||||
(RMB in thousands) | ||||||||||||||||||||
Operating lease obligations (1) | 96.5 | 35.7 | 55.4 | 5.4 | — |
ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
A. | Directors and Senior Management |
Directors and Executive Officers | Age | Position/Title | ||
Yi Wang | Chairman of the Board of Directors and Chief Executive Officer | |||
Zheren Hu | Director and Chief Technology Officer | |||
Hui Lin | Director and Chief Scientist | |||
Li-Lan Cheng | Independent Director | |||
Tiak Koon Loh | Independent Director | |||
Min (Jenny) Zhang | Independent Director | |||
Bing Sun | 51 | Chief Financial Officer |
B. | Compensation |
Name | Class A Ordinary Shares Underlying Options Awarded | Exercise Price (US$/Share) | Date of Grant | Date of Expiration | |||||||||||
Zheren Hu | * | 0.60 | 2018/7/31 | 2028/7/ | |||||||||||
Hui Lin | * | 0.60 | 2018/7/31 | 2028/7/ | |||||||||||
Li-Lan Cheng | * | 0.60 | 2018/9/27 | 2028/9/ | |||||||||||
Tiak Koon Loh | * | 0.60 | 2019/2/27 | 2029/2/ | |||||||||||
Min (Jenny) Zhang | * | 0.60 | 2020/5/22 | 2030/5/21 | |||||||||||
Bing Sun | * | 0.01-3.24 | 2020/5/22 | 2030/5/21 | |||||||||||
Other grantees | 0.01~0.60 | ||||||||||||||
Total |
* | Less than 1% of our total outstanding shares. |
C. | Board Practices |
D. | Employees |
As of December 31, | ||||
Function: | ||||
Research and development | ||||
Platform operation | ||||
Content development | ||||
Sales and marketing | ||||
Others | ||||
Total | ||||
736 |
E. | Share Ownership |
Ordinary Shares Beneficially Owned | Ordinary Shares Beneficially Owned | |||||||||||||||||||||||||||||||||||||||
Class A ordinary shares | Class B ordinary shares | Total ordinary shares on an as converted basis% | % | % of aggregate voting power† | Class A ordinary shares | Class B ordinary shares | Total ordinary shares on an as converted basis% | % | % of aggregate voting power† | |||||||||||||||||||||||||||||||
Directors and Executive Officers**: | ||||||||||||||||||||||||||||||||||||||||
Yi Wang (1) | — | 11,753,847 | 11,753,847 | 23.6 | 51.8 | — | 11,753,847 | 11,753,847 | 23.5 | 51.7 | ||||||||||||||||||||||||||||||
Zheren Hu (2) | * | 5,010,931 | 5,110,931 | 10.2 | 22.1 | * | 5,010,931 | 5,160,931 | 10.3 | 22.1 | ||||||||||||||||||||||||||||||
Hui Lin (3) | * | 2,910,896 | 2,950,896 | 5.9 | 12.8 | * | 2,910,896 | 2,970,896 | 5.9 | 12.8 | ||||||||||||||||||||||||||||||
Li-Lan Cheng(4) | * | — | * | * | — | * | — | * | * | — | ||||||||||||||||||||||||||||||
Tiak Koon Loh (5) | * | — | * | * | * | * | — | * | * | * | ||||||||||||||||||||||||||||||
Min (Jenny) Zhang | * | — | * | * | — | * | — | * | * | — | ||||||||||||||||||||||||||||||
Bing Sun | * | — | * | * | — | * | — | * | * | — | ||||||||||||||||||||||||||||||
All Directors and Executive Officers as a Group | 291,468 | 19,675,674 | 19,967,142 | 39.9 | 86.7 | 762,377 | 19,675,674 | 20,438,051 | 40.4 | 86.7 | ||||||||||||||||||||||||||||||
Principal Shareholders: | ||||||||||||||||||||||||||||||||||||||||
Yi Wang (1) | — | 11,753,847 | 11,753,847 | 23.6 | 51.8 | — | 11,753,847 | 11,753,847 | 23.5 | 51.7 | ||||||||||||||||||||||||||||||
GGV entities (6) | 5,747,332 | — | 5,747,332 | 11.5 | 2.5 | 5,282,497 | — | 5,282,497 | 10.5 | 2.3 | ||||||||||||||||||||||||||||||
Zheren Hu (2) | * | 5,010,931 | 5,160,931 | 10.3 | 22.1 | |||||||||||||||||||||||||||||||||||
TB Alternative Assets Ltd (7) | 5,663,164 | — | 5,663,164 | 11.4 | 2.5 | 3,703,164 | — | 3,703,164 | 7.4 | 1.6 | ||||||||||||||||||||||||||||||
Zheren Hu (2) | * | 5,010,931 | 5,110,931 | 10.2 | 22.1 | |||||||||||||||||||||||||||||||||||
IDG entities (8) | 4,655,164 | — | 4,655,164 | 9.4 | 2.1 | 3,370,003 | — | 3,370,003 | 6.7 | 1.5 | ||||||||||||||||||||||||||||||
Hui Lin (3) | * | 2,910,896 | 2,950,896 | 5.9 | 12.8 | * | 2,910,896 | 2,970,896 | 5.9 | 12.8 | ||||||||||||||||||||||||||||||
CMC Lullaby Holdings Limited (9) | 2,827,690 | — | 2,827,690 | 5.7 | 1.2 | 2,760,325 | — | 2,760,325 | 5.5 | 1.2 |
* | Except as otherwise indicated below, the business address of our directors and executive officers is |
† | 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. Each holder of Class A ordinary shares is entitled to one vote per share and each holder of our Class B ordinary shares is entitled to ten votes per share on all matters submitted to them for a vote. Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one |
(1) | Represents 11,753,847 Class B ordinary shares directly held by Joyx Holdings Ltd., a British Virgin Islands business company limited by shares beneficially owned by Dr. Wang. Joyx Holdings Ltd. is ultimately held by Joyx Trust, a trust established under the laws of British Virgin Islands and managed by UBS Trustees (B.V.I.) Limited as the trustee. Under the terms of this trust, Dr. Wang has the power to direct the trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to, the shares held by Joyx Holdings Ltd. in our company. |
(2) | Represents (i) 5,010,931 Class B ordinary shares directly held by Muang Holdings Ltd., a British Virgin Islands business company limited by shares beneficially owned by Mr. Hu, and (ii) |
(3) | Represents (i) 2,910,896 Class B ordinary shares directly held by Ulingo Holdings Ltd., a British Virgin Islands business company limited by shares beneficially owned by Dr. Lin, and (ii) |
(4) | The business address of Mr. Cheng is 11/F, Yinli Building, No. 788 Guangzhong Road, Shanghai, People’s Republic of China. |
(5) | The business address of Mr. Loh is Room |
(6) | Represents 13F-HR filed by 13F-HR filed by 4-230, Menlo Park, CA 94025, |
(7) | Represents KY1-1104. |
(8) | Represents an aggregate of IDG-Accel China Growth Fund III L.P. andIDG-Accel China III Investors L.P. as of December 31, |
(9) | Represents |
ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. | Major Shareholders |
B. | Related Party Transactions |
C. | Interest of Experts and Counsel |
ITEM 8. | FINANCIAL INFORMATION |
A. | Consolidated Statements and Other Financial Information |
B. | Significant Changes |
ITEM 9. | THE OFFER AND LISTING |
A. | Offer and Listing Details |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution |
F. | Expenses of the Issue |
ITEM 10. | ADDITIONAL INFORMATION |
A. | Share Capital |
B. | Memorandum and Articles of Association |
C. | Material Contracts |
D. | Exchange Controls |
E. | Taxation |
F. | Dividends and Paying Agents |
G. | Statement by Experts |
H. | Documents on Display |
I. | Subsidiary Information |
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
A. | Debt Securities |
B. | Warrants and Rights |
C. | Other Securities |
D. | American Depositary Shares |
Service | Fees | |
• To any person to which ADSs are issued or to any person to which a distribution is made in respect of ADS distributions pursuant to stock dividends or other free distributions of stock, bonus distributions, stock splits or other distributions (except where converted to cash) | Up to US$0.05 per ADS issued |
• Cancellation of ADSs, including the case of termination of the deposit agreement | Up to US$0.05 per ADS canceled | ||
• Distribution of cash dividends | Up to US$0.05 per ADS held | ||
• Distribution of cash entitlements (other than cash dividends) and/or cash proceeds from the sale of rights, securities and other entitlements | Up to US$0.05 per ADS held | ||
• Distribution of ADSs pursuant to exercise of rights. | Up to US$0.05 per ADS held | ||
• Distribution of securities other than ADSs or rights to purchase additional ADSs | Up to US$0.05 per ADS held | ||
• Depositary services | Up to US$0.05 per ADS held on the applicable record date(s) established by the depositary bank |
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. | CONTROLS AND PROCEDURES |
(i) | hiring more qualified personnel equipped with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; |
(ii) | implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; and |
(iii) | establishing effective oversight and clarifying reporting requirements for non-recurring and complex transactions to ensure consolidated financial statements and related disclosures are accurate, complete and in compliance with U.S. GAAP and SEC reporting requirements. |
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. | CODE OF ETHICS |
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Year Ended December 31, | ||||||||||||||||
Year Ended December 31, | 2020 | 2021 | ||||||||||||||
2019 | 2020 | |||||||||||||||
(US$ in thousands) | (US$ in thousands) | |||||||||||||||
Audit fees (1) | 959 | 1,015 | 1,015 | 811 | ||||||||||||
Tax fees (2) | 4 | 35 | 35 | — | ||||||||||||
All other fees | — | — | — | — |
(1) | “Audit fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for the audit of our annual financial statements. |
(2) | “Tax fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for tax compliance and tax advice services. |
ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. | PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
Month | Total Number of Ordinary Shares Purchased | Average Price Paid Per Ordinary Share (US$) | Total Number of Ordinary Shares Purchased as Part of Share Repurchase Program | Approximate Dollar Value of Ordinary Shares that May Yet Be Purchased Under Share Repurchase Program (US$, in millions) | ||||||||||||
January 2020 | — | — | — | 18.5 | ||||||||||||
February 2020 | 600 | 3.9450 | 600 | 18.5 | ||||||||||||
March 2020 | 61,329 | 3.5055 | 61,329 | 18.3 | ||||||||||||
April 2020 | 102,837 | 3.3257 | 102,837 | 17.9 | ||||||||||||
May 2020 | 25,045 | 3.3921 | 25,045 | 17.8 | ||||||||||||
June 2020 | — | — | — | 17.8 | ||||||||||||
July 2020 | — | — | — | 17.8 | ||||||||||||
August 2020 | — | — | — | 17.8 | ||||||||||||
September 2020 | — | — | — | 17.8 | ||||||||||||
October 2020 | — | — | — | 17.8 | ||||||||||||
November 2020 | — | — | — | — | ||||||||||||
December 2020 | — | — | — | — |
ITEM 16F. | CHANGE IN ’ S CERTIFYING ACCOUNTANT |
ITEM 16G. | CORPORATE GOVERNANCE |
ITEM 16H. | MINE SAFETY DISCLOSURE |
ITEM 16I. | DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENT INSPECTIONS |
ITEM 17. | FINANCIAL STATEMENTS |
ITEM 18. | FINANCIAL STATEMENTS |
ITEM 19. | EXHIBITS |
Exhibit Number | Description of Document | |
15.2* | Consent of PricewaterhouseCoopers Zhong Tian LLP, an independent registered public accounting firm | |
15.3* | Consent of Maples and Calder (Hong Kong) LLP | |
101.INS* | Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Cover Page Interactive Data File — the cover page XBRL tags are embedded within the Exhibit 101 Inline XBRL document set |
* | Filed with this annual report on Form 20-F |
** | Furnished with this annual report on Form 20-F |
LAIX Inc. | ||||
By: | /s/ Yi Wang | |||
Name: | Yi Wang | |||
Title: | Chairman of the Board of Directors | |||
and Chief Executive Officer |
F-2 | ||||
F-3 | ||||
F-5 | ||||
F-6 | ||||
F-8 | ||||
F-10 |
As of December 31, | ||||||||||||||||
Note | 2020 | 2021 | ||||||||||||||
RMB | RMB | US$ (Note 2(e)) | ||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | 5 | 137,996 | 63,385 | 9,946 | ||||||||||||
Restricted cash | 6 | 511 | 171 | 27 | ||||||||||||
Short-term investments | 2 | (h) | 91,049 | 6,759 | 1,061 | |||||||||||
Accounts receivable, net | 7 | 5,892 | 2,898 | 455 | ||||||||||||
Prepayments and other current assets | 8 , | 58,272 | 42,731 | 6,705 | ||||||||||||
Total current assets | 293,720 | 115,944 | 18,194 | |||||||||||||
Non-current assets: | ||||||||||||||||
Property and equipment, net | 9 | 30,074 | 15,026 | 2,358 | ||||||||||||
Investment in equity fund | 2 | (j) | 5,711 | 5,580 | 876 | |||||||||||
Intangible assets, net | 10 | 14,341 | 6,031 | 946 | ||||||||||||
Operating lease right-of-use | 13 | 82,488 | 9,283 | 1,457 | ||||||||||||
Other non-current assets | 8 | 5,866 | 12 | 2 | ||||||||||||
Deferred tax assets | 1 8 | 13,547 | 11,974 | 1,879 | ||||||||||||
Total non-current assets | 152,027 | 47,906 | 7,518 | |||||||||||||
Total assets | 445,747 | 163,850 | 25,712 | |||||||||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||||||||
Current liabilities | ||||||||||||||||
Accounts payable (including accounts payable of the consolidated variable interest entities (“VIEs”) without recourse to the Company of RMB 50,443 and RMB 45,676 as of December 31, 2020 and 2021, respectively) | 83,576 | 65,587 | 10,292 | |||||||||||||
Customer deposits and deferred revenue, current (including customer deposits and deferred revenue, current of the VIEs without recourse to the Company of RM B 689,325 and RMB 530,712 as of December 31, 2020 and 2021, respectively) | 689,325 | 530,975 | 83,322 | |||||||||||||
Salary and welfare payable (including salary and welfare payable of the VIEs without recourse to the Company of RMB 56,946 and RMB 31,353 as of December 31, 2020 and 2021, respectively) | 132,433 | 55,002 | 8,631 | |||||||||||||
Tax payable (including tax payable of the VIEs without recourse to the Company of RMB 48,058 and RMB 48,988 as of December 31, 2020 and 2021, respectively) | 11 | 77,327 | 79,656 | 12,500 | ||||||||||||
Operating lease liability, current (including operating lease liability, current of the VIEs without recourse to the Company of RMB 19,465 and RMB 9,821 as of December 31, 2020 and 2021, respectively) | 13 | 31,845 | 9,880 | 1,550 | ||||||||||||
Accrued liabilities and other current liabilities (including accrued liabilities and other current liabilities of the VIEs without recourse to the Company of RMB 16,405 and RMB 11,077 as of December 31, 2020 and 2021, respectively) | 12 | 19,382 | 21,912 | 3,438 | ||||||||||||
Total current liabilities | 1,033,888 | 763,012 | 119,733 | |||||||||||||
Non-current liabilities | ||||||||||||||||
Customer deposits and deferred revenue, non-current (including customer deposits and deferred revenue, non-current of the VIEs without recourse to the Company o f 56,905 and RMB 28,055 as of December 31, 2020 and December 31, 2021) | 56,905 | 28,055 | 4,402 | |||||||||||||
Operating lease liability, non-current (including operating lease liability,non-current of the VIEs without recourse to the Company of RMB 32,933 and RMB 129 as of December 31, 2020 and 2021, respectively) | 13 | 56,903 | 226 | 35 | ||||||||||||
Other non-current liabilities (including othernon-current liabilities of the VIEs without recourse to the Company of RMB 2,380 and RMB 2,380 as of December 31, 2020 and 2021, respectively) | 12 | 10,614 | 4,543 | 713 | ||||||||||||
Total non-current liabilities | 124,422 | 32,824 | 5,150 | |||||||||||||
Total liabilities | 1,158,310 | 795,836 | 124,883 | |||||||||||||
As of December 31, | ||||||||||||||||
Note | 2020 | 2021 | ||||||||||||||
RMB | RMB | US$ (Note 2(e)) | ||||||||||||||
Shareholders’ deficit: | ||||||||||||||||
Class A ordinary shares (US$0.001 par value; 200,000,000 shares authorized, 29,926,647 and 30,408,054 shares issued and outstanding as of December 31, 2020 and 2021, respectively) | 14 | 212 | 215 | 34 | ||||||||||||
Class B ordinary shares (US$0.001 par value; 25,000,000 shares authorized, 19,675,674 shares issued and outstanding as of December 31, 2020 and 2021, respectively) | 14 | 121 | 121 | 19 | ||||||||||||
Subscriptions receivable from founding shareholders | (201 | ) | (279 | ) | (44 | ) | ||||||||||
Treasury stock (US$0.001 par value; 781,011 shares as of December 31, 2020 and December 31, 2021, respectively) | (15,327 | ) | (15,327 | ) | (2,405 | ) | ||||||||||
Additional paid-in capital | 1,198,852 | 1,221,834 | 191,733 | |||||||||||||
Accumulated other comprehensive income | 10,256 | 8,019 | 1,258 | |||||||||||||
Accumulated deficit | (1,906,476 | ) | (1,846,569 | ) | (289,766 | ) | ||||||||||
Total shareholders’ deficit | (712,563 | ) | (631,986 | ) | (99,171 | ) | ||||||||||
Total liabilities and shareholders’ deficit | 445,747 | 163,850 | 25,712 | |||||||||||||
As of December 31, | ||||||||||||||||
Note | 2019 | 2020 | ||||||||||||||
RMB | RMB | US$ (Note 2 (e)) | ||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | 5 | 281,166 | 137,996 | 21,149 | ||||||||||||
Restricted cash | 6 | 1,816 | 511 | 78 | ||||||||||||
Short-term investments | 2 | (h) | 269,643 | 91,049 | 13,954 | |||||||||||
Accounts receivable, net | 7 | 7,360 | 5,892 | 903 | ||||||||||||
Prepayments and other current assets | 8 | 86,787 | 58,272 | 8,931 | ||||||||||||
Total current assets | 646,772 | 293,720 | 45,015 | |||||||||||||
Non-current assets: | ||||||||||||||||
Property and equipment, net | 9 | 71,637 | 30,074 | 4,609 | ||||||||||||
Investment in equity fund | 2 | (j) | 5,919 | 5,711 | 875 | |||||||||||
Intangible assets, net | 10 | 15,541 | 14,341 | 2,198 | ||||||||||||
Operating lease right-of-use | 13 | 155,525 | 82,488 | 12,642 | ||||||||||||
Other non-current assets | 8 | 8,447 | 5,866 | 899 | ||||||||||||
Deferred tax assets | 19 | 15,336 | 13,547 | 2,076 | ||||||||||||
Total non-current assets | 272,405 | 152,027 | 23,299 | |||||||||||||
Total assets | 919,177 | 445,747 | 68,314 | |||||||||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||||||||
Current liabilities | ||||||||||||||||
Accounts payable (including accounts payable of the consolidated variable interest entities (“VIEs”) without recourse to the Company of RMB 91,896 and RMB 50,443 as of December 31, 2019 and 2020, respectively) | 137,684 | 83,576 | 12,809 | |||||||||||||
Deferred revenue , current (including deferred revenue, current of the VIEs without recourse to the Company of RMB 695,971 and RMB 689,325 as of December 31, 2019 and 2020, respectively) | 695,971 | 689,325 | 105,644 | |||||||||||||
Salary and welfare payable (including salary and welfare payable of the VIEs without recourse to the Company of RMB 73,946 and RMB 56,946 as of December 31, 2019 and 2020, respectively) | 153,969 | 132,433 | 20,296 | |||||||||||||
Tax payable (including tax payable of the VIEs without recourse to the Company of RMB 46,823 and RMB 48,058 as of December 31, 2019 and 2020, respectively) | 11 | 74,340 | 77,327 | 11,851 | ||||||||||||
Operating lease liability, current (including operating lease liability, current of the VIEs without recourse to the Company of RMB 29,119 and RMB 19,465 as of December 31, 2019 and 2020, respectively) | 13 | 37,009 | 31,845 | 4,880 | ||||||||||||
Accrued liabilities and other current liabilities (including accrued liabilities and other current liabilities of the VIEs without recourse to the Company of RMB 11,938 and RMB 16,405 as of December 31, 2019 and 2020, respectively) | 12 | 15,444 | 19,382 | 2,970 | ||||||||||||
Total current liabilities | 1,114,417 | 1,033,888 | 158,450 | |||||||||||||
Non-current liabilities | ||||||||||||||||
Deferred revenue, non-current (including deferred revenue,non-current of the VIEs without recourse to the Company of NaN and RMB 56,905 as of December 31, 2019 and December 31, 2020) | — | 56,905 | 8,721 | |||||||||||||
Operating lease liability, non-current (including operating lease liability,non-current of the VIEs without recourse to the Company of RMB 83,282 and RMB 32,933 as of December 31, 2019 and 2020, respectively) | 13 | 117,124 | 56,903 | 8,721 | ||||||||||||
Other non-current liabilities (including othernon-current liabilities of the VIEs without recourse to the Company of RMB 1,000 and RMB 2,380 as of December 31, 2019 and 2020, respectively) | 12 | 12,441 | 10,614 | 1,627 | ||||||||||||
Total non-current liabilities | 129,565 | 124,422 | 19,069 | |||||||||||||
Total liabilities | 1,243,982 | 1,158,310 | 177,519 | |||||||||||||
As of December 31, | ||||||||||||||||
Note | 2019 | 2020 | ||||||||||||||
RMB | RMB | US$ (Note 2 (e)) | ||||||||||||||
Shareholders’ deficit: | ||||||||||||||||
Class A ordinary shares (US$0.001 par value; 200,000,000 shares authorized; 29,580,351 and 29,926,647 sharesissue outstanding as of December 31, 2019 and 2020, respectively)d and | 14 | 208 | 212 | 32 | ||||||||||||
Class B ordinary shares (US$0.001 par value; 25,000,000 shares authori issued and outstanding as of December 31, 2019 and 2020, respectively)z ed, 19,675,674 shares | 14 | 121 | 121 | 19 | ||||||||||||
Subscriptions receivable from founding shareholders | (122 | ) | (201 | ) | (31 | ) | ||||||||||
Treasury stock (US$0.001 par value; 591,200 and 781,011 shares as of December 31, 2019 and December 31, 2020, respectively) | (10,730 | ) | (15,327 | ) | (2,349 | ) | ||||||||||
Additional paid-in capital | 1,167,884 | 1,198,852 | 183,732 | |||||||||||||
Accumulated other comprehensive income | 29,483 | 10,256 | 1,572 | |||||||||||||
Accumulated deficit | (1,511,649 | ) | (1,906,476 | ) | (292,180 | ) | ||||||||||
Total shareholders’ deficit | (324,805 | ) | (712,563 | ) | (109,205 | ) | ||||||||||
Total liabilities and shareholders’ deficit | 919,177 | 445,747 | 68,314 | |||||||||||||
For the years ended December 31, | ||||||||||||||||||||
Note | 2019 | 2020 | 2021 | |||||||||||||||||
RMB | RMB | RMB | US$(Note 2 (e)) | |||||||||||||||||
Net revenues | 1 6 | 1,023,213 | 972,628 | 684,928 | 107,480 | |||||||||||||||
Cost of revenues (including share-based compensation expenses of RMB 1,657, RMB 7,154 and RMB 2,176 for the years ended December 31, 2019, 2020 and 2021, respectively) | (273,515 | ) | (277,240 | ) | (140,439 | ) | (22,038 | ) | ||||||||||||
�� | ||||||||||||||||||||
Gross profit | 749,698 | 695,388 | 544,489 | 85,442 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing expenses (including share-based compensation expenses of RMB 590, RMB 3,282 and RMB 1,060 for the years ended December 31, 2019, 2020 and 2021, respectively) | (969,401 | ) | (801,362 | ) | (325,007 | ) | (51,001 | ) | ||||||||||||
Research and development expenses (including share-based compensation expenses of RMB 13,966, RMB 14,432 and RMB 13,355 for the years ended December 31, 2019, 2020 and 2021, respectively) | (213,866 | ) | (190,711 | ) | (105,066 | ) | (16,487 | ) | ||||||||||||
General and administrative expenses (including share-based compensation expenses of RMB 10,470, RMB 4,159 and RMB 5,454 for the years ended December 31, 2019, 2020 and 2021, respectively) | (153,507 | ) | (111,004 | ) | (84,154 | ) | (13,206 | ) | ||||||||||||
Total operating expenses | (1,336,774 | ) | (1,103,077 | ) | (514,227 | ) | (80,694 | ) | ||||||||||||
Other operating income | 2,390 | 43 | 14,206 | 2,229 | ||||||||||||||||
(Loss)/income from operations | (584,686 | ) | (407,646 | ) | 44,468 | 6,977 | ||||||||||||||
Interest income/(expenses) | 11,283 | 904 | (3,790 | ) | (594 | ) | ||||||||||||||
Foreign exchange related (losses)/gains, net | (2,533 | ) | 4,671 | (63 | ) | (10 | ) | |||||||||||||
Other income, net | 2 j ) (t, | ) | 3,055 | 9,146 | 21,001 | 3,295 | ||||||||||||||
(Loss)/income before income tax expenses | (572,881 | ) | (392,925 | ) | 61,616 | 9,668 | ||||||||||||||
Income tax expense | 1 8 | (1,900 | ) | (1,902 | ) | (1,709 | ) | (268 | ) | |||||||||||
Net (loss)/income | (574,781 | ) | (394,827 | ) | 59,907 | 9,400 | ||||||||||||||
Net (loss)/income attributable to LAIX Inc.’s ordinary shareholders | (574,781 | ) | (394,827 | ) | 59,907 | 9,400 | ||||||||||||||
Net (loss)/income | (574,781 | ) | (394,827 | ) | 59,907 | 9,400 | ||||||||||||||
Other comprehensive income/(loss) —Foreign currency translation adjustment, net of nil tax | 13,165 | (19,227 | ) | (2,237 | ) | (351 | ) | |||||||||||||
Comprehensive (loss)/income | (561,616 | ) | (414,054 | ) | 57,670 | 9,049 | ||||||||||||||
Net (loss)/income per Class A and Class B ordinary shares | ||||||||||||||||||||
—Basic | 19 | (11.64 | ) | (7.99 | ) | 1.20 | 0.19 | |||||||||||||
—Diluted | 19 | (11.64 | ) | (7.99 | ) | 1.19 | 0.19 | |||||||||||||
Weighted average number of Class A and Class B ordinary shares used in per share calculation | ||||||||||||||||||||
—Basic | 19 | 49,364,429 | 49,430,696 | 50,022,094 | 50,022,094 | |||||||||||||||
—Diluted | 19 | 49,364,429 | 49,430,696 | 50,277,973 | 50,277,973 | |||||||||||||||
Class A ordinary shares | Class B ordinary shares | Treasury stock | Subscriptions receivable | Additional paid-in capital | Accumulated other comprehensive income/(loss) | Accumulated deficit | Total shareholders’ equity (deficit) | |||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | |||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2019 | 28,276,557 | 195 | 19,675,674 | 121 | — | — | (122 | ) | 1,139,250 | 16,318 | (936,868 | ) | 218,894 | |||||||||||||||||||||||||||||||
Repurchase of ordinary shares (Note 14) | (591,200 | ) | — | — | — | 591,200 | (10,730 | ) | — | — | — | — | (10,730 | ) | ||||||||||||||||||||||||||||||
Share-based compensation expense (Note 15) | — | — | — | — | — | — | — | 26,683 | — | — | 26,683 | |||||||||||||||||||||||||||||||||
Exercise of option (Note 15) | 1,894,994 | 13 | — | — | — | — | — | 1,951 | — | — | 1,964 | |||||||||||||||||||||||||||||||||
Net loss for the year | — | — | — | — | — | — | — | — | — | (574,781 | ) | (574,781 | ) | |||||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | — | — | — | 13,165 | — | 13,165 | |||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 | 29,580,351 | 208 | 19,675,674 | 121 | 591,200 | (10,730 | ) | (122 | ) | 1,167,884 | 29,483 | (1,511,649 | ) | (324,805 | ) | |||||||||||||||||||||||||||||
Repurchase of ordinary shares (Note 14) | (189,811 | ) | — | — | — | 189,811 | (4,597 | ) | — | — | — | — | (4,597 | ) | ||||||||||||||||||||||||||||||
Share-based compensation expense (Note 15) | — | — | — | — | — | — | — | 29,027 | — | — | 29,027 | |||||||||||||||||||||||||||||||||
Exercise of option (Note 15) | 536,107 | 4 | — | — | — | — | (79 | ) | 1,941 | — | — | 1,866 | ||||||||||||||||||||||||||||||||
Net loss for the year | — | — | — | — | — | — | — | — | — | (394,827 | ) | (394,827 | ) | |||||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | — | — | — | (19,227 | ) | — | (19,227 | ) | |||||||||||||||||||||||||||||||
Balance as of December 31, 2020 | 29,926,647 | 212 | 19,675,674 | 121 | 781,011 | (15,327 | ) | (201 | ) | 1,198,852 | 10,256 | (1,906,476 | ) | (712,563 | ) |
For the years ended December 31, | ||||||||||||||||||||
Note | 2018 | 2019 | 2020 | |||||||||||||||||
RMB | RMB | RMB | �� | US$(Note 2 (e)) | ||||||||||||||||
Net revenues | 17 | 637,224 | 1,023,213 | 972,628 | 149,062 | |||||||||||||||
Cost of revenues (including share-based compensation expenses of RMB 667, RMB 1,657 and RMB 7,154 for the years ended December 31, 2018, 2019 and 2020, respectively) | (174,731 | ) | (273,515 | ) | (277,240 | ) | (42,489 | ) | ||||||||||||
Gross profit | 462,493 | 749,698 | 695,388 | 106,573 | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||
Sales and marketing expenses (including share-based compensation expenses of RMB 6,637, RMB 590 and RMB 3,282 for the years ended December 31, 2018, 2019 and 2020, respectively) | (705,414 | ) | (969,401 | ) | (801,362 | ) | (122,814 | ) | ||||||||||||
Research and development expenses (including share-based compensation expenses of RMB 27,114, RMB 13,966 and RMB 14,432 for the years ended December 31, 2018, 2019 and 2020, respectively) | (155,154 | ) | (213,866 | ) | (190,711 | ) | (29,228 | ) | ||||||||||||
General and administrative expenses (including share-based compensation expenses of RMB 11,055, RMB 10,470 and RMB 4,159 for the years ended December 31, 2018, 2019 and 2020, respectively) | (65,423 | ) | (153,507 | ) | (111,004 | ) | (17,012 | ) | ||||||||||||
Total operating expenses | (925,991 | ) | (1,336,774 | ) | (1,103,077 | ) | (169,054 | ) | ||||||||||||
Other operating income | — | 2,390 | 43 | 7 | ||||||||||||||||
Loss from operations | (463,498 | ) | (584,686 | ) | (407,646 | ) | (62,474 | ) | ||||||||||||
Interest income | 2,732 | 11,283 | 904 | 139 | ||||||||||||||||
Foreign exchange related (losses)/gains, net | (4,156 | ) | (2,533 | ) | 4,671 | 716 | ||||||||||||||
Other income, net | 1,016 | 3,055 | 9,146 | 1,402 | ||||||||||||||||
Loss before income tax expenses | (463,906 | ) | (572,881 | ) | (392,925 | ) | (60,217 | ) | ||||||||||||
Income tax expense | 19 | (24,160 | ) | (1,900 | ) | (1,902 | ) | (291 | ) | |||||||||||
Net loss | (488,066 | ) | (574,781 | ) | (394,827 | ) | (60,508 | ) | ||||||||||||
Series A Preferred share redemption value accretion | (1,978 | ) | — | — | — | |||||||||||||||
Series B Preferred share redemption value accretion | (10,140 | ) | — | — | — | |||||||||||||||
Series C Preferred share redemption value accretion | (15,899 | ) | — | — | — | |||||||||||||||
Net loss attributable to LAIX Inc.’s ordinary shareholders | (516,083 | ) | (574,781 | ) | (394,827 | ) | (60,508 | ) | ||||||||||||
Net loss | (488,066 | ) | (574,781 | ) | (394,827 | ) | (60,508 | ) | ||||||||||||
Other comprehensive income/(losses) | ||||||||||||||||||||
—Foreign currency translation adjustment, net of nil tax | 16,403 | 13,165 | (19,227 | ) | (2,947 | ) | ||||||||||||||
Comprehensive loss | (471,663 | ) | (561,616 | ) | (414,054 | ) | (63,455 | ) | ||||||||||||
Net loss per Class A and Class B ordinary shares | ||||||||||||||||||||
—Basic and diluted | 20 | (19.17 | ) | (11.64 | ) | (7.99 | ) | (1.22 | ) | |||||||||||
Weighted average number of Class A and Class B ordinary shares used in per share calculation | ||||||||||||||||||||
—Basic and diluted | 20 | 26,921,735 | 49,364,429 | 49,430,696 | 49,430,696 | |||||||||||||||
Class A ordinary shares | Class B ordinary shares | Treasury stock | Subscriptions receivable | Additional paid-in capital | Accumulated other comprehensive income | Accumulated deficit | Total shareholders’ equity (deficit) | |||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | |||||||||||||||||||||||||||||||||||||||
Share-based compensation expense (Note 1 5 ) | — | — | — | — | — | — | — | 22,045 | — | — | 22,045 | |||||||||||||||||||||||||||||||||
Exercise of option (Note 1 5 ) | 481,407 | 3 | — | — | — | — | (78 | ) | 937 | — | — | 862 | ||||||||||||||||||||||||||||||||
Net income for the year | — | — | — | — | — | — | — | — | — | 59,907 | 59,907 | |||||||||||||||||||||||||||||||||
Foreign currency translation | — | — | — �� | — | — | — | — | — | (2,237 | ) | — | (2,237 | ) | |||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | 30,408,054 | 215 | 19,675,674 | 121 | 781,011 | (15,327 | ) | (279 | ) | 1,221,834 | 8,019 | (1,846,569 | ) | (631,986 | ) | |||||||||||||||||||||||||||||
Class A ordinary shares | Class B ordinary shares | Treasury stock | Subscriptions receivable | Additional paid-in capital | Accumulated other comprehensive income /(loss) | Accumulated deficit | Total shareholders’ equity (deficit) | |||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | |||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2018 | 158,861 | 1 | 19,675,674 | 121 | — | — | (122 | ) | — | (85 | ) | (447,902 | ) | (447,987 | ) | |||||||||||||||||||||||||||||
Issuance of Class A ordinary shares upon Initial Public Offering (“IPO”), net of issuance costs (Note 15) | 5,750,000 | 40 | — | — | — | — | — | 441,126 | — | — | 441,166 | |||||||||||||||||||||||||||||||||
Conversion of preferred shares to Class A ordinary shares | 22,367,696 | 154 | — | — | — | — | — | 679,768 | — | — | 679,922 | |||||||||||||||||||||||||||||||||
Accretion of convertible redeemable preferred shares | — | — | — | — | — | — | — | (27,117 | ) | — | (900 | ) | (28,017 | ) | ||||||||||||||||||||||||||||||
Share-based compensation expense (Note 16) | — | — | — | — | — | — | — | 45,473 | — | — | 45,473 | |||||||||||||||||||||||||||||||||
Net loss for the year | — | — | — | — | — | — | — | — | — | (488,066 | ) | (488,066 | ) | |||||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | — | — | — | 16,403 | — | 16,403 | |||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 | 28,276,557 | 195 | 19,675,674 | 121 | — | — | (122 | ) | 1,139,250 | 16,318 | (936,868 | ) | 218,894 | |||||||||||||||||||||||||||||||
Class A ordinary shares | Class B ordinary shares | Treasury stock | Subscriptions receivable | Additional paid-in capital | Accumulated other comprehensive income/(loss) | Accumulated deficit | Total shareholders’ equity (deficit) | |||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | Number of Shares | Amount | |||||||||||||||||||||||||||||||||||||||
Repurchase of ordinary shares (Note 15) | (591,200 | ) | — | — | — | 591,200 | (10,730 | ) | — | — | — | — | (10,730 | ) | ||||||||||||||||||||||||||||||
Share-based compensation expense (Note 16) | — | — | — | — | — | — | — | 26,683 | — | — | 26,683 | |||||||||||||||||||||||||||||||||
Exercise of option (Note 16) | 1,894,994 | 13 | — | — | — | — | — | 1,951 | — | — | 1,964 | |||||||||||||||||||||||||||||||||
Net loss for the year | — | — | — | — | — | — | — | — | — | (574,781 | ) | (574,781 | ) | |||||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | — | — | — | 13,165 | — | 13,165 | |||||||||||||||||||||||||||||||||
Balance as of December 31, 201 9 | 29,580,351 | 208 | 19,675,674 | 121 | 591,200 | (10,730 | ) | (122 | ) | 1,167,884 | 29,483 | (1,511,649 | ) | (324,805 | ) | |||||||||||||||||||||||||||||
Repurchase of ordinary shares (Note 15) | (189,811 | ) | — | — | — | 189,811 | (4,597 | ) | — | — | — | — | (4,597 | ) | ||||||||||||||||||||||||||||||
Share-based compensation expense (Note 16) | — | — | — | — | — | — | — | 29,027 | — | — | 29,027 | |||||||||||||||||||||||||||||||||
Exercise of option (Note 16) | 536,107 | 4 | — | — | — | — | (79 | ) | 1,941 | — | — | 1,866 | ||||||||||||||||||||||||||||||||
Net loss for the year | — | — | — | — | — | — | — | — | — | (394,827 | ) | (394,827 | ) | |||||||||||||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | — | — | — | (19,227 | ) | — | (19,227 | ) | |||||||||||||||||||||||||||||||
Balance as of December 31, 2020 | 29,926,647 | 212 | 19,675,674 | 121 | 781,011 | (15,327 | ) | (201 | ) | 1,198,852 | 10,256 | (1,906,476 | ) | (712,563 | ) | |||||||||||||||||||||||||||||
For the years ended December 31, | ||||||||||||||||
2018 | 2019 | 2020 | 2020 | |||||||||||||
RMB | RMB | RMB | US$(Note 2 (e)) | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net loss | (488,066 | ) | (574,781 | ) | (394,827 | ) | (60,508 | ) | ||||||||
Adjustments for: | ||||||||||||||||
Depreciation of property and equipment (Note 9) | 5,854 | 20,287 | 21,256 | 3,258 | ||||||||||||
Amortization of intangible assets (Note 10) | 57 | 1,300 | 6,047 | 927 | ||||||||||||
Amortization of prepaid interest expense and service fees to loan companies | 2,308 | 304 | — | — | ||||||||||||
Foreign exchange losses | 4,156 | 2,221 | 1,358 | 206 | ||||||||||||
Share-based compensation (Note 16) | 45,473 | 26,683 | 29,027 | 4,449 | ||||||||||||
Amortization of operating lease right of use asset (Note 13) | — | 32,301 | 31,177 | 4,778 | ||||||||||||
Interest expense of operating lease liability (Note 13) | — | 8,480 | 6,182 | 947 | ||||||||||||
Impairment of property and equipment (Note 2 (m)) | — | 6,857 | 21,390 | 3,278 | ||||||||||||
Disposal gain on property and equipment | — | — | (165 | ) | (25 | ) | ||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Accounts receivable | (41,339 | ) | 7,043 | 1,468 | 225 | |||||||||||
Prepayments and other current assets | (91,232 | ) | 29,983 | 23,661 | 3,627 | |||||||||||
Receivables of interest income | — | (10,116 | ) | (3,658 | ) | (561 | ) | |||||||||
Other non-current assets | (5,872 | ) | (1,077 | ) | 1,758 | 269 | ||||||||||
Deferred tax assets | (16,940 | ) | 1,604 | 1,789 | 274 | |||||||||||
Accounts payable | 4,236 | 61,391 | (55,255 | ) | (8,468 | ) | ||||||||||
Salary and welfare payable | 61,500 | 45,652 | (21,536 | ) | (3,300 | ) | ||||||||||
Tax payable | 43,118 | 15,459 | 2,987 | 458 | ||||||||||||
Accrued liabilities and other current liabilities | 2,623 | (606 | ) | 3,932 | 603 | |||||||||||
Operating lease liability | — | (42,228 | ) | (29,706 | ) | (4,553 | ) | |||||||||
Other non-current liabilities | — | 2,735 | 258 | 39 | ||||||||||||
Deferred revenue, current and non-current | 361,182 | 218,344 | 50,259 | 7,702 | ||||||||||||
Net cash used in operating activities | (112,942 | ) | (148,164 | ) | (302,598 | ) | (46,375 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchase of short-term investments | (404,041 | ) | (35,841 | ) | (51,019 | ) | (7,819 | ) | ||||||||
Proceeds from maturity of short-term investments | 34,544 | 187,737 | 224,890 | 34,466 | ||||||||||||
Purchase of property and equipment | (41,715 | ) | (49,386 | ) | (2,039 | ) | (313 | ) | ||||||||
Purchase of intangible assets | (1,347 | ) | (2,278 | ) | (7,304 | ) | (1,119 | ) | ||||||||
Proceeds from disposition of property and equipment | 479 | — | 329 | 50 | ||||||||||||
Purchase of investment in equity fund (Note 2(j)) | (5,646 | ) | (73 | ) | (190 | ) | (29 | ) | ||||||||
Proceeds from return of investment in equity fund (Note 2(j)) | 10 | 87 | — | — | ||||||||||||
Net cash (used in)/provided by investing activities | (417,716 | ) | 100,246 | 164,667 | 25,236 | |||||||||||
For the years ended December 31, | ||||||||||||||||
2019 | 2020 | 2021 | 2021 | |||||||||||||
RMB | RMB | RMB | US$(Note 2 (e)) | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net (loss)/income | (574,781 | ) | (394,827 | ) | 59,907 | 9,400 | ||||||||||
Adjustments for: | ||||||||||||||||
Depreciation of property and equipment (Note 9) | 20,287 | 21,256 | 11,547 | 1,814 | ||||||||||||
Amortization of intangible assets (Note 10) | 1,300 | 6,047 | 5,346 | 839 | ||||||||||||
Amortization of prepaid interest expense and service fees to loan companies | 304 | — | — | — | ||||||||||||
Foreign exchange losses | 2,221 | 1,358 | 199 | 31 | ||||||||||||
Share-based compensation (Note 1 5 ) | 26,683 | 29,027 | 22,045 | 3,459 | ||||||||||||
Amortization of operating lease right-of-use asset (Note 13) | 32,301 | 31,177 | 19,123 | 3,001 | ||||||||||||
Interest expense of operating lease liability (Note 13) | 8,480 | 6,182 | 2,995 | 470 | ||||||||||||
Investment income | (10,116 | ) | (3,658 | ) | (2,149 | ) | (337 | ) | ||||||||
Impairment of property and equipment (Note 2 (m)) | 6,857 | 21,390 | 3,356 | 527 | ||||||||||||
Impairment of intangible assets (Note 10) | — | — | 2,396 | 376 | ||||||||||||
Impairment of other current assets (Note 8) | — | — | 12,104 | 1,899 | ||||||||||||
Impairment of other non-current assets (Note 8) | — | — | 1,232 | 194 | ||||||||||||
Disposal gain on property and equipment | — | (165 | ) | (712 | ) | (112 | ) | |||||||||
Changes in assets and liabilities: | ||||||||||||||||
Accounts receivable | 7,043 | 1,468 | 2,994 | 470 | ||||||||||||
Prepayments and other current assets | 29,983 | 23,661 | 1,921 | 301 | ||||||||||||
Other non-current assets | (1,077 | ) | 1,758 | 5,854 | 919 | |||||||||||
Deferred tax assets | 1,604 | 1,789 | 1,573 | 247 | ||||||||||||
Accounts payable | 61,391 | (55,255 | ) | (16,427 | ) | (2,578 | ) | |||||||||
Salary and welfare payable | 45,652 | (21,536 | ) | (77,431 | ) | (12,151 | ) | |||||||||
Tax payable | 15,459 | 2,987 | 2,329 | 365 | ||||||||||||
Accrued liabilities and other current liabilities | (606 | ) | 3,932 | 2,530 | 397 | |||||||||||
Operating lease liability | (42,228 | ) | (29,706 | ) | (27,556 | ) | (4,324 | ) | ||||||||
Other non-current liabilities | 2,735 | 258 | (1,128 | ) | (177 | ) | ||||||||||
Customer deposits and deferred revenue, current and non-current | 218,344 | 50,259 | (187,200 | ) | (29,376 | ) | ||||||||||
Net cash used in operating activities | (148,164 | ) | (302,598 | ) | (155,152 | ) | (24,346 | ) | ||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchase of short-term investments | (35,841 | ) | (51,019 | ) | (78,424 | ) | (12,306 | ) | ||||||||
Proceeds from maturity of short-term investments | 187,737 | 224,890 | 162,721 | 25,534 | ||||||||||||
Purchase of property and equipment | (49,386 | ) | (2,039 | ) | (1,742 | ) | (273 | ) | ||||||||
Purchase of intangible assets | (2,278 | ) | (7,304 | ) | (4,017 | ) | (630 | ) | ||||||||
Proceeds from disposition of property and equipment | — | 329 | 985 | 153 | ||||||||||||
Purchase of investment in equity fund (Note 2(j)) | (73 | ) | (190 | ) | — | — | ||||||||||
Proceeds from return of investment in equity fund (Note 2(j)) | 87 | — | 2,149 | 337 | ||||||||||||
Net cash | 100,246 | 164,667 | 81,672 | 12,815 | ||||||||||||
For the years ended December 31, | ||||||||||||||||
2018 | 2019 | 2020 | 2020 | |||||||||||||
RMB | RMB | RMB | US$(Note 2 (e)) | |||||||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from exercise of share options | — | 1,097 | 2,131 | 327 | ||||||||||||
Proceeds from issuance of Class A ordinary shares upon IPO, net of issuance costs | 441,166 | — | — | — | ||||||||||||
Cash receipts from loan companies | 10,595 | — | — | — | ||||||||||||
Cash payment for repurchase employee vested share options | (2,243 | ) | — | — | — | |||||||||||
Cash payment for repurchase ordinary shares (Note 15) | — | (10,730 | ) | — | — | |||||||||||
(Prepayment)/cash receipt for the repurchase of ordinary shares program (Note 15) | — | (6,711 | ) | 2,154 | 330 | |||||||||||
Repayment of cash to loan companies | (5,540 | ) | — | — | — | |||||||||||
Net cash provided by/(used in) financing activities | 443,978 | (16,344 | ) | 4,285 | 657 | |||||||||||
Net decrease in cash, cash equivalents and restricted cash | (86,680 | ) | (64,262 | ) | (133,646 | ) | (20,482 | ) | ||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 14,919 | 2,522 | (10,829 | ) | (1,660 | ) | ||||||||||
Cash, cash equivalents and restricted cash at the beginning of year | 416,483 | 344,722 | 282,982 | 43,369 | ||||||||||||
Cash, cash equivalents and restricted cash at the end of year | 344,722 | 282,982 | 138,507 | 21,227 | ||||||||||||
Supplemental schedule of non-cash operating activities: | ||||||||||||||||
Non-cash settlement related to interest expenses and service fee, net | 304 | — | — | — | ||||||||||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||||||||||
Accounts payable related to the purchase of property and equipment | 86 | 2,533 | 1,761 | 270 | ||||||||||||
Payables related to the purchase of copyright | — | 13,295 | 13,130 | 2,012 | ||||||||||||
Non—cash settlement related to repayment of loan and corresponding de-recognition of related receivables | 34,172 | 7,187 | — | — | ||||||||||||
Accretion on redeemable preferred shares | 28,017 | — | — | — | ||||||||||||
Other receivables related to share options settlement (Note 8) | — | 867 | 602 | 92 |
For the years ended December 31, | ||||||||||||||||
2019 | 2020 | 2021 | 2021 | |||||||||||||
RMB | RMB | RMB | US$(Note 2 (e)) | |||||||||||||
Cash flows from financing activities: | ||||||||||||||||
Proceeds from exercise of share options | 1,097 | 2,131 | 1,145 | 180 | ||||||||||||
Cash payment for repurchase ordinary shares (Note 1 4 ) | (10,730 | ) | — | — | — | |||||||||||
(Prepayment)/cash receipt for the repurchase of ordinary shares program (Note 1 4 ) | (6,711 | ) | 2,154 | — | — | |||||||||||
Net cash (used in)/provided by financing activities | (16,344 | ) | 4,285 | 1,145 | 180 | |||||||||||
Net decrease in cash, cash equivalents and restricted cash | (64,262 | ) | (133,646 | ) | (72,335 | ) | (11,351 | ) | ||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2,522 | (10,829 | ) | (2,616 | ) | (411 | ) | |||||||||
Cash, cash equivalents and restricted cash at the beginning of year | 344,722 | 282,982 | 138,507 | 21,735 | ||||||||||||
Cash, cash equivalents and restricted cash at the end of year | 282,982 | 138,507 | 63,556 | 9,973 | ||||||||||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||||||||||
Accounts payable related to the purchase of property and equipment | 2,533 | 1,761 | 147 | 23 | ||||||||||||
Payables related to the purchase of copyright | 13,295 | 13,130 | 8,652 | 1,358 | ||||||||||||
Non - cash settlement related to repayment of loan and correspondingde-recognition of related receivables | 7,187 | — | — | — | ||||||||||||
Other receivables related to share options settlement (Note 8) | 867 | 602 | 319 | 50 |
1. | Organization and Principal Activities |
(a) | Principal activities |
Company Name | Date of establishment | Place of incorporation | Percentage of direct or indirect economic ownership | Principal activities | ||||||||||||
Wholly owned subsidiaries of the Company: | ||||||||||||||||
LingoChamp US Inc. | Established on August 15, 2017 | US | 100 | % | AI lab operation | |||||||||||
LingoChamp (HK) Limited | Established on August 29, 2013 | Hong Kong | 100 | % | Investment holding | |||||||||||
Yuguan Information Technology (Shanghai) Co., Ltd. (“Yuguan WFOE”) | Established on November 19, 2013 | PRC | 100 | % | Technology development | |||||||||||
Yuling Culture Communication (Shanghai) Co., Ltd. | Established on October 13, 2015 | PRC | 100 | % | Provision of cross-border loan arrangement | |||||||||||
Variable Interest Entity (“VIEs”) | ||||||||||||||||
August 15, 2017 | ||||||||||||||||
August 29, 2013 | ||||||||||||||||
November 19, 2013 | ||||||||||||||||
October 13, 2015 | loan arrangement | |||||||||||||||
Shanghai Liulishuo Information and Technology Co., Ltd. (“Shanghai Liulishuo” or “Shanghai Liulishuo VIE”) | Established on May 17, 2013 | PRC | 100 | % | Provision of English learning services | |||||||||||
Shanghai Mengfan Culture Communication Co., Ltd. (“Mengfan”) | Established on December 8, 2014 | PRC | 100 | % | Provision of marketing support services | |||||||||||
Shanghai Mengfan Education (“Mengfan Education”) | Established on April 18, 2019 | PRC | 100 | % | Provision of English learning service | |||||||||||
Subsidiary of Variable Interest Entity subsidiary”) | ||||||||||||||||
Wuhan Liulishuo Information and Technology Co., Ltd. | Established on January 14, 2019 | PRC | 100 | % | Provision of marketing support service |
(b) | Organization Structure |
1) | On August 19, 2013, L was incorporated in the Cayman Islands by the founders.AIX Inc. |
2) | On August 29, 2013, LingoChamp HK was incorporated in Hong Kong with 100% ownership by LAIX Inc . |
3) | On November 19, 2013, Yuguan WFOE was incorporated in the PRC with 100% ownership by LingoChamp HK. |
(c) | VIE arrangements |
(d) | Combined financial information of the VIEs and VIEs’ subsidiary |
As of December 31, | ||||||||
2020 | 2021 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 37,673 | 2,764 | ||||||
Restricted cash | 20 | 0 | ||||||
Accounts receivable, net | 5,892 | 2,898 | ||||||
Amounts due from inter-company entities | 4,254 | 3,939 | ||||||
Prepayments and other current assets | 36,298 | 32,338 | ||||||
Total current assets | 84,137 | 41,939 | ||||||
Non-current assets | ||||||||
Property and equipment, net | 15,773 | 9,763 | ||||||
Operating lease right-of-use | 48,862 | 9,133 | ||||||
Other non-current assets | 3,510 | 0 | ||||||
Deferred tax assets | 13,547 | 11,974 | ||||||
Total non-current assets | 81,692 | 30,870 | ||||||
Total assets | 165,829 | 72,809 | ||||||
As of December 31, | ||||||||
2019 | 2020 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | 137,364 | 37,673 | ||||||
Restricted cash | 100 | 20 | ||||||
Accounts receivable, net | 7,360 | 5,892 | ||||||
Amounts due from inter-company entities | 3,258 | 4,254 | ||||||
Prepayments and other current assets | 60,942 | 36,298 | ||||||
Total current assets | 209,024 | 84,137 | ||||||
Non-current assets | ||||||||
Property and equip m ent, net | 34,815 | 15,773 | ||||||
Operating lease right-of-use | 113,616 | 48,862 | ||||||
Other non-current assets | 6,023 | 3,510 | ||||||
Deferred tax assets | 15,336 | 13,547 | ||||||
Total non-current assets | 169,790 | 81,692 | ||||||
Total assets | 378,814 | 165,829 | ||||||
As of December 31, | ||||||||
2020 | 2021 | |||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable | 50,443 | 45,676 | ||||||
Amounts due to inter-company entities | 169,717 | 217,089 | ||||||
Customer deposits and deferred revenue, current | 689,325 | 530,712 | ||||||
Salary and welfare payable | 56,946 | 31,353 | ||||||
Tax payable | 48,058 | 48,988 | ||||||
Operating lease liability, current | 19,465 | 9,821 | ||||||
Accrued liabilities and other current liabilities | 16,405 | 11,077 | ||||||
Total current liabilities | 1,050,359 | 894,716 | ||||||
Customer deposits and deferred revenue, non-current | 56,905 | 28,055 | ||||||
Operating lease liability, non-current | 32,933 | 129 | ||||||
Other non-current liabilities | 2,380 | 2,380 | ||||||
Total non-current liabilities | 92,218 | 30,564 | ||||||
Total liabilities | 1,142,577 | 925,280 | ||||||
As of December 31, | ||||||||
2019 | 2020 | |||||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable | 91,896 | 50,443 | ||||||
Amounts due to inter-company entities | 219,744 | 169,717 | ||||||
Deferred revenue, current | 695,971 | 689,325 | ||||||
Salary and welfare payable | 73,946 | 56,946 | ||||||
Tax payable | 46,823 | 48,058 | ||||||
Operating lease liability, current | 29,119 | 19,465 | ||||||
Accrued liabilities and other current liabilities | 11,938 | 16,405 | ||||||
Total current liabilities | 1,169,437 | 1,050,359 | ||||||
Deferred revenue, non-current | 0 | 56,905 | ||||||
Operating lease liability, non-current | 83,282 | 32,933 | ||||||
Other non-current liabilities | 1,000 | 2,380 | ||||||
Total non-current liabilities | 84,282 | 92,218 | ||||||
Total liabilities | 1,253,719 | 1,142,577 | ||||||
For the years ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Net revenues | 637,034 | 1,023,213 | 972,628 | |||||||||
Net loss | (387,668 | ) | (298,596 | ) | (101,843 | ) |
For the years ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Net revenues | 1,023,213 | 972,628 | 684,635 | |||||||||
Net (loss)/income (includes inter-company service fee charges incurred in the amounts of RMB 600,999, RMB 426,886 and RMB 233,868, respectively) | (298,596 | ) | (101,843 | ) | 124,277 |
For the years ended December 31, | For the years ended December 31, | |||||||||||||||||||||||
2018 | 2019 | 2020 | 2019 | 2020 | 2021 | |||||||||||||||||||
Net cash provided by/(used in) operating activities | 48,285 | 109,999 | (98,741 | ) | 109,999 | (98,741 | ) | (34,004 | ) | |||||||||||||||
Net cash used in investing activities | (15,538 | ) | (31,603 | ) | (1,030 | ) | (31,603 | ) | (1,030 | ) | (925 | ) | ||||||||||||
Net cash provided by financing activities | 5,055 | 1,000 | 0 | 1,000 | 0 | 0 | ||||||||||||||||||
Net increase/(decrease) in cash, cash equivalents and restricted cash | 37,802 | 79,396 | (99,771 | ) | 79,396 | (99,771 | ) | (34,929 | ) | |||||||||||||||
(e) | Risks associated with VIE arrangements |
(a) | revoking the business licenses of such entities; |
(b) | discontinuing or restricting the conduct of any transactions between the Company’s PRC subsidiaries and the VIEs; |
(c) | imposing fines, confiscating the income of the VIEs or the Company’s PRC subsidiaries, or imposing other requirements with which the Company or its PRC subsidiaries and consolidated VIEs may not be able to comply; |
(d) | requiring the Company to restructure its 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 its ability to consolidate, derive economic interests from, or exert effective control over the VIEs; or |
(e) | restricting or prohibiting its use of the proceeds of any offering to finance its business and operations in China. |
2. | Principal Accounting Policies |
(a) | Basis of preparation and going concern |
(b) | Use of estimates |
(c) | Consolidation |
(d) | Functional Currency and Foreign Currency Translation |
(e) | Convenience Translation |
(f) | Fair value of financial instruments |
Level 1 | Level 2 | Level 3 | Balance at fair value | |||||||||||||
As of December 31, 2020 | ||||||||||||||||
Assets | ||||||||||||||||
Short-term investments—Wealth management products | — | 91,049 | — | 91,049 | ||||||||||||
As of December 31, 2021 | ||||||||||||||||
Assets | ||||||||||||||||
Short-term investments—Wealth management products | — | 6,759 | — | 6,759 | ||||||||||||
Level 1 | Level 2 | Level 3 | Balance at fair value | |||||||||||||
As of December 31 2019, | ||||||||||||||||
Assets | ||||||||||||||||
Short-term investments—Wealth management products | — | 240,948 | — | 240,948 | ||||||||||||
As of December 31, 2020 | ||||||||||||||||
Assets | ||||||||||||||||
Short-term investments—Wealth management products | — | 91,049 | — | 91,049 | ||||||||||||
(g) | Cash and Cash Equivalents |
(h) | Short-term investments |
(i) | Accounts receivable, net |
(j) | Investment in equity fund |
(k) | Intangible assets |
(l) | Property and equipment, net |
Leasehold improvements | over the shorter of lease terms or estimated useful lives of the assets | |
Office | 3-5 years | |
Software | 3 years |
(m) | Impairment of long-lived assets |
(n) | Customer Deposits and Deferred Revenue |
(o) | Revenue recognition |
(p) | Cost of revenues |
(q) | Research and development expense |
(r) | Sales and marketing expenses |
(s) | General and administrative expenses |
(t) | Government subsidies |
(u) | Operating leases |
(v) | Employee social security and welfare benefits |
(w) | Income taxes |
(x) | Share-based compensation |
(y) | Treasury stock |
(z) | Statutory reserves |
(aa) | Related parties |
(ab) | Dividends |
(ac) |
(ad) | Comprehensive |
(ae) | Segment reporting |
(af) | Recently adopted accounting pronouncements |
(ag) | Recently issued accounting pronouncements not yet adopted |
3. | Risks and Concentration |
(a) | PRC regulations |
(1) | Historical non-compliance due to lack of ICP license |
(2) | Violation of intellectual property rights of others |
( 3 ) | Impact of Double Alleviating Opinions |
(b) | Foreign exchange risk |
(c) | Credit and concentration risk |
(i) | Concentration of revenues |
(ii) | Concentration of accounts receivable |
As of December 31, | ||||||||
2020 | 2021 | |||||||
Distribution channel A | 50 | % | 34 | % | ||||
Distribution channel B | 20 | % | 20 | % | ||||
As of December 31, | ||||||||
2019 | 2020 | |||||||
Distribution channel A | 56 | % | 50 | % | ||||
Distribution channel B | 25 | % | 20 | % | ||||
4 | Significant equity transactions |
5. | Cash and cash equivalents |
RMB amount (RMB denominated) | RMB equivalent amount (US$ denominated) | Total | ||||||||||||||||||||||||||
Overseas | China | Overseas | China | |||||||||||||||||||||||||
Non VIE | VIE | Non VIE | VIE | |||||||||||||||||||||||||
December 31, 2020 | 5,668 | 33,310 | 37,673 | 32,702 | 28,643 | — | 137,996 | |||||||||||||||||||||
December 31, 2021 | 3,184 | 38,457 | 2,764 | 6,558 | 12,422 | — | 63,385 |
RMB amount (RMB denominated) | RMB equivalent amount (US$ denominated) | Total | ||||||||||||||||||||||||||
Overseas | China | Overseas | China | |||||||||||||||||||||||||
Non VIE | VIE | Non VIE | VIE | |||||||||||||||||||||||||
December 31, 2019 | 6,607 | 13,453 | 137,364 | 65,059 | 58,683 | — | 281,166 | |||||||||||||||||||||
December 31, 2020 | 5,668 | 33,310 | 37,673 | 32,702 | 28,643 | — | 137,996 |
6. | Restricted cash |
As of December 31, | ||||||||
2020 | 2021 | |||||||
Restricted cash for exercise of share options to be transmitted to employees | 491 | 171 | ||||||
Cash deposit held in designated bank account | 20 | 0 | ||||||
Total restricted cash | 511 | 171 | ||||||
As of December 31, | ||||||||
2019 | 2020 | |||||||
Restricted cash for exercise of share options to be transmitted to employees | 1,716 | 491 | ||||||
Cash deposit held in designated bank account | 100 | 20 | ||||||
Total restricted cash | 1,816 | 511 | ||||||
7. | Accounts receivable, net |
As of December 31, | ||||||||
2020 | 2021 | |||||||
Accounts receivable, gross | 5,892 | 2,898 | ||||||
Less: allowance for credit losses | 0 | 0 | ||||||
Accounts receivable, net | 5,892 | 2,898 | ||||||
As of December 31, | ||||||||
2019 | 2020 | |||||||
Accounts receivable, gross | 7,360 | 5,892 | ||||||
Less: allowance for cr edit losses | 0 | 0 | ||||||
Accounts receivable, net | 7,360 | 5,892 | ||||||
8. | Other assets |
As of December 31, | ||||||||
2020 | 2021 | |||||||
Prepayment and other current assets | ||||||||
Subscription fees receivables due from distribution channels and online commerce platform partners for unconsumed courses | 9,587 | 19,689 | ||||||
Rental deposits refundable within one year | 2,009 | 4,093 | ||||||
Receivables from payment- processing- service providers | 5,255 | 3,890 | ||||||
Prepaid advertising fees | 4,551 | 3,854 | ||||||
Prepaid insurance fees | 5,099 | 3,111 | ||||||
Gift goods to be used in promotion and incentive programs (c) | 9,346 | 2,320 | ||||||
Prepayments of service fees | 3,060 | 1,961 | ||||||
Prepayment of software license fee | 2,500 | 1,195 | ||||||
Loan receivables from shareholders (Note 22) | — | 1,000 | ||||||
Payment for digital contents (a) (c) | 6,621 | 435 | ||||||
Loans and advance to employees (b) (c) | 2,899 | 425 | ||||||
Prepaid rental fee | 72 | 126 | ||||||
Value-added tax receivable | 3,797 | 49 | ||||||
Printing course materials (c) | 1,906 | 0 | ||||||
Others | 1,570 | 583 | ||||||
Total prepayment and other current assets | 58,272 | 42,731 | ||||||
Non-current assets | ||||||||
Long-term rental deposits | 4,643 | 12 | ||||||
Prepayment for courses copyright (c) | 1,223 | — | ||||||
Total non-current assets | 5,866 | 12 | ||||||
As of December 31, | ||||||||
2019 | 2020 | |||||||
Prepayment and other current assets | ||||||||
Subscription fees receivables due from distribution channels and online commerce platform partners for unconsumed courses | 20,597 | 9,587 | ||||||
Gift goods to be used in promotion and incentive programs | 4,775 | 9,346 | ||||||
Payment for digital contents (b) | 4,921 | 6,621 | ||||||
Receivables from payment- processing- service providers | 6,335 | 5,255 | ||||||
Prepaid insurance fees | 4,938 | 5,099 | ||||||
Prepaid advertising fees | 5,788 | 4,551 | ||||||
Value-added tax receivable | 17,405 | 3,797 | ||||||
Prepayments of service fees | 3,216 | 3,060 | ||||||
Loans and advance to employees (a) | 4,437 | 2,899 | ||||||
Prepayment of software license fee | 2,278 | 2,500 | ||||||
Rental deposits refundable within one year | 1,878 | 2,009 | ||||||
Printing course materials | — | 1,906 | ||||||
Prepaid rental fee | 1,291 | 72 | ||||||
Prepayment for share repurchase program (Note 15) | 6,711 | — | ||||||
Others | 2,217 | 1,570 | ||||||
Total repayment and other current assets | 86,787 | 58,272 | ||||||
Non-current | ||||||||
Long-term rental deposits | 8,447 | 4,643 | ||||||
Prepayment for courses copyright | — | 1,223 | ||||||
Total non-current | 8,447 | 5,866 | ||||||
(a) |
Payment for digital contents represent the payment to a publisher for the access to digital books of which the control has been obtained. The respective content costs will be realized into cost of revenue along with the revenue recognition of the subscription to the |
(b) | As of December 31, 2021, loans and advance to employees consists of 1) advance to employees of RMB 106 (US$17) for future travel and other business - related purpose; and 2) receivables from employees for the option exercised price of RMB319 (US$ 50). |
(c) | The other assets represent the net amount after the impairment. Write-down of the carrying amount of the other assets was NaN, NaN, and RMB13,336(US$2,093) for the years ended December 31, 2019, 2020 and 2021, respectively on gift goods to be used in promotion and incentive programs, payment for digital contents, loans and advance to employees, printing course materials and prepayment for course copyright. |
9. | Property and equipment, net |
As of December 31, | ||||||||
2020 | 2021 | |||||||
Cost: | ||||||||
Leasehold improvements | 45,020 | 30,045 | ||||||
Office equipment | 31,539 | 25,652 | ||||||
Software | 1,651 | 1,651 | ||||||
Total cost | 78,210 | 57,348 | ||||||
Less: Accumulated depreciation | (40,427 | ) | (42,220 | ) | ||||
Less: Impairment loss | (7,709 | ) | (102 | ) | ||||
Property and equipment, net | 30,074 | 15,026 | ||||||
As of December 31, | ||||||||
2019 | 2020 | |||||||
Cost: | ||||||||
Leasehold improvements | 68,987 | 45,020 | ||||||
Office equipment | 36,009 | 31,539 | ||||||
Software | 1,651 | 1,651 | ||||||
Total cost | 106,647 | 78,210 | ||||||
Less: Accumulated depreciation | (28,153 | ) | (40,427 | ) | ||||
Less: Impairment loss | (6,857 | ) | (7,709 | ) | ||||
Property and equipment, ne t | 71,637 | 30,074 | ||||||
For the years ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Cost of revenues | 4,095 | 5,189 | 2,731 | |||||||||
Sales and marketing expenses | 12,801 | 11,350 | 6,233 | |||||||||
Research and development | 2,729 | 2,837 | 1,692 | |||||||||
General and administrative expenses | 662 | 1,880 | 891 | |||||||||
Total | 20,287 | 21,256 | 11,547 | |||||||||
For the years ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Cost of revenues | 810 | 4,095 | 5,189 | |||||||||
Sales and marketing expenses | 3,865 | 12,801 | 11,350 | |||||||||
Research and development | 894 | 2,729 | 2,837 | |||||||||
General and administrative expenses | 285 | 662 | 1,880 | |||||||||
Total | 5,854 | 20,287 | 21,256 | |||||||||
10. | Intangible assets |
As of December 31, | ||||||||||||||||
As of December 31, | 2020 | 2021 | ||||||||||||||
2019 | 2020 | |||||||||||||||
Copyright (Note 12( a )) | 15,573 | 20,242 | ||||||||||||||
Copyright (Note 12(a)) | 20,242 | 17,191 | ||||||||||||||
Computer software | 862 | 862 | 862 | 805 | ||||||||||||
Domain name | 484 | 484 | 484 | 485 | ||||||||||||
Less: Accumulated amortization | (1,357 | ) | (7,404 | ) | (7,404 | ) | (10,029 | ) | ||||||||
Less: Impairment loss | — | (2,396 | ) | |||||||||||||
Add: translation difference | (21 | ) | 157 | 157 | (25 | ) | ||||||||||
Intangible assets, net | 15,541 | 14,341 | 14,341 | 6,031 | ||||||||||||
11. | Tax payable |
As of December 31, | ||||||||||||||||
As of December 31, | 2020 | 2021 | ||||||||||||||
2019 | 2020 | |||||||||||||||
Uncertain tax position (Note 19) | 41,100 | 41,100 | ||||||||||||||
Uncertain tax position (Note 1 8 ) | 41,100 | 41,100 | ||||||||||||||
Withholding individual income tax | 33,153 | 36,226 | 36,226 | 35,185 | ||||||||||||
Value added tax | 87 | 1 | 1 | 3,347 | ||||||||||||
Other tax | — | 24 | ||||||||||||||
Total | 74,340 | 77,327 | 77,327 | 79,656 | ||||||||||||
12. | Accrued liabilities and other liabilities |
As of December 31, | ||||||||
2019 | 2020 | |||||||
Accrued liabilities and other current liabilities | ||||||||
Payables related to professional service fee | 3,700 | 6,753 | ||||||
Government grant | 6,070 | 5,450 | ||||||
Accrual for exchange golden coins and membership credits | 2,434 | 5,156 | ||||||
Refund from depository bank - current | 1,011 | 945 | ||||||
Payables to employees related to net proceeds from share options exercised (Note 6) | 1,716 | 491 | ||||||
Others | 513 | 587 | ||||||
Total | 15,444 | 19,382 | ||||||
Non-Current | ||||||||
Payables related to copyright (a) | 8,707 | 6,622 | ||||||
Government grant | 1,000 | 2,380 | ||||||
Refund from depository bank - non-current | 2,734 | 1,612 | ||||||
Total | 12,441 | 10,614 | ||||||
As of December 31, | ||||||||
2020 | 2021 | |||||||
Accrued liabilities and other current liabilities | ||||||||
Payables related to professional service fee | 6,753 | 9,394 | ||||||
Accrual for exchange golden coins and membership credits | 5,156 | 5,181 | ||||||
Due to depository bank - current | 945 | 4,619 | ||||||
Government grant | 5,450 | 1,125 | ||||||
Payables to employees related to net proceeds from share options exercised (Note 6) | 491 | 171 | ||||||
Others | 587 | 1,422 | ||||||
Total | 19,382 | 21,912 | ||||||
Non-Current | ||||||||
Payables related to copyright (a) | 6,622 | 2,163 | ||||||
Government grant | 2,380 | 2,380 | ||||||
Due to depository bank -non-current | 1,612 | 0 | ||||||
Total | 10,614 | 4,543 | ||||||
(a) | The Group purchased copyrights from third party copyright owners for the purpose of new product development and recorded liability for the payment not yet settled. |
13. | Leases |
As of December 31, | As of December 31, | |||||||
2020 | 2021 | |||||||
Assets | ||||||||
Operating lease right of use assets, net | 82,488 | 9,283 | ||||||
Liabilities | ||||||||
Operating lease liabilities, current | 31,845 | 9,880 | ||||||
Operating lease liabilities, non-current | 56,903 | 226 | ||||||
Weighted average remaining lease term (years) | 3.20 | 0.92 | ||||||
Weighted average discount rate | 5.70 | % | 5.70 | % |
As of December 31, | As of December 31, | |||||||
2019 | 2020 | |||||||
Assets | ||||||||
Operating lease right of use assets, net | 155,525 | 82,488 | ||||||
Liabilities | ||||||||
Operating lease liabilities, current | 37,009 | 31,845 | ||||||
Operating lease liabilities, non-current | 117,124 | 56,903 | ||||||
Weighted average remaining lease term (years) | 3.97 | 3.20 | ||||||
Weighted average discount rate | 5.70 | % | 5.70 | % |
As of December 31, | As of December 31, | |||||||
2019 | 2020 | |||||||
Operating lease rental expense | ||||||||
Amortization of right of use assets | 32,301 | 31,177 | ||||||
Expense for short-term leases within 12 months | 12,369 | 1,743 | ||||||
Interest of lease liabilities | 8,480 | 6,182 | ||||||
53,150 | 39,102 | |||||||
For the Year ended December 31, | For the Year ended December 31, | |||||||
2019 | 2020 | |||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating lease payment | 42,228 | 29,706 | ||||||
Right-of-use | ||||||||
Operating lease liabilities | 26,840 | 1,330 | ||||||
As of December 31, | ||||
2020 | ||||
2021 | 35,735 | |||
2022 | 30,152 | |||
2023 | 25,252 | |||
2024 | 5,387 | |||
Total undiscounted lease payment | 96,526 | |||
Less: imputed interest | (7,778 | ) | ||
Total lease liabilities | 88,748 | |||
As of December 31, | As of December 31, | |||||||
2020 | 2021 | |||||||
Operating lease rental expense | ||||||||
Amortization of right of use assets | 31,177 | 19,123 | ||||||
Expense for short-term leases within 12 months | 1,743 | 341 | ||||||
Interest of lease liabilities | 6,182 | 2,995 | ||||||
39,102 | 22,459 | |||||||
For the Year ended December 31, | For the Year ended December 31, | |||||||
2020 | 2021 | |||||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
Operating lease payment | 29,706 | 27,556 | ||||||
Right-of-use | ||||||||
Operating lease liabilities | 1,330 | 1,335 | ||||||
As of December 31, | ||||
2021 | ||||
2022 | 10,070 | |||
2023 | 195 | |||
2024 | 35 | |||
Total undiscounted lease payment | 10,300 | |||
Less: imputed interest | (194 | ) | ||
Total lease liabilities | 10,106 | |||
Ordinary shares |
Share-based compensation |
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | Weighted Average Grant Date Fair Value | ||||||||||||||||
USD | In years | USD’000 | USD | |||||||||||||||||
Outstanding at January 1, 2019 | 4,980,394 | 0.3806 | 8.19 | 35,875 | 7.13 | |||||||||||||||
Granted | 490,759 | 0.6000 | 7.27 | |||||||||||||||||
Exercised | (1,894,994 | ) | 0.1484 | |||||||||||||||||
Forfeited | (937,438 | ) | 0.5477 | |||||||||||||||||
Outstanding at December 31, 2019 | 2,638,721 | 0.5288 | 8.39 | 11,429 | 8.76 | |||||||||||||||
Outstanding at January 1, 2020 | 2,638,721 | 0.5288 | 8.39 | 11,429 | 8.76 | |||||||||||||||
Granted | 2,983,730 | 0.6633 | 2.38 | |||||||||||||||||
Exercised | (536,107 | ) | 0.5246 | |||||||||||||||||
Forfeited | (1,920,717 | ) | 0.4849 | |||||||||||||||||
Outstanding at December 31, 2020 | 3,165,627 | 0.6829 | 8.74 | 3,070 | 4.95 | |||||||||||||||
Outstanding at January 1, 2021 | 3,165,627 | 0.6829 | 8.74 | 3,070 | 4.95 | |||||||||||||||
Granted | 110,000 | 0.6000 | 1.85 | |||||||||||||||||
Exercised | (481,407 | ) | 0.3016 | |||||||||||||||||
Forfeited | (854,470 | ) | 0.5611 | |||||||||||||||||
Outstanding at December 31, 2021 | 1,939,750 | 0.8265 | 7.74 | 190 | 5.35 | |||||||||||||||
Vested and expected to vest at December 31, 2021 | 1,591,307 | 0.8630 | 7.64 | 187 | 5.64 | |||||||||||||||
Exercisable at December 31, 2021 | 1,004,010 | 0.6207 | 7.32 | 130 | 6.88 |
Number of options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | Weighted Average Grant Date Fair Value | ||||||||||||||||
USD | In years | USD’000 | USD | |||||||||||||||||
Outstanding at January 1, 2018 | 3,245,554 | 0.2093 | 8.17 | 25,272 | 3.61 | |||||||||||||||
Granted | 2,388,750 | 0.6000 | 11.74 | |||||||||||||||||
Forfeited | (653,910 | ) | 0.3318 | |||||||||||||||||
Outstanding at December 31, 2018 | 4,980,394 | 0.3806 | 8.19 | 35,875 | 7.13 | |||||||||||||||
Outstanding at January 1, 2019 | 4,980,394 | 0.3806 | 8.19 | 35,875 | 7.13 | |||||||||||||||
Granted | 490,759 | 0.6000 | 7.27 | |||||||||||||||||
Exercised | (1,894,994 | ) | 0.1484 | |||||||||||||||||
Forfeited | (937,438 | ) | 0.5477 | |||||||||||||||||
Outstanding at December 31, 2019 | 2,638,721 | 0.5288 | 8.39 | 11,429 | 8.76 | |||||||||||||||
Outstanding at January 1, 2020 | 2,638,721 | 0.5288 | 8.39 | 11,429 | 8.76 | |||||||||||||||
Granted | 2,983,730 | 0.6633 | 2.38 | |||||||||||||||||
Exercised | (536,107 | ) | 0.5246 | |||||||||||||||||
Forfeited | (1,920,717 | ) | 0.4849 | |||||||||||||||||
Outstanding at December 31, 2020 | 3,165,627 | 0.6829 | 8.74 | 3,070 | 4.95 | |||||||||||||||
Vested and expected to vest at December 31, 2020 | 2,335,330 | 0.7453 | 8.64 | 2,208 | 5.09 | |||||||||||||||
Exercisable at December 31, 2020 | 665,065 | 0.4761 | 7.28 | 694 | 8.97 |
2018 | 2019 | 2020 | ||||
Expected volatility (i) | 48.13%~49.11% | 45.82 %~ 47.20% | 46.8%~53.05% | |||
Risk-free interest rate (ii) | 2.85%~3.14% | 1.75 %~ 2.82% | 0.78%~0.99% | |||
Exercise multiple | 2.8 | 2.8 | 2.2~2.8 | |||
Expected dividend yield (iii) | 0% | 0% | 0% | |||
Contractual term | 10 | 10 | 10 | |||
Expected forfeiture rate (post-vesting) | 5% | 5% | 5% | |||
Exercise price | US$0.60 | US$0.60 | US$0.01 \US$0.60\ US$3.24 | |||
Fair value of the common share on the date of | US$8.25~US$13.39 | US$2.90-US$11.94 | US$1.26~US$4.11 |
2019 | 2020 | 2021 | ||||
Expected volatility (i) | 45.82%~47.20% | 46.8%~53.05% | 55.30% | |||
Risk-free interest rate (ii) | 1.75%~2.82% | 0.78%~0.99% | 1.89% | |||
Exercise multiple | 2.8 | 2.2~2.8 | 2.2 | |||
Expected dividend yield (iii) | 0% | 0% | 0% | |||
Contractual term | 10 | 10 | 10 | |||
Expected forfeiture rate (post-vesting) | 5% | 5% | 5% | |||
Exercise price | US$0.60 | US$0.01\US$0.60\US$3.24 | US$0.60 | |||
Fair value of the common share on the date of option grant (US$) (iv) | US$2.90-US$11.94 | US$1.26~US$4.11 | US$1.85 |
(i) | Expected volatility is estimated based on the average of historical volatilities of the comparable companies in the same industry as at the valuation dates. |
(ii) | The risk-free interest rate of periods within the contractual life of the share option is based on the market yield of the US Treasury Strip Bond with a maturity life equal to the expected life to expiration. |
(iii) | The Company has no history or expectation of paying dividends on its ordinary shares. |
(iv) | Before the IPO, the estimated fair value of the Company’s ordinary shares at their respective grant dates, was determined with the assistance of an independent third party valuation firm by using income approach. |
16. | Revenue |
For the years ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Prepaid standard courses | 596,702 | 997,794 | 924,695 | |||||||||
Prepaid multiple course packages | 27,904 | 13,139 | 44,876 | |||||||||
Other courses | 12,658 | 12,280 | 3,057 | |||||||||
Total revenues | 637,264 | 1,023,213 | 972,628 | |||||||||
Less: tax surcharges | (40 | ) | — | 0 | ||||||||
Net revenues | 637,224 | 1,023,213 | 972,628 | |||||||||
For the years ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Prepaid standard courses | 997,794 | 924,695 | 551,836 | |||||||||
Prepaid multiple course packages | 13,139 | 44,876 | 115,356 | |||||||||
Other courses | 12,280 | 3,057 | 17,736 | |||||||||
Net revenues | 1,023,213 | 972,628 | 684,928 | |||||||||
Employee benefits |
Income Taxes |
(a) | Cayman Islands |
(b) | Hong Kong Profits Tax |
(c) | U.S. Corporate Income Tax |
(d) | PRC Enterprise Income Tax (“EIT”) |
For the years ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
% | % | % | ||||||||||
PRC Statutory income tax rates | 25.0 | % | 25.0 | % | 25.0 | % | ||||||
Change in valuation allowance | (20.2 | )% | (24.9 | )% | 25.6 | % | ||||||
Super deduction of research and development expenses | 3.9 | % | 6.1 | % | (22.0 | )% | ||||||
Non-deductible expenses | (0.6 | )% | (0.2 | )% | (0.7 | ) % | ||||||
Difference in EIT rates of certain overseas entities | (1.0 | )% | (2.0 | )% | 4.4 | % | ||||||
Tax filing difference | 0.7 | % | 0.1 | % | — | |||||||
Effect of tax holiday (Note) | (8.1 | )% | (4.6 | )% | (29.6 | )% | ||||||
Total | (0.3 | )% | (0.5 | )% | 2.7 | % | ||||||
For the years ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Domestic | 560,503 | 383,730 | (75,618 | ) | ||||||||
Foreign | 12,378 | 9,195 | 14,002 | |||||||||
Total | 572,881 | 392,925 | (61,616 | ) | ||||||||
For the years ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
% | % | % | ||||||||||
PRC Statutory income tax rates | 25.0 | % | 25.0 | % | 25.0 | % | ||||||
Change in valuation allowance | (9.0 | )% | (20.2 | )% | (24.9 | )% | ||||||
Super deduction of research and development expenses | — | 3.9 | % | 6.1 | % | |||||||
Non-deductible expenses | (0.3 | )% | (0.6 | )% | (0.2 | )% | ||||||
Estimates for uncertain tax positions | (10.5 | )% | — | — | ||||||||
Difference in EIT rates of certain overseas entities | (2.8 | )% | (1.0 | )% | (2.0 | )% | ||||||
Tax filing difference | — | 0.7 | % | 0.1 | % | |||||||
Effect of tax holiday (Note) | (7.6 | )% | (8.1 | )% | (4.6 | )% | ||||||
Total | (5.2 | )% | (0.3 | )% | (0.5 | )% | ||||||
For the years ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Tax holiday effect | 27,400 | 8,317 | 0 | |||||||||
Basic and diluted net loss per share effect | 1.02 | 0.17 | 0 |
For the years ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Domestic | 400,791 | 560,503 | 383,730 | |||||||||
Foreign | 63,115 | 12,378 | 9,195 | |||||||||
Total | 463,906 | 572,881 | 392,925 | |||||||||
For the years ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Current income tax expense | 41,100 | 296 | 113 | |||||||||
Deferred income tax (benefit)/expense | (16,940 | ) | 1,604 | 1,789 | ||||||||
Income tax expense | 24,160 | 1,900 | 1,902 | |||||||||
For the years ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Current income tax expense | 296 | 113 | 136 | |||||||||
Deferred income tax expense | 1,604 | 1,789 | 1,573 | |||||||||
Income tax expense | 1,900 | 1,902 | 1,709 | |||||||||
As of December 31, | ||||||||
2019 | 2020 | |||||||
Deferred tax assets | ||||||||
Deductible temporary difference related to advertising expenses | 91,710 | 128,756 | ||||||
Deductible temporary difference related to accruals and other payables | 26,851 | 24,954 | ||||||
Tax losses carried forward | 103,246 | 163,998 | ||||||
Total deferred tax assets | 221,807 | 317,708 | ||||||
Less: valuation allowanc e | (206,471 | ) | (304,161 | ) | ||||
Total deferred tax assets | 15,336 | 13,547 | ||||||
As of December 31, | ||||||||
2020 | 2021 | |||||||
Deferred tax assets | ||||||||
Deductible temporary difference related to advertising expenses | 128,756 | 122,141 | ||||||
Deductible temporary difference related to accruals and other payables | 24,954 | 21,192 | ||||||
Tax losses carried forward | 163,998 | 186,963 | ||||||
Total deferred tax assets | 317,708 | 330,296 | ||||||
Less: valuation allowance | (304,161 | ) | (318,322 | ) | ||||
Total deferred tax assets | 13,547 | 11,974 | ||||||
For the years ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Beginning balance | 90,979 | 206,471 | 304,161 | |||||||||
Additions | 137,122 | 103,399 | 36,061 | |||||||||
Reversals | (21,630 | ) | (5,709 | ) | (21,900 | ) | ||||||
Ending balance | 206,471 | 304,161 | 318,322 | |||||||||
For the years ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Beginning balance | 49,183 | 90,979 | 206,471 | |||||||||
Additions | 41,796 | 137,122 | 103,399 | |||||||||
Reversals | — | (21,630 | ) | (5,709 | ) | |||||||
Ending balance | 90,979 | 206,471 | 304,161 | |||||||||
For the years ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Beginning balance | 0 | 41,100 | 41,100 | |||||||||
Increases related to tax positions taken during the current year | 41,100 | 0 | 0 | |||||||||
Total | 41,100 | 41,100 | 41,100 | |||||||||
For the years ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Beginning balance | 41,100 | 41,100 | 41,100 | |||||||||
Increases related to tax positions taken during the current year | 0 | 0 | 0 | |||||||||
Total | 41,100 | 41,100 | 41,100 | |||||||||
Basic and diluted net |
(a) | Basic and diluted net |
For the years ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Numerator: | ||||||||||||
Net (loss)/income | (574,781 | ) | (394,827 | ) | 59,907 | |||||||
Net (loss)/income attributable to ordinary shareholders-Basic and diluted | (574,781 | ) | (394,827 | ) | 59,907 | |||||||
Denominator: | ||||||||||||
Denominator for basic and diluted (loss)/income per share weighted-average ordinary shares outstanding (Note *1 and *2) | ||||||||||||
Basic | 49,364,429 | 49,430,696 | 50,022,094 | |||||||||
diluted | 49,364,429 | 49,430,696 | 50,277,973 | |||||||||
Basic (loss)/income per share | (11.64 | ) | (7.99 | ) | 1.20 | |||||||
Diluted (loss)/income per share | (11.64 | ) | (7.99 | ) | 1.19 | |||||||
For the years ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Numerator: | ||||||||||||
Net loss | (488,066 | ) | (574,781 | ) | (394,827 | ) | ||||||
Accretion on Series A convertible redeemable preferred shares redemption value | (1,978 | ) | — | 0 | ||||||||
Accretion on Series B convertible redeemable preferred shares redemption value | (10,140 | ) | — | 0 | ||||||||
Accretion on Series C convertible redeemable preferred shares redemption value | (15,899 | ) | — | 0 | ||||||||
Net loss attributable to ordinary shareholders-Basic and diluted | (516,083 | ) | (574,781 | ) | (394,827 | ) | ||||||
Denominator: | ||||||||||||
Denominator for basic and diluted loss per share weighted-average ordinary shares outstanding (Note) | ||||||||||||
Basic and diluted | 26,921,735 | 49,364,429 | 49,430,696 | |||||||||
Basic and diluted loss per share | (19.17 | ) | (11.64 | ) | (7.99 | ) | ||||||
For the year ended December 31, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
Preferred shares — weighted average | 16,729,811 | — | 0 | |||||||||
Share options — weighted average | 2,263,775 | 1,051,152 | 372,273 |
Denominator for basic and diluted (loss)/income per ADS weighted-average ADS outstanding (Note *3) | ||||||||||||
Basic | 3,526,031 | 3,530,764 | 3,573,007 | |||||||||
diluted | 3,526,031 | 3,530,764 | 3,591,284 | |||||||||
Basic (loss)/income per ADS | (162.96 | ) | (111.86 | ) | 16.80 | |||||||
Diluted (loss)/income per ADS | (162.96 | ) | (111.86 | ) | 16.66 |
(2) | Options exercisable for a minimal exercise price are included in the denominator of basic loss per share calculation once there are no further vesting conditions or contingencies associated with them, as they are considered contingently issuable shares. Accordingly, the weighted average number of shares of NaN, NaN and 215,684 related to these options, for which the exercise price is US$0.01 per share, are included in the denominator for the computation of basic net (loss)/income per share for the years ended December 31, 2019, 2020 and 2021, respectively. |
(3) | Basic and diluted net (loss)/income per ADS calculation was given the retroactive effect per the subsequent event disclosed in Note 21. The ADS in this Note represents the new ADS ratio of one (1) ADS to fourteen (14) Class A ordinary share. |
20. | Contingencies |
21. | Subsequent events |
(1) | From January 2022, the Company ceased the operation of Kids Liulishuo in light of the requirements of the Double Alleviating Opinions and granted Yangpu Liuli a private non-profit after-school tutoring institution founded by the Company’s founders, the right to utilize and operate Kids Liulishuo for which the Company will charge Yangpu Liuli on a monthly basis: (i) a royalty fee of % of its revenues through a software licensing arrangement, and (ii) 10% of its revenues through a service agreement for the provision of administrative supporting services, including legal, human resources, financial and managerial supporting services by the Company. Given that the royalty fees and service fees charged under the related-party agreements must be “fair”, “just” and “reasonable”, while no specific guidance has been issued so far as to how these terms should be implemented. The Group has no assurance that the fee going to be charged between the Company and Yangpu Liuli would be determined to be “fair, just and reasonable” by the relevant government authorities absent further guidance or administrative practice. The Group may be required to cease cooperation with Yangpu Liuli and be further subject to fines or other sanctions. Refer to Note 2(a) regarding the Company’s financial resources and going concern. |
(2) | In February 2022, the Company announced the ratio of its American Depositary Shares (“ADSs”) to its Class A ordinary shares (the “ADS Ratio”), par value US$0.001 per share, would change from the current ADS Ratio of one (1) ADS to one (1) Class A ordinary share to a new ADS Ratio of one (1) ADS to fourteen (14) Class A ordinary shares. The change became effective on March 4, 2022. |
(3) | On April 7, 2022, the NYSE commenced proceedings to delist the Company’s ADSs and suspended the trading of these ADSs which have been then quoted on the OTC Pink Limited Information under the symbol “LAIXY”. The delisting will become effective ten days after the NYSE’s application to SEC which was submitted on April 22, 2022. |
22. |
Name of related parties | Relationship with the Company | |
Yi Wang | Shareholder of the Company | |
Zheren Hu | Shareholder of the Company | |
Hui Lin | Shareholder of the Company |
For the years ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Transaction amount with related parties | ||||||||||||
Loan to shareholders | ||||||||||||
Yi Wang | 0 | 0 | 600 | |||||||||
Zheren Hu | 0 | 0 | 250 | |||||||||
Hui Lin | 0 | 0 | 150 |
As of December 31, 2021 | ||||||||
2020 | 2021 | |||||||
Balance amount with related parties | ||||||||
Prepayments and other current assets | ||||||||
Yi Wang | 0 | 600 | ||||||
Zheren Hu | 0 | 250 | ||||||
Hui Lin | 0 | 150 |
23. | Restricted net assets |
24. | ADDITIONAL INFORMATION: CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY |
As of December 31, | ||||||||||||
2020 | 2021 | |||||||||||
RMB | RMB | US$ (Note 2 (e)) | ||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | 2,888 | 574 | 90 | |||||||||
Amounts due from subsidiaries and VIEs | 866,102 | 895,041 | 140,451 | |||||||||
Prepayments and other current assets | 5,434 | 3,255 | 511 | |||||||||
Short-term investment | 64,910 | 6,759 | 1,061 | |||||||||
Total current assets | 939,334 | 905,629 | 142,113 | |||||||||
Non-current assets: | ||||||||||||
Investment in equity fund | 5,711 | 5,580 | 876 | |||||||||
Total non-current assets | 5,711 | 5,580 | 876 | |||||||||
Total assets | 945,045 | 911,209 | 142,989 | |||||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||||
Current liabilities: | ||||||||||||
Payables to subsidiaries and VIEs | 3,415 | 3,409 | 535 | |||||||||
Accrued expenses and other current liabilities | 1,543 | 8,931 | 1,401 | |||||||||
Total current liabilities | 4,958 | 12,340 | 1,936 | |||||||||
Non-current liabilities: | ||||||||||||
Investment deficit in subsidiaries and VIEs | 1,651,038 | 1,530,855 | 240,224 | |||||||||
Other non-current liabilities | 1,612 | 0 | 0 | |||||||||
Total non-current liabilities | 1,652,650 | 1,530,855 | 240,224 | |||||||||
Total liabilities | 1,657,608 | 1,543,195 | 242,160 | |||||||||
Shareholders’ deficit | ||||||||||||
Class A ordinary shares (US$0.001 par value; 200,000,000 shares authorized; 29,926,647 and 30,408,054 shares issued and outstanding as of December 31, 2020 and 2021, respectively) | 212 | 215 | 34 | |||||||||
Class B ordinary shares (US$0.001 par value; 25,000,000 shares authorized, 19,675,674 shares issued and outstanding as of December 31, 2020 and 2021, respectively) | 121 | 121 | 19 | |||||||||
Subscriptions receivable from founding shareholders | (201 | ) | (279 | ) | (44 | ) | ||||||
Treasury stock (US$0.001 par value; 781,011 shares as of December 31, 2020 and December 31, 2021, respectively) | (15,327 | ) | (15,327 | ) | (2,405 | ) | ||||||
Additional paid-in capital | 1,198,852 | 1,221,834 | 191,733 | |||||||||
Accumulated other comprehensive income | 10,256 | 8,019 | 1,258 | |||||||||
Accumulated deficit | (1,906,476 | ) | (1,846,569 | ) | (289,766 | ) | ||||||
Total shareholders’ deficit | (712,563 | ) | (631,986 | ) | (99,171 | ) | ||||||
Total liabilities and shareholders’ deficit | 945,045 | 911,209 | 142,989 | |||||||||
As of December 31, | ||||||||||||
2019 | 2020 | |||||||||||
RMB | RMB | US$ (Note 2 (e)) | ||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | 2,028 | 2,888 | 443 | |||||||||
Amounts due from subsidiaries and VIEs | 892,324 | 866,102 | 132,736 | |||||||||
Prepayments and other current assets | 12,851 | 5,434 | 833 | |||||||||
Short-term investment | 139,524 | 64,910 | 9,948 | |||||||||
Total current assets | 1,046,727 | 939,334 | 143,960 | |||||||||
Non-current assets: | ||||||||||||
Investment in equity fund | 5,919 | 5,711 | 875 | |||||||||
Total non-current assets | 5,919 | 5,711 | 875 | |||||||||
Total assets | 1,052,646 | 945,045 | 144,835 | |||||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||||
Current liabilities: | ||||||||||||
Payables to subsidiaries and VIEs | 3,209 | 3,415 | 523 | |||||||||
Accrued expenses and other current liabilities | 1,618 | 1,543 | 236 | |||||||||
Total current liabilitie s | 4,827 | 4,958 | 759 | |||||||||
Non-current liabilities: | ||||||||||||
Investment payables to subsidiaries and VIEs | 1,369,890 | 1,651,038 | 253,034 | |||||||||
Other non-current liabilities | 2,734 | 1,612 | 247 | |||||||||
Total non-current liabilities | 1,372,624 | 1,652,650 | 253,281 | |||||||||
Total liabilities | 1,377,451 | 1,657,608 | 254,040 | |||||||||
Shareholders’ deficit | ||||||||||||
Class A ordinary shares (US$0.001 par value; 200,000,000 shares authorized; 29,580,351 and 29,926,647 sharesiss ued and | 208 | 212 | 32 | |||||||||
Class B ordinary shares (US$0.001 par value; 25,000,000 shares authorized, 19,675,674 shares issued and outstanding as of December 31, 2019 and 2020, respectively) | 121 | 121 | 19 | |||||||||
Subscriptions receivable from founding shareholders | (122 | ) | (201 | ) | (31 | ) | ||||||
Treasury stock (US$0.001 par value; 591,200 and 781,011 shares as of December 31, 2019 and December 31, 2020, respectively) | (10,730 | ) | (15,327 | ) | (2,349 | ) | ||||||
Additional paid-in capital | 1,167,884 | 1,198,852 | 183,732 | |||||||||
Accumulated other comprehensive income | 29,483 | 10,256 | 1,572 | |||||||||
Accumulated deficit | (1,511,649 | ) | (1,906,476 | ) | (292,180 | ) | ||||||
Total shareholders’ deficit | (324,805 | ) | (712,563 | ) | (109,205 | ) | ||||||
Total liabilities and shareholders’ deficit | 1,052,646 | 945,045 | 144,835 | |||||||||
For the years ended December 31, | ||||||||||||||||
2018 | 2019 | 2020 | ||||||||||||||
RMB | RMB | RMB | US$ (Note 2 (e)) | |||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative expense s | (5,807 | ) | (11,787 | ) | (12,549 | ) | (1,922 | ) | ||||||||
Total operating expenses | (5,807 | ) | (11,787 | ) | (12,549 | ) | (1,922 | ) | ||||||||
Loss from operations | (5,807 | ) | (11,787 | ) | (12,549 | ) | (1,922 | ) | ||||||||
Interest income | — | 6,280 | 2,797 | 429 | ||||||||||||
Investment income | 48 | 87 | — | 0 | ||||||||||||
Other loss, net | (1 | ) | (46 | ) | — | 0 | ||||||||||
Loss from subsidiaries and VIEs | (482,306 | ) | (569,315 | ) | (385,075 | ) | (59,015 | ) | ||||||||
Loss before provision for income taxes | (488,066 | ) | (574,781 | ) | (394,827 | ) | (60,508 | ) | ||||||||
Provision for income taxes | 0 | 0 | 0 | 0 | ||||||||||||
Net loss | (488,066 | ) | (574,781 | ) | (394,827 | ) | (60,508 | ) | ||||||||
Series A Preferred share redemption value accretion | (1,978 | ) | — | 0 | — | |||||||||||
Series B Preferred share redemption value accretion | (10,140 | ) | — | 0 | — | |||||||||||
Series C Preferred share redemption value accretion | (15,899 | ) | — | 0 | — | |||||||||||
Net loss attributable to ordinary shareholders | (516,083 | ) | (574,781 | ) | (394,827 | ) | (60,508 | ) | ||||||||
Net loss | (488,066 | ) | (574,781 | ) | (394,827 | ) | (60,508 | ) | ||||||||
Other comprehensive income/(loss) | ||||||||||||||||
—Foreign currency translation adjustment, net of nil tax | 16,403 | 13,165 | (19,227 | ) | (2,947 | ) | ||||||||||
Comprehensive loss | (471,663 | ) | (561,616 | ) | (414,054 | ) | (63,455 | ) | ||||||||
For the years ended December 31, | ||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||
RMB | RMB | RMB | US$ (Note 2 (e)) | |||||||||||||
Operating expenses: | ||||||||||||||||
General and administrative expenses | (11,787 | ) | (12,549 | ) | (12,640 | ) | (1,985 | ) | ||||||||
Total operating expenses | (11,787 | ) | (12,549 | ) | (12,640 | ) | (1,985 | ) | ||||||||
Loss from operations | (11,787 | ) | (12,549 | ) | (12,640 | ) | (1,985 | ) | ||||||||
Interest income | 6,280 | 2,797 | 47 | 7 | ||||||||||||
Investment income | 87 | 0 | — | 0 | ||||||||||||
Other (loss)/income, net | (46 | ) | 0 | 2,149 | 338 | |||||||||||
(Loss)/income from subsidiaries and VIEs | (569,315 | ) | (385,075 | ) | 70,351 | 11,040 | ||||||||||
(Loss)/income before provision for income taxes | (574,781 | ) | (394,827 | ) | 59,907 | 9,400 | ||||||||||
Provision for income taxes | 0 | 0 | 0 | 0 | ||||||||||||
Net (loss)/income | (574,781 | ) | (394,827 | ) | 59,907 | 9,400 | ||||||||||
Net (loss)/income attributable to ordinary shareholders | (574,781 | ) | (394,827 | ) | 59,907 | 9,400 | ||||||||||
Net (loss)/income | (574,781 | ) | (394,827 | ) | 59,907 | 9,400 | ||||||||||
Other comprehensive income/(loss) | ||||||||||||||||
—Foreign currency translation adjustment, net of nil tax | 13,165 | (19,227 | ) | (2,237 | ) | (351 | ) | |||||||||
Comprehensive (loss)/income | (561,616 | ) | (414,054 | ) | 57,670 | 9,049 | ||||||||||
For the years ended December 31, | ||||||||||||||||
2018 | 2019 | 2020 | ||||||||||||||
RMB | RMB | RMB | US$ (Note 2 (e)) | |||||||||||||
Cash flows used in operating activities | (6,722 | ) | (11,422 | ) | (13,448 | ) | (2,061 | ) | ||||||||
Cash flows (used in)/provided by investing activities | (362,380 | ) | (119,440 | ) | 18,176 | 2,786 | ||||||||||
Cash flows provided by/(used in) financing activities | 438,923 | (16,344 | ) | 4,285 | 657 | |||||||||||
Effect of exchange rate changes on cash | 360 | 2,121 | (8,153 | ) | (1,250 | ) | ||||||||||
Net increase/(decrease) in cash and cash equivalents | 70,181 | (145,085 | ) | 860 | 132 | |||||||||||
Cash and cash equivalents, beginning of year | 76,932 | 147,113 | 2,028 | 311 | ||||||||||||
Cash and cash equivalents, end of year | 147,113 | 2,028 | 2,888 | 443 | ||||||||||||
For the years ended December 31, | ||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||
RMB | RMB | RMB | US$ (Note 2 (e)) | |||||||||||||
Cash flows used in operating activities | (11,422 | ) | (13,448 | ) | (2,778 | ) | (436 | ) | ||||||||
Cash flows (used in)/provided by investing activities | (119,440 | ) | 18,176 | 1,736 | 272 | |||||||||||
Cash flows (used in)/provided by financing activities | (16,344 | ) | 4,285 | 1,145 | 180 | |||||||||||
Effect of exchange rate changes on cash | 2,121 | (8,153 | ) | (2,417 | ) | (379 | ) | |||||||||
Net (decrease)/increase in cash and cash equivalents | (145,085 | ) | 860 | (2,314 | ) | (363 | ) | |||||||||
Cash and cash equivalents, beginning of year | 147,113 | 2,028 | 2,888 | 453 | ||||||||||||
Cash and cash equivalents, end of year | 2,028 | 2,888 | 574 | 90 | ||||||||||||