Annual and Transition Report (foreign Private Issuer) (20-f)
May 02 2022 - 04:06PM
Edgar (US Regulatory)
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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. As of
December 31, 2021, the fair value of investments measured at NAV
was RMB44.9 million and was classified as a short-term investment
as it is now redeemable within one year. 0001733298 2021-12-31
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SECURITIES AND EXCHANGE COMMISSION
☐ |
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
(Exact name of Registrant as specified in its charter)
(Exact name of Registrant as specified in its charter)
Building No. 8, Shanghai Pudong Software Park
519 Yi De Road, Pudong New Area
People’s Republic of China
(Address of principal executive offices)
Mr. Xiaolu Zhu, Chief Financial Officer
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:
|
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|
Name of each exchange
on which registered
|
American Depositary
Shares, every two representing five Class A ordinary shares
|
|
|
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NASDAQ Global Select
Market
|
Class A Ordinary
Shares, par value US$0.0001 per share*
|
|
|
|
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)
Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act:
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.
|
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Large accelerated filer |
|
☐ |
|
Accelerated
filer |
|
☒ |
|
Non-accelerated filer |
|
☐ |
|
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|
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:
|
|
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U.S. GAAP ☒ |
|
International
Financial Reporting Standards as issued |
|
|
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Other ☐ |
|
|
by the
International Accounting Standards Board |
|
☐ |
|
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|
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
|
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4
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ITEM 1.
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4
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ITEM 2.
|
|
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4
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ITEM 3.
|
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4
|
|
|
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ITEM 4.
|
|
|
|
|
62
|
|
|
|
ITEM 4A.
|
|
|
|
|
96
|
|
|
|
ITEM 5.
|
|
|
|
|
96
|
|
|
|
ITEM 6.
|
|
|
|
|
114
|
|
|
|
ITEM 7.
|
|
|
|
|
123
|
|
|
|
ITEM 8.
|
|
|
|
|
124
|
|
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|
ITEM 9.
|
|
|
|
|
125
|
|
|
|
ITEM 10.
|
|
|
|
|
126
|
|
|
|
ITEM 11.
|
|
|
|
|
133
|
|
|
|
ITEM 12.
|
|
|
|
|
133
|
|
|
|
|
|
|
|
|
|
136
|
|
|
|
ITEM 13.
|
|
|
|
|
136
|
|
|
|
ITEM 14.
|
|
|
|
|
136
|
|
|
|
ITEM 15.
|
|
|
|
|
136
|
|
|
|
ITEM 16A.
|
|
|
|
|
137
|
|
|
|
ITEM 16B.
|
|
|
|
|
137
|
|
|
|
ITEM 16C.
|
|
|
|
|
137
|
|
|
|
ITEM 16D.
|
|
|
|
|
137
|
|
|
|
ITEM 16E.
|
|
|
|
|
138
|
|
|
|
ITEM 16F.
|
|
|
|
|
138
|
|
|
|
ITEM 16G.
|
|
|
|
|
138
|
|
|
|
ITEM 16H.
|
|
|
|
|
138
|
|
|
|
ITEM 16I.
|
|
|
|
|
138
|
|
|
|
|
|
|
|
|
|
139
|
|
|
|
ITEM 17.
|
|
|
|
|
139
|
|
|
|
ITEM 18.
|
|
|
|
|
139
|
|
|
|
ITEM 19.
|
|
|
|
|
139
|
|
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
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.
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.”
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.
ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|
ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE
|
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.
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.”
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.”
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.”
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:
|
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|
|
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|
|
For the Year Ended
December 31, 2019
|
|
|
|
|
|
|
|
|
|
Primary
Beneficiaries
of the
Group VIEs
|
|
|
Group VIEs
and their
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
1 |
|
|
|
10,126 |
|
|
|
5,559,954 |
|
|
|
— |
|
|
|
5,570,081 |
|
|
|
|
— |
|
|
|
— |
|
|
|
35,648 |
|
|
|
67,419 |
|
|
|
(103,067 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
1 |
|
|
|
45,774 |
|
|
|
5,627,373 |
|
|
|
(103,067 |
) |
|
|
5,570,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(561 |
) |
|
|
(191,858 |
) |
|
|
(1,551,280 |
) |
|
|
103,067 |
|
|
|
(1,640,632 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(560 |
) |
|
|
(146,084 |
) |
|
|
4,076,093 |
|
|
|
— |
|
|
|
3,929,449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party operating expenses (1)
|
|
|
(287,027 |
) |
|
|
(15,412 |
) |
|
|
(91,299 |
) |
|
|
(6,561,213 |
) |
|
|
271,978 |
|
|
|
(6,682,973 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(287,027 |
) |
|
|
(15,412 |
) |
|
|
(91,299 |
) |
|
|
(6,561,213 |
) |
|
|
271,978 |
|
|
|
(6,682,973 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating income/(expense)
|
|
|
— |
|
|
|
— |
|
|
|
19,211 |
|
|
|
11,081 |
|
|
|
— |
|
|
|
30,292 |
|
|
|
|
(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 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
December 31, 2020
|
|
|
|
|
|
|
|
|
|
Primary
Beneficiaries
of the
Group VIEs
|
|
|
Group VIEs
and
their
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
1,513 |
|
|
|
5,283,682 |
|
|
|
— |
|
|
|
5,285,195 |
|
|
|
|
— |
|
|
|
— |
|
|
|
560,789 |
|
|
|
— |
|
|
|
(560,789 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
562,302 |
|
|
|
5,283,682 |
|
|
|
(560,789 |
) |
|
|
5,285,195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party cost of revenues
|
|
|
— |
|
|
|
(189 |
) |
|
|
(198,011 |
) |
|
|
(1,476,216 |
) |
|
|
— |
|
|
|
(1,674,416 |
) |
Intra-Group cost of revenues (2)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15,462 |
) |
|
|
15,462 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(189 |
) |
|
|
(198,011 |
) |
|
|
(1,491,678 |
) |
|
|
15,462 |
|
|
|
(1,674,416 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(189 |
) |
|
|
364,291 |
|
|
|
3,792,004 |
|
|
|
(545,327 |
) |
|
|
3,610,779 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
|
|
|
(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 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
December 31, 2021
|
|
|
|
|
|
|
|
|
|
Primary
Beneficiaries
of the Group
VIEs
|
|
|
Group VIEs
and
their
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
225 |
|
|
|
2,990 |
|
|
|
4,336,388 |
|
|
|
— |
|
|
|
4,339,603 |
|
|
|
|
— |
|
|
|
— |
|
|
|
970,661 |
|
|
|
188,298 |
|
|
|
(1,158,959 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
225 |
|
|
|
973,651 |
|
|
|
4,524,686 |
|
|
|
(1,158,959 |
) |
|
|
4,339,603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-party cost of revenues
|
|
|
— |
|
|
|
(325 |
) |
|
|
(303,600 |
) |
|
|
(867,701 |
) |
|
|
— |
|
|
|
(1,171,626 |
) |
Intra-Group cost of revenues (2)
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(18,959 |
) |
|
|
18,959 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(325 |
) |
|
|
(303,600 |
) |
|
|
(886,660 |
) |
|
|
18,959 |
|
|
|
(1,171,626 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(100 |
) |
|
|
670,051 |
|
|
|
3,638,026 |
|
|
|
(1,140,000 |
) |
|
|
3,167,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
|
|
|
|
(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 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary
Beneficiaries
of the Group
VIEs
|
|
|
Group VIEs
and
their
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
1,933 |
|
|
|
360,232 |
|
|
|
120,226 |
|
|
|
12,084 |
|
|
|
— |
|
|
|
494,475 |
|
|
|
|
— |
|
|
|
— |
|
|
|
36,000 |
|
|
|
64,316 |
|
|
|
— |
|
|
|
100,316 |
|
|
|
|
— |
|
|
|
36,186 |
|
|
|
256,497 |
|
|
|
98,350 |
|
|
|
— |
|
|
|
391,033 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
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 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,618,177 |
|
|
|
825,851 |
|
|
|
5,618,332 |
|
|
|
2,784,944 |
|
|
|
(10,374,988 |
) |
|
|
2,472,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Account receivables,
non-current
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
54,639 |
|
|
|
— |
|
|
|
54,639 |
|
Property and equipment, net
|
|
|
— |
|
|
|
— |
|
|
|
252 |
|
|
|
16,961 |
|
|
|
— |
|
|
|
17,213 |
|
|
|
|
— |
|
|
|
— |
|
|
|
2,210 |
|
|
|
48,109 |
|
|
|
— |
|
|
|
50,319 |
|
|
|
|
— |
|
|
|
— |
|
|
|
75,302 |
|
|
|
7,821 |
|
|
|
— |
|
|
|
83,123 |
|
|
|
|
— |
|
|
|
— |
|
|
|
7,268 |
|
|
|
— |
|
|
|
— |
|
|
|
7,268 |
|
|
|
|
27,589 |
|
|
|
47,300 |
|
|
|
— |
|
|
|
8,000 |
|
|
|
— |
|
|
|
82,889 |
|
|
|
|
4,266 |
|
|
|
— |
|
|
|
— |
|
|
|
143,825 |
|
|
|
— |
|
|
|
148,091 |
|
Investment in subsidiaries and VIEs (2)
|
|
|
— |
|
|
|
87,915 |
|
|
|
— |
|
|
|
— |
|
|
|
(87,915 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,855 |
|
|
|
135,215 |
|
|
|
85,032 |
|
|
|
279,355 |
|
|
|
(87,915 |
) |
|
|
443,542 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,650,032 |
|
|
|
961,066 |
|
|
|
5,703,364 |
|
|
|
3,064,299 |
|
|
|
(10,462,903 |
) |
|
|
2,915,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
20,000 |
|
|
|
50,000 |
|
|
|
— |
|
|
|
70,000 |
|
Loan from a related party
|
|
|
— |
|
|
|
13,050 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13,050 |
|
|
|
|
— |
|
|
|
— |
|
|
|
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 |
|
|
|
|
— |
|
|
|
— |
|
|
|
(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 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
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 |
|
|
|
|
1,174,868 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,174,868 |
|
Other non current liabilities
|
|
|
4,256 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,256 |
|
|
|
|
— |
|
|
|
— |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,930,806 |
|
|
|
3,467,795 |
|
|
|
5,615,449 |
|
|
|
7,053,122 |
|
|
|
(17,959,477 |
) |
|
|
3,107,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
non-controlling
interests
|
|
|
— |
|
|
|
1,093,526 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,093,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Qutoutiao Inc. shareholders’ deficit
|
|
|
(1,280,774 |
) |
|
|
(3,595,666 |
) |
|
|
87,915 |
|
|
|
(3,988,823 |
) |
|
|
7,496,574 |
|
|
|
(1,280,774 |
) |
|
|
|
— |
|
|
|
(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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Primary
Beneficiaries
of the Group
VIEs
|
|
|
Group VIEs
and
their
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
19,633 |
|
|
|
99,871 |
|
|
|
101,064 |
|
|
|
19,783 |
|
|
|
— |
|
|
|
240,351 |
|
|
|
|
— |
|
|
|
— |
|
|
|
62,322 |
|
|
|
13,160 |
|
|
|
— |
|
|
|
75,482 |
|
|
|
|
— |
|
|
|
150,117 |
|
|
|
159,300 |
|
|
|
33,600 |
|
|
|
— |
|
|
|
343,017 |
|
|
|
|
— |
|
|
|
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 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,546,095 |
|
|
|
920,601 |
|
|
|
6,372,754 |
|
|
|
2,149,351 |
|
|
|
(11,126,292 |
) |
|
|
1,862,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Account receivables,
non-current
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Property and equipment, net
|
|
|
— |
|
|
|
— |
|
|
|
33 |
|
|
|
12,828 |
|
|
|
— |
|
|
|
12,861 |
|
|
|
|
— |
|
|
|
— |
|
|
|
222 |
|
|
|
26,120 |
|
|
|
— |
|
|
|
26,342 |
|
|
|
|
— |
|
|
|
— |
|
|
|
65,688 |
|
|
|
99,582 |
|
|
|
— |
|
|
|
165,270 |
|
|
|
|
— |
|
|
|
— |
|
|
|
7,268 |
|
|
|
— |
|
|
|
— |
|
|
|
7,268 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,416 |
|
|
|
— |
|
|
|
1,416 |
|
|
|
|
2,645 |
|
|
|
— |
|
|
|
— |
|
|
|
2,164 |
|
|
|
— |
|
|
|
4,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,645 |
|
|
|
— |
|
|
|
73,211 |
|
|
|
142,110 |
|
|
|
— |
|
|
|
217,966 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,548,740 |
|
|
|
920,601 |
|
|
|
6,445,965 |
|
|
|
2,291,461 |
|
|
|
(11,126,292 |
) |
|
|
2,080,475 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
20,000 |
|
|
|
— |
|
|
|
— |
|
|
|
20,000 |
|
|
|
|
— |
|
|
|
— |
|
|
|
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 |
|
|
|
|
— |
|
|
|
— |
|
|
|
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 |
|
|
|
|
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 |
|
|
|
|
— |
|
|
|
— |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,938,296 |
|
|
|
4,217,470 |
|
|
|
7,103,980 |
|
|
|
7,423,709 |
|
|
|
(21,385,642 |
) |
|
|
3,297,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
non-controlling
interests
|
|
|
— |
|
|
|
1,172,218 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,172,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Qutoutiao Inc. shareholders’ deficit
|
|
|
(2,389,556 |
) |
|
|
(4,469,087 |
) |
|
|
(658,015 |
) |
|
|
(5,132,248 |
) |
|
|
10,259,350 |
|
|
|
(2,389,556 |
) |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
(2) |
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.
|
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
|
|
|
|
|
|
|
|
|
|
Primary
Beneficiaries
of the
Group VIEs
|
|
|
Group VIEs
and
their
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
December 31, 2020
|
|
|
|
|
|
|
|
|
|
Primary
Beneficiaries
of the
Group VIEs
|
|
|
Group VIEs
and
their
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended
December 31, 2021
|
|
|
|
|
|
|
|
|
|
Primary
Beneficiaries
of the
Group VIEs
|
|
|
Group VIEs
and
their
subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
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 |
) |
|
Capitalization and Indebtedness
|
|
Reasons for the Offer and Use of Proceeds
|
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.
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.
|
|
• |
|
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.
|