Annual and Transition Report (foreign Private Issuer) (20-f)

falseFY00017332982131715true2020-012020-01Cayman IslandsBritish Virgin Islands (“BVI”)For the year ended December 31, 2019, 2020 and 2021, the service fee of RMB473.2 million, RMB250.9 million and RMB39.8 million charged to related parties represents advertising and marketing services provided to companies under the common control of the founder, to help promote these companies’ online applications, which were developed in late 2018. As of December 31, 2020 and 2021, the amounts due from related parties that pertains to accounts receivable from related party revenues generated was RMB368.5 million and RMB246.5 million respectively. Out of the accounts receivable from related parties of RMB259.9 million as of December 31, 2021, a total of RMB204.0 million of the balance is overdue. A majority amount of RMB185.9 million of the overdue balance was collected as of this report date. Although the overdue receivables were settled after the due date, and the settlement of the remaining receivables may still be after the due date, as these companies are under the common control of the founder and they have demonstrated an ability to continuously pay off their balances, the Company did not view this delay in payment as a sign of collectability risk. For the revenue recognized in 2021, payments have not been received as the balances as of December 31, 2021 are still within the nine to twelve months payment terms and expect to be settled within the payment terms. As of December 31, 2020, in addition to accounts receivable from revenues generated there was also RMB15.1 million which was a fee that the Company prepaid to a related party to place advertisements on behalf of their customers on the related party platform. The balances are settled and recorded as cost of revenues as the advertisement services are provided, and the prepayment was fully utilized during 2021.In 2019 the Group entered into CPM (cost per impression) arrangements with media platforms under the common control of the founder for the Group’s customer’s advertisement placement. The total service fee charged from related parties amounted to RMB35.6 million, RMB29.2 million and RMB103.3 million for the years ended December 31, 2019, 2021 and 2021, respectively.In July 2019, the Company invested RMB3.0 million in a game developing company which the founder’s controlled entity has significant influence in. The investment was measured using the measurement alternative recorded at cost less any impairment since it does not have a readily determinable fair value. The investment was fully impaired as of December 31, 2021 (Note 6). In 2019 the Group entered into a game cooperation agreement with this company and the Group is the principal in the arrangement. The total service fee represents the amount paid to this company in relation to the arrangement.For the years ended December 31, 2019, 2020 and 2021, the service fee charged from related parties represented the expense charged from companies under common control of the founder which provided the Group advertising and marketing related promotion services.The Company borrowed an interest free loan of RMB13.0 million from an entity under common control of the founder in December 2020. The loan was repaid in the first quarter of 2021.The Company’s investments in non-marketable equity securities primarily consist of an investment in an equity fund (see below) and small, non-controlling investments in companies for which the Company has equity ownership with preferential rights but cannot exert significant influence. During 2021, equity securities of RMB8.0 million without readily determinable fair value were either disposed or impaired and had nil carrying value as of December 31, 2021. During the first quarter of 2020, the Company subscribed to shares of an equity fund as a limited partner, with an initial cost of RMB106.0 million. The investment in the fund is nonredeemable for two years after the subscription date and the directors of the fund can extend the non-redemption period for another two years. The investment is measured under the NAV practical expedient. Unrealized losses of RMB54.4 million and RMB1.2 million was recorded in investment income (loss) in the consolidated statements of comprehensive loss for the years ended December 31, 2020 and 2021, respectively. 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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

☐	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 For the fiscal year ended December 31, 2021

☐	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

Date of event requiring this shell company report

For the transition period from to

Commission file number 001-38644

Qutoutiao Inc.

(Exact name of Registrant as specified in its charter)

Cayman Islands

(Exact name of Registrant as specified in its charter)

Building No. 8, Shanghai Pudong Software Park

519 Yi De Road, Pudong New Area

Shanghai 200124

People’s Republic of China

(Address of principal executive offices)

Mr. Xiaolu Zhu, Chief Financial Officer

Telephone:

+86-21-5889-0398

Email: ir@qutoutiao.net

At the address of the Company set forth above

(Name, Telephone,

E-mail

and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
American Depositary Shares, every two representing five Class A ordinary shares	QTT	NASDAQ Global Select Market
Class A Ordinary Shares, par value US$0.0001 per share*	N/A	NASDAQ Global Select Market

*	Not for trading, but only in connection with the listing on the NASDAQ Global Select Market of American depositary shares.

Securities registered or to be registered pursuant to Section 12(g)

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report

43,920,018 Class A ordinary shares were outstanding as of December 31, 2021

32,937,193 Class B ordinary shares were outstanding as of December 31, 2021

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in

Rule 12b-2

of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒	Non-accelerated filer	☐

				Emerging growth company	☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act ☒

†	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.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark which basis of accounting the registration has used to prepare the financial statements included in this filing:


U.S. GAAP ☒	International Financial Reporting Standards as issued		Other ☐
	by the International Accounting Standards Board	☐

If “Other” has been checked in response to the previous question, indicate by check mark which consolidated financial statement item the registrant has elected to follow ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in

Rule 12b-2

of the Securities Exchange Act of 1934) ☐ Yes ☒ No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court ☐ Yes ☐ No

Table of Contents


			Page
PART I.				4
	ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS		4
	ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE		4
	ITEM 3.	KEY INFORMATION		4
	ITEM 4.	INFORMATION ON THE COMPANY		62
	ITEM 4A.	UNRESOLVED STAFF COMMENTS		96
	ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS		96
	ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		114
	ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		123
	ITEM 8.	FINANCIAL INFORMATION		124
	ITEM 9.	THE OFFER AND LISTING		125
	ITEM 10.	ADDITIONAL INFORMATION		126
	ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		133
	ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES		133

PART II.				136
	ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES		136
	ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS		136
	ITEM 15.	CONTROLS AND PROCEDURES		136
	ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT		137
	ITEM 16B.	CODE OF ETHICS		137
	ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES		137
	ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES		137
	ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS		138
	ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT		138
	ITEM 16G.	CORPORATE GOVERNANCE		138
	ITEM 16H.	MINE SAFETY DISCLOSURE		138
	ITEM 16I.	DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS		138

PART III.				139
	ITEM 17.	FINANCIAL STATEMENTS		139
	ITEM 18.	FINANCIAL STATEMENTS		139
	ITEM 19.	EXHIBITS		139

Table of Contents

CONVENTIONS THAT APPLY TO THIS ANNUAL REPORT ON

FORM 20-F

Except where the context otherwise requires, references in this annual report to:

•

“installed users” are to the aggregate number of unique mobile devices that have downloaded and launched the Group’s relevant mobile application at least once;

•

“ADSs” are to American depositary shares, with every four ADSs representing one Class A ordinary share, and “ADRs” are to American depositary receipts that evidence ADSs;

•

“CAGR” are to compound annual growth rate;

•

“China” and the “PRC” are to the People’s Republic of China, excluding, for the purposes of this annual report only, Taiwan, the Hong Kong Special Administrative Region and the Macao Special Administrative Region;

•

“DAUs” are to the number of unique mobile devices that accessed the Group’s relevant mobile application on a given day. “Combined average DAUs” for a particular period is the average of the DAUs for all of the Group’s mobile applications on each day during that period;

•

“the Group” are to Qutoutiao Inc., the Group VIEs and their respective subsidiaries;

•

“Group VIEs” are to the variable interest entities, or VIEs, that are controlled by us through contractual arrangements and are consolidated into the Group’s consolidated financial statements in accordance with U.S. GAAP;

•

“Key WFOEs” are to material wholly foreign-owned entities of Qutoutiao Inc., namely Shanghai Quyun Network Technology Co., Ltd. and Shanghai Zhicao Information Technology Co., Ltd.;

•

“Key VIEs” are to material variable interest entities of Qutoutiao Inc., namely Shanghai Jifen Culture Communications Co., Ltd., Shanghai Big Rhinoceros Horn Information Technology Co., Ltd., Anhui Zhangduan Internet Technology Co., Ltd., Beijing Churun Technology Co., Ltd., Hubei Rapid Information Technology Co., Ltd., and Huaian Beixia Information Technology Co., Ltd.;

•

“MAUs” are to the number of unique mobile devices that accessed the Group’s relevant mobile application in a given month. “Combined average MAUs” for a particular period is the average of the MAUs for all of the Group’s mobile applications in each month during that period;

•

“oCPC” are to optimized

cost-per-click

as basis for charging the Group’s advertising services;

•

“oCPM” are to optimized

cost-per-thousand-impressions

as basis for charging the Group’s advertising services;

•

“Qutoutiao,” “we,” “us,” “our company” and “our” are to Qutoutiao Inc., its subsidiaries, and, in the context of describing its operations and consolidated financial information, the Group VIEs.

•

“R&D” are to research and development;

•

“registered users” are to users that have registered accounts on the Group’s relevant mobile application;

•

“RMB” or “Renminbi” are to the legal currency of China;

•

“lower-tier cities” are to cities in China that are not

tier-1

and

tier-2

cities;

•

“tier-1

and

tier-2

cities” refer to

(i) tier-1

cities in China, which are Beijing, Shanghai, Guangzhou and Shenzhen and

(ii) tier-2

cities in China, which are Hangzhou, Nanjing, Jinan, Chongqing, Qingdao, Dalian, Ningbo, Xiamen, Tianjin, Chengdu, Wuhan, Harbin, Shenyang, Xi’an, Changchun, Changsha, Fuzhou, Zhengzhou, Shijiazhuang, Suzhou, Foshan, Dongguan, Wuxi, Yantai, Taiyuan, Hefei, Kunming, Nanchang, Nanning, Tangshan, Wenzhou and Zibo; and

•

“US$,” “U.S. dollars,” or “dollars” are to the legal currency of the United States.

On December 10, 2021, we effected a change of the ratio of our ADSs to Class A ordinary shares from the then ADS ratio of four (4) ADSs to one (1) Class A ordinary share to a new ADS ratio of two (2) ADS representing five (5) Class A ordinary shares. Unless otherwise indicated, ADSs and per ADS amount in this annual report have been retroactively adjusted to reflect the change in ratio for all periods presented.

Unless specifically indicated otherwise or unless the context otherwise requires, all references to our ordinary shares exclude ordinary shares issuable upon the exercise of outstanding options with respect to our ordinary shares under our share incentive plan.

This annual report contains translations between Renminbi and U.S. dollars solely for the convenience of the reader. The translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report were made at a rate of RMB6.3726 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 30, 2021. We make no representation that the Renminbi or U.S. dollar amounts referred to in this annual report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.

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Unless the context indicates otherwise, all share and per share data in this annual report have given effect to a share split in September 2017 in which each one of the previously issued ordinary shares was split into 10,000 ordinary shares.

This annual report on Form

20-F

includes the Group’s audited consolidated financial statements for the years ended December 31, 2019, 2020 and 2021, and as of December 31, 2020 and December 31, 2021.

Our ADSs are listed on the NASDAQ Global Select Market under the symbol “QTT.”

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FORWARD-LOOKING INFORMATION

This annual report on

Form 20-F

contains statements of a forward-looking nature. All statements other than statements of historical facts are forward-looking statements. These forward-looking statements are made under the “safe harbor” provision under Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and as defined in the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, uncertainties and other factors that may cause the Group’s actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. These forward-looking statements relate to, among others:

•

the Group’s goal and strategies;

•

the Group’s ability to maintain and strengthen its position as a leader amongst mobile content platform companies in China’s mobile content industry;

•

the Group’s expansion plans;

•

the Group’s ability to monetize through advertising and other products and services that it plans to introduce;

•

the Group’s future business development, financial condition and results of operations, including its expectations regarding the impact of the

COVID-19

pandemic on the Group’s business, financial condition and results of operations;

•

PRC laws, regulations, and policies relating to the Internet and Internet content providers; and

•

general economic and business conditions.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect the Group’s financial condition, results of operations, business strategy and financial needs.

You should read these statements in conjunction with the risks disclosed in “Item 3. Key Information—D. Risk Factors” of this annual report and other risks outlined in our other filings with the Securities and Exchange Commission, or the SEC. Moreover, the Group operates in an emerging and evolving environment. New risks may emerge from time to time, and it is not possible for our management to predict all risks, nor can we assess the impact of such risks on the Group’s business or the extent to which any risk, or combination of risks, may cause actual results to differ materially from those contained in any forward-looking statements. The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this annual report and the documents that we have referred to in this annual report, completely and with the understanding that the Group’s actual future results may be materially different from what we expect.

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PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3.

KEY INFORMATION

Our Corporate Structure and Contractual Arrangements

Qutoutiao Inc. is not a Chinese operating company but a Cayman Islands holding company with operations primarily conducted (i) through contractual arrangements with certain variable interest entities, or the Group VIEs, in China and (ii) by our subsidiaries in China. Qutoutiao Inc. does not own equity interests in the Group VIEs, and does not conduct business operations directly. PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in certain value-added telecommunication services, internet audio-video program services and certain other businesses. Therefore, we operate such businesses in China through the Group VIEs and their subsidiaries, and rely on contractual arrangements among our PRC subsidiaries, the Group VIEs and their respective shareholders to control the business operations of the Group VIEs. Investors in our ADSs do not hold equity interests in the Group’s operating entities in China, but instead hold equity interests in Qutoutiao Inc., a Cayman Islands holding company. See “Item 4. Information on the Company—D. Organizational Structure” for a diagram illustrating our corporate structure. As used in this annual report, “Qutoutiao,” “we,” “us,” “our company” or “our” refers to Qutoutiao Inc., its subsidiaries, and, in the context of describing its operations and consolidated financial information, the Group VIEs; “the Group” refers to Qutoutiao Inc., the Group VIEs and their respective subsidiaries; and “the Group VIEs” refer to the variable interest entities that conduct our business operations in China.

The contractual arrangements among our PRC subsidiaries, the Group VIEs and their respective shareholders collectively enable us to:

•

exercise effective control over the Group VIEs and their subsidiaries;

•

receive substantially all the economic benefits of the Group VIEs; and

•

have an exclusive option to purchase all or part of the equity interests and assets of the Group VIEs when and to the extent permitted by PRC law.

As a result of the contractual arrangements, Qutoutiao Inc. and certain of its subsidiaries are considered the primary beneficiaries of the Group VIEs for accounting purposes, and we have consolidated the financial results of the Group VIEs in the Group’s consolidated financial statements. For more details of the contractual arrangements, see “Item 4. Information on the Company—D. Organizational Structure—Contractual Arrangements among Our Key WFOEs, the Key VIEs and Their Respective Shareholders.” Terms contained in each set of contractual arrangements with the Group VIEs are substantially similar.

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We are subject to risks associated with our contractual arrangements with the Group VIEs and their shareholders. Our Cayman Islands holding company and its investors may never hold equity interests in the Group VIEs. The contractual arrangements may be less effective than equity ownership in providing us with control over the Group VIEs and we may incur substantial costs to enforce the terms of the arrangements. If the Group VIEs or their shareholders fail to perform their respective obligations under these contractual arrangements, our ability, as a Cayman Islands holding company, to enforce these contractual arrangements may be limited. The contractual arrangements have not been tested in a court of law in China. There are very few precedents and little formal guidance as to how contractual arrangements in the context of a variable interest entity should be interpreted or enforced under PRC law. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over the Group VIEs, and our ability to conduct the Group’s business and the Group’s results of operations and financial condition may be materially and adversely affected. See “—D. Risk Factors—Risks Relating to Our Corporate Structure—We rely on contractual arrangements with the Group VIEs and their respective shareholders to operate the Group’s business, which may be less effective than equity ownership in providing operational control and otherwise materially and adversely affect the Group’s business” and “—The shareholders of the Group VIEs may have potential conflicts of interest with us, which may materially and adversely affect the Group’s business, results of operations and financial condition.”

There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules with regard to our corporate structure and the contractual arrangements with the Group VIEs and their shareholders. If Chinese regulatory authorities disallow such structure and arrangements, it would have a material effect on our operations and cause the value of our ADSs to significantly decline or become worthless. See “—D. Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government deems that the contractual arrangements in relation to the Group 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. In addition, our ADSs may significantly decline in value or become worthless if we are unable to assert our contractual control over the assets of the Group VIEs” and “—Substantial uncertainties exist with respect to whether the controlling of PRC onshore variable interest entities by foreign investors via contractual arrangements will be recognized as ‘foreign investment’ and how it may impact the viability of the Group’s current corporate structure and operations.”

The Group also faces various legal and operational risks and uncertainties associated with being based in or having its operations primarily in China and the country’s complex and evolving laws and regulations. For example, the Group faces risks associated with regulatory approvals on offerings conducted overseas by and foreign investment in China-based issuers, the use of the Group VIEs, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, which may impact the Group’s ability to conduct certain businesses, accept foreign investments, or list on a U.S. or other foreign exchange outside of China. These risks could result in a material adverse change in the Group’s operations and the value of our ADSs, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. See “—D. Risks Factors—Risks Relating to Doing Business in China.”

Holding Foreign Companies Accountable Act

The Holding Foreign Companies Accountable Act, or the HFCAA, was enacted in December 2020 and may affect our ability to maintain our listing on NASDAQ. Pursuant to the HFCAA, if the SEC determines that we are an issuer, or a covered issuer, that has filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the U.S. Public Company Accounting Oversight Board, or the PCAOB, for three consecutive years beginning in 2021, the SEC shall prohibit our ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. As stated in its report dated December 16, 2021, the PCAOB has determined that it is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor as an independent registered public accounting firm. As a result, our ADSs may be prohibited from trading or delisted under the HFCAA. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. See “—D. Risks Factors—Risks Relating to Doing Business in China—Our ADSs will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China, or 2023 if proposed changes to the law are enacted. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

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Permissions and Approvals

As of the date of this annual report, the Group has obtained all material permissions and approvals that are, or may be, required for the Group’s main operations in China, except as disclosed in “—D. Risk Factors—Risk Relating to Our Business and Industry—The Group’s inability to fully comply with Audio-visual Program Provisions may expose it to administrative sanctions, which would materially and adversely affect the Group’s business, results of operations and financial condition” and “—The Group may be adversely affected by the complexity, uncertainties and changes in PRC regulation of Internet businesses and companies, including limitations on its ability to own key assets such as its mobile applications.” No material permission or approval for the Group has been denied by relevant authorities in China. See “Item 4. Information on the Company—C. Regulations—Permissions and Licenses Requirements” for more details.

In addition, we, our PRC subsidiaries and the Group VIEs may be required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, and may be required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, in connection with any future offering and listing in an overseas market. As of the date of this annual report, we have not been subject to any cybersecurity review made by the CAC. See “—D. Risks Factors—Risks Relating to Doing Business in China—The approval of and the filing with the China Securities Regulatory Commission, or the CSRC, or other PRC government authorities may be required in connection with our future offshore offerings under PRC law, which may hinder our ability to continue to offer securities to investors offshore; in addition, the regulation of the CSRC or other PRC regulatory agencies establish complex procedures for acquisitions conducted by foreign investors that could make it more difficult for us to grow through acquisitions” and “—Risks Relating to Our Industry and Business—We may be subject to cybersecurity review by regulatory authorities of the PRC in the future.”

Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future, and may not be able to maintain or renew our current licenses, permits, filings or approvals. In addition, rules and regulations in China can change quickly with little advance notice. Uncertainties due to evolving laws and regulations could impede the ability of a China-based issuer, such as us, to obtain or maintain permits or licenses required to conduct business in China. In the absence of required permits or licenses, governmental authorities could impose material sanctions or penalties on us. See “—D. Risks Factors—Risks Relating to Doing Business in China—Changes in the political and economic policies of the PRC government may materially and adversely affect the Group’s business, results of operations and financial condition and may result in the Group’s inability to sustain our growth and expansion strategies. The PRC government may intervene or influence our operations at any time, which could result in a material change in the Group’s operations and/or the value of our ADSs. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder the Group’s ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless” and “—There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. In addition, rules and regulations in China can change quickly with little advance notice.”

Cash Transfers Through Our Organization

Qutoutiao Inc. is a holding company with no material operations of its own. We conduct our operations primarily (i) through contractual arrangements with the Group VIEs in China and (ii) by our subsidiaries in China. As a result, Qutoutiao Inc.’s ability to pay dividends depends upon dividends paid by our PRC subsidiaries and remittances from the Group VIEs. If our PRC subsidiaries or the Group VIEs incur debt on their own in the future, the instruments governing their debt may restrict their ability to pay dividends or make other distributions or remittances to us. In addition, current PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders only out of their retained earnings, if any, determined in accordance with PRC accounting standards and regulations. Furthermore, each of our PRC subsidiaries and the Group VIEs is required to set aside at least 10% of its net income each year to fund certain statutory reserves until the cumulative amount of such reserves reaches 50% of its registered capital. These reserves, together with the registered capital, are not distributable as cash dividends. For more details, see “—D. Risks Factors—Risks Relating to Doing Business in China—We rely to a significant extent on dividends and other distributions on equity paid by our principal operating subsidiaries and the Group VIEs to fund offshore cash and financing requirements. Any limitation on the ability of our PRC operating subsidiaries or the Group VIEs to make payments to us could materially and adversely affect our ability to conduct the Group’s business.”

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Set forth in the table below is a summary of cash transfers that have occurred between our subsidiaries and the Group VIEs for the years ended December 31, 2019, 2020 and 2021, respectively.


	Year ended December 31,
	2019		2020			2021
	(RMB in thousands)
Cash paid by the Group VIEs to our subsidiaries under service agreements		—		(297,510	)		(756,962	)
Cash received by the Group VIEs from our subsidiaries under service agreements		67,419		—			188,798
Cash received by the Group VIEs from our subsidiaries for intra-Group financing		2,859,506		462,233			137,515

For the years ended December 31, 2019, 2020 and 2021, no subsidiaries or Group VIEs paid dividends or made other distributions to the Cayman Islands holding company, and no dividends or distributions were paid or made to U.S. investors. For the years ended December 31, 2019, 2020 and 2021, no assets were transferred between our subsidiaries and the Group VIEs other than the cash transfers set forth in the table above. We do not have any present plan to pay any dividends on our shares in the foreseeable future. We intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” However, if our PRC subsidiaries or Group VIEs declare and distribute profits to us, such payments will be subject to withholding tax, which will increase our tax liability and reduce the amount of cash available to us. For PRC and United States federal income tax considerations in connection with an investment in our ADSs, see “Item 10. Additional Information—E. Taxation.” We plan to continue to determine the amount of service fee and payment method with the Group VIEs and their shareholders through bona fide negotiation, and settle fees under the contractual arrangements accordingly in the future.

In addition, our PRC subsidiaries, the Group VIEs and their subsidiaries generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends to us or our ability to pay dividends in foreign currencies to our investors. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—We are subject to restrictions on currency exchange.”

Financial Information Related to the Group VIEs

We do not own any equity interest in the Group VIEs that are consolidated in the Group’s financial statements. The Group consolidates the results of the Group VIEs and their subsidiaries under U.S. GAAP through our contractual arrangements with the Group VIEs and their respective shareholders. For more details of such contractual arrangements, see “Item 4. — Information on the Company — D. Organizational Structure — Contractual Arrangements among Our Key WFOEs, the Key VIEs and Their Respective Shareholders.”

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Condensed Consolidated Schedule of Results of Operation

The following table presents the Group’s condensed consolidated schedules of results of operations for our holding company, Qutoutiao Inc., our wholly foreign-owned entities that are the primary beneficiaries of the Group VIEs under U.S. GAAP, or the Primary Beneficiaries of the Group VIEs, our other subsidiaries that are not the Primary Beneficiaries of the Group VIEs, or Other Subsidiaries, and the Group VIEs and their subsidiaries that the Group consolidates for the periods presented:


	For the Year Ended December 31, 2019
	Qutoutiao Inc.			Other subsidiaries			Primary Beneficiaries of the Group VIEs			Group VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals

	(RMB in thousands)
Revenues:
Third-party revenues		—			1			10,126			5,559,954			—			5,570,081
Intra-Group revenues (2)		—			—			35,648			67,419			(103,067	)		—

Total revenues		—			1			45,774			5,627,373			(103,067	)		5,570,081
Cost of revenues:
Third-party cost of revenues		—			(561	)		(124,439	)		(1,515,632	)		—			(1,640,632	)
Intra-Group cost of revenues (2)		—			—			(67,419	)		(35,648	)		103,067			—

Total cost of revenues		—			(561	)		(191,858	)		(1,551,280	)		103,067			(1,640,632	)

Gross profit		—			(560	)		(146,084	)		4,076,093			—			3,929,449

Operating expenses:
Third-party operating expenses (1)		(287,027	)		(15,412	)		(91,299	)		(6,561,213	)		271,978			(6,682,973	)

Total operating expenses		(287,027	)		(15,412	)		(91,299	)		(6,561,213	)		271,978			(6,682,973	)

Other operating income/(expense)		—			—			19,211			11,081			—			30,292
Loss from Operations		(287,027	)		(15,972	)		(218,172	)		(2,474,039	)		271,978			(2,723,232	)
Non-operating income/(expense)		17,393			3,796			7,831			9,787			—			38,807

Loss before income tax expense		(269,634	)		(12,176	)		(210,341	)		(2,464,252	)		271,978			(2,684,425	)
Income tax benefits/expense		—			—			(32	)		(4,811	)		—			(4,843	)
Loss from subsidiaries and VIEs (1)		(2,419,047	)		(2,679,436	)		(2,469,063	)		—			7,567,546			—

Net Loss		(2,688,681	)		(2,691,612	)		(2,679,436	)		(2,469,063	)		7,839,524			(2,689,268	)
Less: Net loss attributable to the noncontrolling interest shareholders		—			587			—			—			—			587
Net loss attributable to Qutoutiao Inc.		(2,688,681	)		(2,691,025	)		(2,679,436	)		(2,469,063	)		7,839,524			(2,688,681	)

Accretion to convertible redeemable preferred shares redemption value		(20,548	)		—			—			—			—			(20,548	)

Net loss attributable to Qutoutiao Inc.’s ordinary shareholders		(2,709,229	)		(2,691,025	)		(2,679,436	)		(2,469,063	)		7,839,524			(2,709,229	)

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	For the Year Ended December 31, 2020
	Qutoutiao Inc.			Other subsidiaries			Primary Beneficiaries of the Group VIEs			Group VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals

	(RMB in thousands)
Revenues:
Third-party revenues		—			—			1,513			5,283,682			—			5,285,195
Intra-Group revenues (2)		—			—			560,789			—			(560,789	)		—

Total revenues		—			—			562,302			5,283,682			(560,789	)		5,285,195
Cost of revenues:
Third-party cost of revenues		—			(189	)		(198,011	)		(1,476,216	)		—			(1,674,416	)
Intra-Group cost of revenues (2)		—			—			—			(15,462	)		15,462			—

Total cost of revenues		—			(189	)		(198,011	)		(1,491,678	)		15,462			(1,674,416	)

Gross profit		—			(189	)		364,291			3,792,004			(545,327	)		3,610,779
Operating expenses:
Third-party operating expenses (1)		(471,730	)		(9,706	)		(346,422	)		(4,357,603	)		463,214			(4,722,247	)
Intra-Group operating expenses (2)		—			—			—			(545,327	)		545,327			—

Total operating expenses		(471,730	)		(9,706	)		(346,422	)		(4,902,930	)		1,008,541			(4,722,247	)

Other operating income/(expense)		—			—			56,300			22,999			—			79,299
Loss from Operations		(471,730	)		(9,895	)		74,169			(1,087,927	)		463,214			1,032,169
Non-operating income/(expense)		(34,003	)		(31,889	)		168			(8,281	)		—			74,005

Loss before income tax expense		(505,733	)		(41,784	)		74,337			(1,096,208	)		463,214			1,106,174
Income tax benefits/expense		—			—			1,008			—			—			1,008
Loss from subsidiaries and VIEs (1)		(598,706	)		1,020,863			(1,096,208	)		—			2,715,777			—

Net Loss		(1,104,439	)		1,062,647			1,020,863			(1,096,208	)		3,178,991			1,105,116
Less: Net loss attributable to the noncontrolling interest shareholders		—			727			—			—			—			727
Net loss attributable to Qutoutiao Inc.		(1,104,439	)		(1,061,920	)		1,020,863			(1,096,208	)		3,178,991			(1,104,439	)

Accretion to convertible redeemable preferred shares redemption value		(48,277	)		—			—			—			—			(48,277	)
Gain on repurchase of Shares B Convertible Preferred		14,842			—			—			—			—			14,842

Net loss attributable to Qutoutiao Inc.’s ordinary shareholders		(1,137,874	)		(1,061,920	)		1,020,863			(1,096,208	)		3,178,991			(1,137,874	)

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	For the Year Ended December 31, 2021
	Qutoutiao Inc.			Other subsidiaries			Primary Beneficiaries of the Group VIEs			Group VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals

	(RMB in thousands)
Revenues:
Third-party revenues		—			225			2,990			4,336,388			—			4,339,603
Intra-Group revenues (2)		—			—			970,661			188,298			(1,158,959	)		—

Total revenues		—			225			973,651			4,524,686			(1,158,959	)		4,339,603
Cost of revenues:
Third-party cost of revenues		—			(325	)		(303,600	)		(867,701	)		—			(1,171,626	)
Intra-Group cost of revenues (2)		—			—			—			(18,959	)		18,959			—

Total cost of revenues		—			(325	)		(303,600	)		(886,660	)		18,959			(1,171,626	)

Gross profit		—			(100	)		670,051			3,638,026			(1,140,000	)		3,167,977
Operating expenses:
Third-party operating expenses		(208,594	)		(12,210	)		(379,130	)		(4,067,548	)		200,184			(4,467,298	)
Intra-Group operating expenses (2)		—			—			(188,298	)		(951,702	)		1,140,000			—

Total operating expenses		(208,594	)		(12,210	)		(567,428	)		(5,019,250	)		1,340,184			(4,467,298	)

Other operating income/(expense)		—			—			87,439			18,659			—			106,098
Loss from Operations		(208,594	)		(12,310	)		190,062			(1,362,565	)		200,184			(1,193,223	)
Non-operating income/(expense)		(58,313	)		(16,944	)		12,267			22,282			—			(40,708	)

Loss before income tax expense		(266,907	)		(29,254	)		202,329			(1,340,283	)		200,184			(1,233,931	)
Income tax benefits/expense		—			(1	)		(2,918	)		(131	)		—			(3,050	)
Loss from subsidiaries and VIEs (1)		(972,710	)		(1,144,198	)		(1,343,609	)		—			3,460,517			—
Equity in loss of affiliate companies		—			—			—			(3,195	)		—			(3,195	)

Net Loss		(1,239,617	)		(1,173,453	)		(1,144,198	)		(1,343,609	)		3,660,701			(1,240,176	)
Less: Net loss attributable to the noncontrolling interest shareholders		—			559			—			—			—			559
Net loss attributable to Qutoutiao Inc.		(1,239,617	)		(1,172,894	)		(1,144,198	)		(1,343,609	)		3,660,701			(1,239,617	)

Accretion to convertible redeemable preferred shares redemption value		(108,896	)		—			—			—			—			(108,896	)

Net loss attributable to Qutoutiao Inc.’s ordinary shareholders		(1,348,513	)		(1,172,894	)		(1,144,198	)		(1,343,609	)		3,660,701			(1,348,513	)

Note:

(1)

Represents the elimination of investments among Qutoutiao Inc., the Primary Beneficiaries of the Group VIEs, the Other Subsidiaries, and the Group VIEs and their subsidiaries that the Group consolidates. The deficit of investment in subsidiaries and the Group VIEs of Qutoutiao Inc. as of December 31, 2020 have been revised from amounts previously disclosed in the audit report. Share-based compensation expenses are recorded in Qutoutiao Inc., which issued these equity awards, and are also pushed down to the VIEs and subsidiaries. The expenses pushed down to the VIEs and subsidiaries are eliminated upon consolidation to avoid duplication.

(2)	Represents the elimination of the intercompany service charge at the consolidation level.

Condensed Consolidated Schedule of Balance Sheets

The following table presents the Group’s condensed consolidated schedule of financial position for Qutoutiao Inc., the Primary Beneficiaries of the Group VIEs, our Other Subsidiaries, and the Group VIEs and their subsidiaries that the Group consolidates as of the dates presented:

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	As of December 31, 2020
	Qutoutiao Inc.			Other subsidiaries			Primary Beneficiaries of the Group VIEs			Group VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals

	(RMB in thousands)
ASSETS
Current assets:
Cash and cash equivalents		1,933			360,232			120,226			12,084			—			494,475
Restricted cash		—			—			36,000			64,316			—			100,316
Short-term investments		—			36,186			256,497			98,350			—			391,033
Accounts receivable, net		—			—			—			737,789			—			737,789
Amount due from related parties		—			—			15,129			368,465			—			383,594
Prepaid and other current assets		3,619			737			29,866			330,887			—			365,109
Intra-Group receivables due from the Company’s subsidiaries (1)		3,612,625			428,696			5,160,614			1,173,053			(10,374,988	)		—

Total current assets		3,618,177			825,851			5,618,332			2,784,944			(10,374,988	)		2,472,316

Noncurrent assets:
Account receivables, non-current		—			—			—			54,639			—			54,639
Property and equipment, net		—			—			252			16,961			—			17,213
Right-of-use assets, net		—			—			2,210			48,109			—			50,319
Intangible assets		—			—			75,302			7,821			—			83,123
Goodwill		—			—			7,268			—			—			7,268
Long-term Investments		27,589			47,300			—			8,000			—			82,889
Other non-current assets		4,266			—			—			143,825			—			148,091
Investment in subsidiaries and VIEs (2)		—			87,915			—			—			(87,915	)		—

Total noncurrent assets		31,855			135,215			85,032			279,355			(87,915	)		443,542

Total assets		3,650,032			961,066			5,703,364			3,064,299			(10,462,903	)		2,915,858

LIABILITIES
Current liabilities:
Short-term borrowings		—			—			20,000			50,000			—			70,000
Loan from a related party		—			13,050			—			—			—			13,050
Accounts payable		—			—			49,123			399,858			—			448,981
Amount due to related parties		—			—			5,132			4,295			—			9,427
Registered users’ loyalty payable		—			6,447			—			66,180			—			72,627
Advance from advertising customers and deferred revenue		—			—			—			140,776			—			140,776
Salary and welfare payable		—			221			34,176			115,307			—			149,704
Tax payable		—			—			(1,653	)		98,797			—			97,144
Lease liabilities, current		—			—			730			20,030			—			20,760
Accrued liabilities related to users’ loyalty program		—			—			—			100,088			—			100,088
Accrued liabilities and other current liabilities		2,512			3,158			150,307			607,456			—			763,433
Convertible Loan—current		—			—			—			—			—			—
Intra-Group payables due to the Company’s subsidiaries (1)		153,504			3,444,919			1,349,764			5,426,801			(10,374,988	)		—

Total current liabilities		156,016			3,467,795			1,607,579			7,029,588			(10,374,988	)		1,885,990

Lease liabilities, non-current		—			—			222			23,534			—			23,756
Convertible Loan		1,174,868			—			—			—			—			1,174,868
Other non current liabilities		4,256			—			—			—			—			4,256
Deferred tax liabilities		—			—			18,825			—			—			18,825
Deficit of investment in subsidiaries and VIEs (2)		3,595,666			—			3,988,823			—			(7,584,489	)		—

Total long-term liabilities		4,774,790			—			4,007,870			23,534			(7,584,489	)		1,221,705

Total liabilities		4,930,806			3,467,795			5,615,449			7,053,122			(17,959,477	)		3,107,695

Commitments and contingencies
Mezzanine equity
Redeemable non-controlling interests		—			1,093,526			—			—			—			1,093,526
SHAREHOLDERS’ deficit
Total Qutoutiao Inc. shareholders’ deficit		(1,280,774	)		(3,595,666	)		87,915			(3,988,823	)		7,496,574			(1,280,774	)
Noncontrolling interest		—			(4,589	)		—			—			—			(4,589	)

Total shareholders’ deficit (2)		(1,280,774	)		(3,600,255	)		87,915			(3,988,823	)		7,496,574			(1,285,363	)

Total liabilities and shareholders’ deficit		3,650,032			961,066			5,703,364			3,064,299			(10,462,903	)		2,915,858

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	As of December 31, 2021
	Qutoutiao Inc.			Other subsidiaries			Primary Beneficiaries of the Group VIEs			Group VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals

	(RMB in thousands)
ASSETS
Current assets:
Cash and cash equivalents		19,633			99,871			101,064			19,783			—			240,351
Restricted cash		—			—			62,322			13,160			—			75,482
Short-term investments		—			150,117			159,300			33,600			—			343,017
Accounts receivable, net		—			122			—			770,797			—			770,919
Amount due from related parties		—			—			—			259,863			—			259,863
Prepaid and other current assets		4,605			313			53,642			114,317			—			172,877
Intra-Group receivables due from the Company’s subsidiaries (1)		3,521,857			670,178			5,996,426			937,831			(11,126,292	)		—

Total current assets		3,546,095			920,601			6,372,754			2,149,351			(11,126,292	)		1,862,509

Noncurrent assets:
Account receivables, non-current		—			—			—			—			—			—
Property and equipment, net		—			—			33			12,828			—			12,861
Right-of-use assets, net		—			—			222			26,120			—			26,342
Intangible assets		—			—			65,688			99,582			—			165,270
Goodwill		—			—			7,268			—			—			7,268
Long-term Investments		—			—			—			1,416			—			1,416
Other non-current assets		2,645			—			—			2,164			—			4,809

Total noncurrent assets		2,645			—			73,211			142,110			—			217,966

Total assets		3,548,740			920,601			6,445,965			2,291,461			(11,126,292	)		2,080,475

LIABILITIES
Current liabilities:
Short-term borrowings		—			—			20,000			—			—			20,000
Accounts payable		—			—			58,586			255,182			—			313,768
Amount due to related parties		—			—			5,433			1,495			—			6,928
Registered users’ loyalty payable		—			6,299			—			55,392			—			61,691
Advance from advertising customers and deferred revenue		—			—			3			122,594			—			122,597
Salary and welfare payable		—			74			23,676			42,237			—			65,987
Tax payable		—			—			28,591			15,288			—			43,879
Lease liabilities, current		—			—			222			11,675			—			11,897
Accrued liabilities related to users’ loyalty program		—			—			—			99,360			—			99,360
Accrued liabilities and other current liabilities		3,312			687			31,547			1,299,057			—			1,334,603
Convertible Loan—current		1,182,963			—			—			—			—			1,182,963
Intra-Group payables due to the Company’s subsidiaries (1)		281,201			3,552,395			1,787,252			5,505,444			(11,126,292	)		—

Total current liabilities		1,467,476			3,559,455			1,955,310			7,407,724			(11,126,292	)		3,263,673

Lease liabilities, non-current		—			—			—			15,985			—			15,985
Other non current liabilities		1,733			—			—			—			—			1,733
Deferred tax liabilities		—			—			16,422			—			—			16,422
Deficit of investment in subsidiaries and VIEs (2)		4,469,087			658,015			5,132,248			—			(10,259,350	)		—

Total long-term liabilities		4,470,820			658,015			5,148,670			15,985			(10,259,350	)		34,140

Total liabilities		5,938,296			4,217,470			7,103,980			7,423,709			(21,385,642	)		3,297,813

Commitments and contingencies
Mezzanine equity
Redeemable non-controlling interests		—			1,172,218			—			—			—			1,172,218
SHAREHOLDERS’ deficit
Total Qutoutiao Inc. shareholders’ deficit		(2,389,556	)		(4,469,087	)		(658,015	)		(5,132,248	)		10,259,350			(2,389,556	)
Noncontrolling interest		—			—			—			—			—			—

Total shareholders’ deficit (2)		(2,389,556	)		(4,469,087	)		(658,015	)		(5,132,248	)		10,259,350			(2,389,556	)

Total liabilities and shareholders’ deficit		3,548,740			920,601			6,445,965			2,291,461			(11,126,292	)		2,080,475

Note:

(1)

Represents the elimination of intercompany balances among Qutoutiao Inc., the Primary Beneficiaries of the Group VIEs, the Other Subsidiaries, and the Group VIEs and their subsidiaries that we consolidate. The intra-Group receivables and payables of Qutoutiao Inc. as of December 31, 2020 have been revised from amounts previously disclosed in the audit report included in this annual report.

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(2)

Condensed Consolidated Schedule of Cash Flows

The following table presents our condensed consolidated schedules of cash flows for Qutoutiao Inc., the Primary Beneficiaries of the Group VIEs, our Other Subsidiaries, and the Group VIEs and their subsidiaries that the Group consolidates for the periods presented:


	For the Year Ended December 31, 2019
	Qutoutiao Inc.			Other subsidiaries			Primary Beneficiaries of the Group VIEs			Group VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals
	(RMB in thousands)
Cash flows from operating activities:
Net cash provided by/(used in) transactions with external parties		39,183			(14,695	)		458,381			(2,850,164	)		—			(2,367,295	)
Net cash provided by/(used in) transactions with intra-Group entities		—			—			(67,419	)		67,419			—			—

Net cash provided by/(used in) operating activities		39,183			(14,695	)		390,962			(2,782,745	)		—			(2,367,295	)
Cash flows from investing activities:
Net cash provided by/(used in) transactions with external parties		(526,853	)		(463,917	)		(172,836	)		(60,546	)		—			(1,224,152	)
Cash used in capital contribution to intra-Group entities		—			(348,818	)		—			—			348,818			—
Cash used in providing borrowings to intra-Group entities		(2,800,753	)		(2,360,017	)		(2,859,506	)		—			8,020,276			—

Net cash provided by/(used in) investing activities		(3,327,606	)		(3,172,752	)		(3,032,342	)		(60,546	)		8,369,094			(1,224,152	)
Cash flows from financing activities:
Net cash provided by/(used in) transactions with external parties		1,397,382			370,619			—			—			—			1,768,001
Cash provided by capital contribution from intra-Group entities		—			—			348,818			—			(348,818	)		—
Cash provided by borrowings from intra-Group entities		—			2,800,753			2,360,017			2,859,506			(8,020,276	)		—

Net cash provided by/(used in) financing activities		1,397,382			3,171,372			2,708,835			2,859,506			(8,369,094	)		1,768,001


	For the Year Ended December 31, 2020
	Qutoutiao Inc.			Other subsidiaries			Primary Beneficiaries of the Group VIEs			Group VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals
	(RMB in thousands)
Cash flows from operating activities:
Net cash provided by/(used in) transactions with external parties		(354	)		956			(770,879	)		(93,497	)		—			(863,774	)
Net cash provided by/(used in) transactions with intra-Group entities		—			—			297,510			(297,510	)		—			—

Net cash provided by/(used in) operating activities		(354	)		956			(473,369	)		(391,007	)		—			(863,774	)
Cash flows from investing activities:
Net cash provided by/(used in) transactions with external parties		594,486			241,302			27,263			(80,506	)		—			782,545
Cash used in capital contribution to intra-Group entities		—			(924,020	)		—			—			924,020			—
Cash used in providing borrowings to intra-Group entities		(604,494	)		—			(462,233	)		—			1,066,727			—

Net cash provided by/(used in) investing activities		(10,008	)		(682,718	)		(434,970	)		(80,506	)		1,990,747			782,545
Cash flows from financing activities:
Net cash provided by/(used in) transactions with external parties		(135,744	)		373,490			20,000			50,000			—			307,746
Cash provided by capital contribution from intra-Group entities		—			—			924,020			—			(924,020	)		—
Cash provided by borrowings from intra-Group entities		—			604,494			—			462,233			(1,066,727	)		—

Net cash provided by/(used in) financing activities		(135,744	)		977,984			944,020			512,233			(1,990,747	)		307,746

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	For the Year Ended December 31, 2021
	Qutoutiao Inc.			Other subsidiaries			Primary Beneficiaries of the Group VIEs			Group VIEs and their subsidiaries			Eliminating adjustments			Consolidated totals
	(RMB in thousands)
Cash flows from operating activities:
Net cash provided by/(used in) transactions with external parties		(14,807	)		67,637			(709,141	)		377,189			—			(279,122	)
Net cash provided by/(used in) transactions with intra-Group entities		—			—			568,164			(568,164	)		—			—

Net cash provided by/(used in) operating activities		(14,807	)		67,637			(140,977	)		(190,975	)		—			(279,122	)
Cash flows from investing activities:
Net cash provided by/(used in) transactions with external parties		—			(84,723	)		97,197			63,047			—			75,521
Cash used in capital contribution to intra-Group entities		—			(198,086	)		—			—			198,086			—
Cash used in providing borrowings to intra-Group entities		—			—			(137,515	)		—			137,515			—
Cash provided by repayment of borrowings from intra-Group entities		32,506			—			—			—			(32,506	)		—

Net cash provided by/(used in) investing activities		32,506			(282,809	)		(40,318	)		63,047			303,095			75,521
Cash flows from financing activities:
Net cash provided by/(used in) transactions with external parties		—			(13,050	)		—			(53,044	)		—			(66,094	)
Cash provided by capital contribution from intra-Group entities		—			—			198,086			—			(198,086	)		—
Cash provided by borrowings from intra-Group entities		—			—			—			137,515			(137,515	)		—
Cash used in repayment of borrowings to intra-Group entities		—			(32,506	)		—			—			32,506			—

Net cash provided by/(used in) financing activities		—			(45,556	)		198,086			84,471			(303,095	)		(66,094	)

A.	[Reserved]

B.	Capitalization and Indebtedness

Not Applicable.

C.	Reasons for the Offer and Use of Proceeds

Not Applicable.

D.	Risk Factors

Summary of Risk Factors

An investment in our ADSs is subject to a number of risks, including risks relating to our industry and business, risks relating to the Group’s corporate structure, risks relating to doing business in China and risks relating to the ADSs. The following summarizes some, but not all, of these risks. Please carefully consider all of the information discussed in “Item 3. Key Information—D. Risk Factors” in this annual report for a more thorough description of these and other risks.

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Risks Relating to Our Industry and Business

•

The Group has a limited operating history, which makes it difficult to evaluate its business.

•

If the Group fails to acquire new users or retain existing users, or if user engagement on the Group’s platform declines, its business, results of operations and financial condition may be materially and adversely affected.

•

There is substantial doubt as to our ability to continue as a going concern.

•

We require a significant amount of cash to fund our operations as well as to meet our Convertible Loan obligations. If we cannot obtain additional financing and liquidity, our business, financial condition and results of operation will be materially and adversely affected.

•

The Group has incurred net losses in the past and may continue to incur losses in the future.

•

The Group’s inability to fully comply with Audio-visual Program Provisions may expose it to administrative sanctions, which would materially and adversely affect the Group’s business, results of operations and financial condition.

•

If the Group does not continue to increase the strength of its brand, the Group may not be able to maintain current or attract new users and customers for its products and services.

•

Any catastrophe, including natural catastrophes and outbreaks of health pandemics and other extraordinary events, could disrupt the Group’s business operation. For example, the

COVID-19

pandemic may have a material adverse effect on the Group’s business, results of operations and financial condition, as well as the trading price of the ADSs.

•

If the Group is unable to compete effectively in the industry it operates, the Group’s business, results of operations and financial condition may be materially and adversely affected.

•

The Group generates a substantial majority of its revenues from advertising and marketing. A decline in the Group’s advertising and marketing revenues could harm its business.

•

The Group may be adversely affected by the complexity, uncertainties and changes in PRC regulation of Internet businesses and companies, including limitations on its ability to own key assets such as its mobile applications.

•

Privacy concerns relating to the Group’s products and services and the use of user information could damage its reputation, deter current and potential users and customers from using the Group’s mobile applications and negatively impact its business.

•

We may be subject to cybersecurity review by regulatory authorities of the PRC in the future.

Risks Relating to Our Corporate Structure

•

We rely on contractual arrangements with the Group VIEs and their respective shareholders to operate the Group’s business, which may be less effective than equity ownership in providing operational control and otherwise materially and adversely affect the Group’s business.

•

The shareholders of the Group VIEs may have potential conflicts of interest with us, which may materially and adversely affect the Group’s business, results of operations and financial condition.

•

If the PRC government deems that the contractual arrangements in relation to the Group 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. In addition, our ADSs may significantly decline in value or become worthless if we are unable to assert our contractual control over the assets of the Group VIEs.

•

Substantial uncertainties exist with respect to whether the controlling of PRC onshore variable interest entities by foreign investors via contractual arrangements will be recognized as “foreign investment” and how it may impact the viability of the Group’s current corporate structure and operations.

Risks Relating to Doing Business in China

•

Changes in the political and economic policies of the PRC government may materially and adversely affect the Group’s business, results of operations and financial condition and may result in the Group’s inability to sustain our growth and expansion strategies. The PRC government may intervene or influence our operations at any time, which could result in a material change in the Group’s operations and/or the value of our ADSs. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder the Group’s ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.

•

There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. In addition, rules and regulations in China can change quickly with little advance notice.

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•

The approval of and the filing with the China Securities Regulatory Commission, or the CSRC, or other PRC government authorities may be required in connection with our future offshore offerings under PRC law, which may hinder our ability to continue to offer securities to investors offshore; in addition, the regulation of the CSRC or other PRC regulatory agencies establish complex procedures for acquisitions conducted by foreign investors that could make it more difficult for us to grow through acquisitions.

•

PRC regulations relating to investments in offshore companies by PRC residents may subject our

PRC-resident

beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits.

•

We rely to a significant extent on dividends and other distributions on equity paid by our principal operating subsidiaries and the Group VIEs to fund offshore cash and financing requirements. Any limitation on the ability of our PRC operating subsidiaries or the Group VIEs to make payments to us could materially and adversely affect our ability to conduct the Group’s business.

•

We are subject to restrictions on currency exchange.

•

The audit report included in this annual report is prepared by an auditor who is not inspected by the U.S. Public Company Accounting Oversight Board and, as such, our investors are deprived of the benefits of such inspection.

•

Our ADSs will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China, or 2023 if proposed changes to the law are enacted. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.

Risks Relating to the ADSs

•

The trading price of the ADSs may be volatile, which could result in substantial losses to you.

•

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