Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2018shares | |
Entity Registrant Name | CooTek(Cayman)Inc. |
Entity Central Index Key | 0001734262 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Entity Shell Company | false |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | FY |
Ordinary shares | |
Entity Common Stock, Shares Outstanding | 3,180,281,201 |
Class A | |
Entity Common Stock, Shares Outstanding | 2,934,056,736 |
Class B | |
Entity Common Stock, Shares Outstanding | 246,224,465 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 84,859,915 | $ 26,720,158 |
Restricted cash | 306,082 | |
Account receivable, net of allowance for doubtful accounts of US$1,295,149 and US$1,286,120 as of December 31, 2017 and 2018, respectively | 23,373,969 | 10,979,821 |
Amount due from related parties | 340,955 | |
Prepaid expenses and other current assets | 4,942,285 | 5,391,736 |
Total current assets | 113,176,169 | 43,738,752 |
Property and equipment, net | 4,211,051 | 1,943,550 |
Long-term investment | 500,032 | |
Amount due from related parties-non-current | 24,442 | |
Other non-current assets | 555,922 | 554,278 |
TOTAL ASSETS | 118,443,174 | 46,261,022 |
Current liabilities: | ||
Accounts payable (including accounts payable of consolidated VIEs, without recourse to the Company of US$107,568 and US$570,504, respectively, as of December 31, 2017 and 2018) | 24,780,899 | 5,432,505 |
Short-term bank borrowings and current portion of long-term bank borrowings (including short-term bank borrowings of consolidated VIEs, without recourse to the Company of US$790,816 and nil, respectively, as of December 31, 2017 and 2018) | 3,193,381 | |
Accrued salary and benefits (including accrued salary and benefits of consolidated VIEs, without recourse to the Company of US$269,245 and US$416,749, respectively, as of December 31, 2017 and 2018) | 4,535,133 | 3,244,931 |
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of consolidated VIEs, without recourse to the Company of US$951,817 and US$518,357, respectively, as of December 31, 2017 and 2018) | 3,582,160 | 2,422,313 |
Deferred revenue (including deferred revenue of consolidated VIEs, without recourse to the Company of US$276,812 and US$157,793, respectively, as of December 31, 2017 and 2018) | 344,361 | 521,640 |
Total current liabilities | 33,242,553 | 14,814,770 |
Other non-current liabilities | 877,826 | |
Total LIABILITIES | 34,120,379 | 14,814,770 |
Commitments (Note 17) | ||
Convertible redeemable preferred shares (redemption value of US$209,694,647 and nil as of December 31, 2017 and December 31, 2018, respectively) (Note 13) | 156,367,810 | |
Shareholders' (deficit) equity: | ||
Ordinary shares | 8,984 | |
Treasury stocks (nil and 15,550,500 shares as of December 31 2017 and 2018, respectively) | (2,499,167) | |
Additional paid-in capital | 204,701,187 | 876,560 |
Accumulated deficit | (116,752,285) | (126,899,750) |
Accumulated other comprehensive income (loss) | (1,158,900) | 1,092,648 |
Total Shareholders' (Deficit) Equity | 84,322,795 | (124,921,558) |
TOTAL LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED SHARES AND SHAREHOLDERS' (DEFICIT) EQUITY | 118,443,174 | $ 46,261,022 |
Class A | ||
Shareholders' (deficit) equity: | ||
Ordinary shares | 29,498 | |
Class B | ||
Shareholders' (deficit) equity: | ||
Ordinary shares | $ 2,462 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Allowance for doubtful accounts | $ 1,286,120 | $ 1,295,149 |
Accounts payable | 24,780,899 | 5,432,505 |
Short-term bank borrowings and current portion of long-term bank borrowings | 3,193,381 | |
Accrued salary and benefits | 4,535,133 | 3,244,931 |
Accrued expenses and other current liabilities | 3,582,160 | 2,422,313 |
Deferred revenue | 344,361 | 521,640 |
Convertible redeemable preferred shares, redemption value | $ 0 | $ 209,694,647 |
Ordinary shares, par value | $ 0.00001 | |
Ordinary shares, shares authorized | 15,000,000,000 | 2,920,061,989 |
Ordinary shares, shares issued | 898,393,690 | |
Ordinary shares, shares outstanding | 898,393,690 | |
Treasury Stock, Shares | 15,550,500 | 0 |
Class A | ||
Ordinary shares, par value | $ 0.00001 | |
Ordinary shares, shares authorized | 13,750,000,000 | |
Ordinary shares, shares issued | 2,949,757,236 | |
Ordinary shares, shares outstanding | 2,934,206,736 | |
Class B | ||
Ordinary shares, par value | $ 0.00001 | |
Ordinary shares, shares authorized | 250,000,000 | |
Ordinary shares, shares issued | 246,224,465 | |
Ordinary shares, shares outstanding | 246,224,465 | |
VIEs | ||
Accounts payable | $ 570,504 | $ 107,568 |
Short-term bank borrowings and current portion of long-term bank borrowings | 0 | 790,816 |
Accrued salary and benefits | 416,749 | 269,245 |
Accrued expenses and other current liabilities | 518,357 | 951,817 |
Deferred revenue | $ 157,793 | $ 276,812 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net revenues | $ 134,109,632 | $ 37,334,966 | $ 11,030,079 |
Cost of revenue (including share-based compensation of US$24,514, US$31,510 and US$53,850 in 2016, 2017 and 2018, respectively) | (14,932,713) | (20,101,386) | (20,158,565) |
Gross (loss) profit | 119,176,919 | 17,233,580 | (9,128,486) |
Operating expenses: | |||
General and administrative expenses (including share-based compensation of US$222,317, US$1,777,941 and US$389,802 in 2016, 2017 and 2018, respectively) | (10,728,807) | (8,366,698) | (3,920,057) |
Research and development expenses (including share-based compensation of US$445,084, US$544,786 and US$1,788,724 in 2016, 2017 and 2018, respectively) | (19,324,657) | (12,868,356) | (8,691,539) |
Sales and marketing expenses (including share-based compensation of US$35,298 , US$70,707 and US$127,095 in 2016, 2017 and 2018, respectively) | (80,729,626) | (20,161,353) | (9,396,663) |
Other operating income, net | 1,609,159 | 190,338 | 605,890 |
Total operating expenses | (109,173,931) | (41,206,069) | (21,402,369) |
(Loss) Income from operations | 10,002,988 | (23,972,489) | (30,530,855) |
Interest income, net | 214,730 | 481,932 | 12,887 |
Foreign exchange losses, net | (70,033) | (169,556) | (188,631) |
(Loss) Income before income taxes | 10,147,685 | (23,660,113) | (30,706,599) |
Income tax expense | (220) | (800) | 0 |
Net (loss) Income | 10,147,465 | (23,660,913) | (30,706,599) |
Deemed dividend from repurchase of preferred shareholders | (1,028,055) | ||
Net (loss) Income attributable to ordinary shareholders | $ 10,147,465 | $ (24,688,968) | $ (30,706,599) |
Net (Loss) Income per ordinary share: | |||
Basic (in dollars per share) | $ 0.003 | $ (0.03) | $ (0.03) |
Diluted (in dollars per share) | $ 0.003 | $ (0.03) | $ (0.03) |
Weighted average shares used in calculating net (loss) income per ordinary share: | |||
Basic (in shares) | 1,464,257,884 | 898,781,587 | 912,551,946 |
Diluted (in shares) | 1,591,094,630 | 898,781,587 | 912,551,946 |
ADS | |||
Net (Loss) Income per ordinary share: | |||
Basic (in dollars per share) | $ 0.17 | $ (1.37) | $ (1.68) |
Diluted (in dollars per share) | $ 0.15 | $ (1.37) | $ (1.68) |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cost of revenue | |||
Share-based compensation expense | $ 53,850 | $ 31,510 | $ 24,514 |
General and administrative expenses | |||
Share-based compensation expense | 389,802 | 1,777,941 | 222,317 |
Research and development expenses | |||
Share-based compensation expense | 1,788,724 | 544,786 | 445,084 |
Sales and marketing expenses | |||
Share-based compensation expense | $ 127,095 | $ 70,707 | $ 35,298 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | |||
Net (Loss) Income | $ 10,147,465 | $ (23,660,913) | $ (30,706,599) |
Other comprehensive loss | |||
Foreign currency translation adjustments, net of tax of nil | (2,251,548) | 1,783,245 | (518,196) |
Comprehensive (Loss) Income | $ 7,895,917 | $ (21,877,668) | $ (31,224,795) |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | |||
Foreign currency translation adjustments, tax | $ 0 | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT) EQUITY - USD ($) | Ordinary sharesClass A | Ordinary sharesClass B | Ordinary shares | Treasury Stock | Additional paid-in capitalSeries A Preferred Shares | Additional paid-in capital | Accumulated deficitSeries A Preferred Shares | Accumulated deficit | Accumulated other comprehensive income (loss) | Class A | Class B | Series A Preferred Shares | Total |
Beginning balance at Dec. 31, 2015 | $ 9,126 | $ 426,210 | $ (70,321,969) | $ (172,401) | $ (70,059,034) | ||||||||
Beginning balance (in shares) at Dec. 31, 2015 | 912,551,946 | ||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT) EQUITY | |||||||||||||
Net Profit (loss) | (30,706,599) | (30,706,599) | |||||||||||
Share-based compensation | 727,213 | 727,213 | |||||||||||
Foreign currency translation adjustments | (518,196) | (518,196) | |||||||||||
Ending balance at Dec. 31, 2016 | $ 9,126 | 1,153,423 | (101,028,568) | (690,597) | (100,556,616) | ||||||||
Ending balance (in shares) at Dec. 31, 2016 | 912,551,946 | ||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT) EQUITY | |||||||||||||
Net Profit (loss) | (23,660,913) | (23,660,913) | |||||||||||
Repurchase of shares | $ (142) | $ (1,153,423) | $ (758,795) | (1,451,474) | $ (1,912,218) | (1,451,616) | |||||||
Repurchase of shares (in shares) | (14,158,256) | ||||||||||||
Share-based compensation | 876,560 | 876,560 | |||||||||||
Foreign currency translation adjustments | 1,783,245 | 1,783,245 | |||||||||||
Ending balance at Dec. 31, 2017 | $ 8,984 | 876,560 | (126,899,750) | 1,092,648 | $ (124,921,558) | ||||||||
Ending balance (in shares) at Dec. 31, 2017 | 898,393,690 | 898,393,690 | |||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT) EQUITY | |||||||||||||
Net Profit (loss) | 10,147,465 | $ 10,147,465 | |||||||||||
Conversion of Class A/B ordinary shares upon the completion of initial public offering("IPO") | $ 6,522 | $ 2,462 | $ (8,984) | ||||||||||
Conversion of Class A/B ordinary shares upon the completion of initial public offering("IPO") (in shares) | 652,169,225 | 246,224,465 | (898,393,690) | ||||||||||
Repurchase of shares | $ (2,499,167) | (2,499,167) | |||||||||||
Repurchase of shares (in shares) | (15,550,500) | ||||||||||||
Issuance of ordinary shares for IPO, net of issuance costs (Note 11) | $ 2,175 | 45,118,147 | 45,120,322 | ||||||||||
Issuance of ordinary shares for IPO, net of issuance costs (Note 11) (in shares) | 217,500,000 | ||||||||||||
Conversion of preferred shares into Class A ordinary shares upon IPO (Note 13) | $ 20,799 | 156,347,011 | 156,367,810 | ||||||||||
Conversion of preferred shares into Class A ordinary shares upon IPO (in shares) (Note 13) | 2,079,938,011 | ||||||||||||
Share-based compensation | 2,359,471 | 2,359,471 | |||||||||||
Issuance of ordinary shares upon vesting of restricted shares (Note 14) | $ 2 | (2) | |||||||||||
Issuance of ordinary shares upon vesting of restricted shares (in shares) (Note 14) | 150,000 | ||||||||||||
Foreign currency translation adjustments | (2,251,548) | (2,251,548) | |||||||||||
Ending balance at Dec. 31, 2018 | $ 29,498 | $ 2,462 | $ (2,499,167) | $ 204,701,187 | $ (116,752,285) | $ (1,158,900) | $ 84,322,795 | ||||||
Ending balance (in shares) at Dec. 31, 2018 | 2,949,757,236 | 246,224,465 | (15,550,500) | 2,934,206,736 | 246,224,465 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||
Net (loss) income | $ 10,147,465 | $ (23,660,913) | $ (30,706,599) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 1,153,606 | 899,018 | 555,762 |
Provision for allowance of doubtful accounts | 11,422 | 1,295,149 | |
Share-based compensation | 2,359,471 | 876,560 | 727,213 |
Loss on disposal of property, plant and equipment | 801 | 2,160 | |
Changes in assets and liabilities: | |||
Accounts receivable | (12,578,516) | (9,622,450) | (1,807,077) |
Prepaid expenses and other current assets | 222,083 | (1,137,368) | (992,593) |
Other non-current assets | (32,353) | (332,826) | 88,024 |
Accounts payable | 19,354,959 | 1,611,991 | 1,769,190 |
Accrued salary and benefits | 1,302,591 | 1,074,075 | 659,554 |
Accrued expenses and other current liabilities | 430,326 | 897,784 | 1,071,541 |
Deferred revenue | (158,401) | 47,668 | 199,533 |
Other non-current liabilities | 892,551 | ||
Net cash (used in) provided by operating activities | 23,106,005 | (28,049,152) | (28,435,452) |
Cash flows from investing activities: | |||
Purchases of property, plant and equipment | (3,533,121) | (1,489,567) | (758,735) |
Advances to related parties | (293,285) | (74,734) | |
Repayment of advances to related parties | 378,111 | 24,440 | 2,076 |
Purchases of long-term investment | (500,032) | ||
Net cash used in investing activities | (3,655,042) | (1,758,412) | (831,393) |
Cash flows from financing activities: | |||
Proceeds from bank borrowings | 1,869,493 | 5,986,206 | |
Repayment of bank borrowings | (3,261,936) | (4,016,257) | (679,246) |
Proceeds from issuance of preferred shares | 20,000,000 | 46,000,000 | |
Repurchase of ordinary shares | (1,451,616) | ||
Repurchase of preferred shares | (2,000,000) | ||
Proceeds from initial public offering, net of issuance costs paid of US$2,615,726 | 45,930,274 | ||
Payment of share repurchase | (2,499,167) | ||
Net cash provided by financing activities | 40,169,171 | 14,401,620 | 51,306,960 |
Net (decrease) increase in cash, cash equivalents, and restricted cash | 59,620,134 | (15,405,944) | 22,040,115 |
Cash, cash equivalents, and restricted cash at beginning of year | 27,026,240 | 41,344,623 | 19,845,488 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1,786,459) | 1,087,561 | (540,980) |
Cash, cash equivalents, and restricted cash at end of year | 84,859,915 | 27,026,240 | 41,344,623 |
Supplemental disclosure of cash flow information: | |||
Income taxes paid | 220 | 800 | |
Interest paid | 92,041 | 172,563 | 104,859 |
Supplemental disclosure of noncash investing and financing activities: | |||
Deferred issuance costs not yet paid | 809,952 | ||
Reconciliation in amounts on consolidated balance sheets: | |||
Total cash, cash equivalents, and restricted cash | $ 27,026,240 | $ 41,344,623 | $ 19,845,488 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |
Proceeds from initial public offering, issuance cost paid | $ 2,615,726 |
Organization and Principal Acti
Organization and Principal Activities | 12 Months Ended |
Dec. 31, 2018 | |
Organization and Principal Activities | |
Organization and Principal Activities | 1. Organization and Principal Activities CooTek (Cayman) Inc. (the “Company”) was incorporated in the Cayman Islands on March 5, 2012. The Company, its subsidiaries and its consolidated Variable Interest Entities (“VIEs”) (collectively referred to as the “Group”) are a fast‑growing AI and big data‑driven mobile internet company serving a large global user base. History of the Group and reorganization The Group’s history began in August 2008 with the commencement of operations of Shanghai Han Xiang (CooTek) Information Technology Co., Ltd (“Han Xiang”), a limited liability company incorporated in the People’s Republic of China (“PRC”) by certain individuals. In October 2010, three outside investors acquired an aggregate of 24.24% equity interest of Han Xiang. In 2012, Han Xiang and its shareholders undertook a reorganization which was conducted to establish a Cayman holding company for the existing business to obtain investment from outside investors and in preparation of an overseas initial public offering. The Group has recognized the net assets of Han Xiang on a historical cost with no change in basis in the consolidated financial statements upon the completion of the reorganization. The shareholders’ rights and obligations remained the same after the reorganization. On October 2, 2018, the Group completed its initial public offering ("IPO") and issued 4,350,000 American depositary shares representing 217,500,000 of the Group's ordinary shares. Net proceeds from the IPO after deducting underwriting discount and offering costs were US$45.1 million. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies (a) Basis of Presentation The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). (b) Principles of Consolidation The consolidated financial statements include the financial information of the Company, its wholly owned subsidiaries and its consolidated variable interest entities (“VIEs”). All intercompany balances and transactions have been eliminated upon consolidation. Applicable PRC laws and regulations currently limit foreign ownership of companies that provide internet content distribution services and any other restrictions. The Company is deemed a foreign legal person under PRC laws and accordingly subsidiaries owned by the Company are not eligible to engage in provisions of internet content or online services. The Group therefore conducts its online business through the following consolidated VIEs: · Shanghai Han Xiang (CooTek) Information Technology Co., Ltd. (“Han Xiang”) · Shanghai Chu Bao (CooTek) Information Technology Co., Ltd. (“Chu Bao”) · Yingsun Information Technology Co., Ltd. (“Yingsun”) · Molihong Internet Technology Co., Ltd (“Molihong”) To provide the Group effective control over the VIEs and receive substantially all of the economic benefits of the VIEs, the Company’s wholly owned subsidiary, Shanghai ChuLe (CooTek) Information Technology Co., Ltd. (“Chu Le” of “WFOE”) entered into a series of contractual arrangements, described below, with The VIEs and their respective shareholders. Agreements that provide the Company effective control over the VIEs include: Voting Rights Proxy Agreements & Irrevocable Power of Attorney Pursuant to which each of the shareholders of VIEs has executed voting rights proxy agreements, appointing the WFOE, or any person designated by the WFOE, as their attorney‑ in‑fact to (i) call and attend shareholders’ meetings of VIEs and execute relevant shareholders’ resolutions; (ii) exercise on their behalf all his rights as a shareholder of VIEs, including those rights under PRC laws and regulations and the articles of association of VIEs, such as voting, appointing, replacing or removing directors, (iii) submit all documents as required by governmental authorities on behalf of VIEs, and (iv) assign the shareholding rights of VIEs, including receiving dividends, disposing of equity interest and enjoying the rights and interests during and after liquidation. Exclusive Call Option Agreements Pursuant to which each the VIE shareholders unconditionally and irrevocably granted the WFOE or its designee exclusive options to purchase, to the extent permitted under PRC laws and regulations, all or part of the equity interests in the VIEs. The WFOE has the sole discretion to decide when to exercise the options, and whether to exercise the options in part or in full. Without the WFOE’s written consent, the VIE shareholders may not sell, transfer, pledge or otherwise dispose of or create any encumbrance on any of VIEs’ assets or equity interests. Equity Pledge Agreements The VIE shareholders agreed to pledge their equity interests in VIEs to the WFOE to secure the performance of the VIEs’ obligations under the series of contractual agreements and any such agreements to be entered into in the future. Without prior written consent of the WFOE, the VIEs’ shareholders shall not transfer or dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests. If any economic interests were received by means of their equity interests in the VIEs, such interests belong to the WFOE. Agreements that transfer economic benefits of VIEs to the Group include: Exclusive Business Cooperation Agreements Under the exclusive services agreement, the Company and the WFOE have the exclusive right to provide comprehensive technical and business support services to the VIEs. In exchange, the VIEs pay monthly service fees to the WFOE in the amount equivalent to all of their net income as confirmed by the WFOE. The WFOE has the right to adjust the service fee rates at its sole discretion. The agreement can be early terminated by the WFOE by giving a 30‑day prior notice, but not by the VIEs or VIE shareholders. Loan Agreements The WFOE entered into loan agreements with each shareholder of the VIEs. Pursuant to the terms of these loan agreements, the WFOE granted an interest‑free loan to each shareholder of the VIEs for the explicit purpose of making a capital contribution to the VIEs. The term of the loans are 10 years and shall be renewed automatically every 3 years for an additional 3 years unless the WFOE terminates the agreement (which option is at the WFOE’s sole discretion) at which point the loans are payable on demand. The shareholders of the VIEs may not prepay all or any portion of the loans without the WFOE’s consent. The WFOE did not enter into loan agreements with shareholders of Han Xiang, as the capital paid is sufficient for operation. Voting Rights Proxy Agreements & Irrevocable Powers of Attorney provide the Company effective control over the VIEs and its subsidiaries, while the Equity Pledge Agreements secure the obligations of the shareholders of the VIEs under the relevant agreements. Because the Company, through the WFOE, has (i) the power to direct the activities of the VIEs that most significantly affect the entity’s economic performance and (ii) the right to receive substantially all of the benefits from the VIEs, the Company is deemed the primary beneficiary of the VIEs. Accordingly, the Company has consolidated the VIEs’ financial results of operations, assets and liabilities in the Group’s consolidated financial statements. The aforementioned agreements are effective agreements between a parent and consolidated subsidiaries, neither of which is accounted for in the consolidated financial statements or are ultimately eliminated upon consolidation (i.e. service fees under the Exclusive Business Cooperation Agreement). The Group believes that the contractual arrangements with the VIEs are in compliance with PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could: · revoke the business and operating licenses of the Company’s PRC subsidiaries and VIEs; · discontinue or restrict the operations of any related‑party transactions between the Company’s PRC subsidiaries and VIEs; · limit the Group’s business expansion in China by way of entering into contractual arrangements; · impose fines or other requirements with which the Company’s PRC subsidiaries and VIEs may not be able to comply; · require the Company or the Company’s PRC subsidiaries or VIEs to restructure the relevant ownership structure or operations; or · restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance the Group’s business and operations in China. The following consolidated financial statement balances and amounts of the Group’s VIEs were included in the accompanying consolidated financial statements after the elimination of intercompany balances and transactions among the Company, its subsidiaries and its VIEs. As of December 31, 2017 2018 US$ US$ ASSETS Cash and cash equivalents 2,485,998 1,114,076 Restricted cash 306,082 — Account Receivable, net 2,065,324 2,273,325 Prepaid expense and other assets 3,665,503 2,613,413 Property and equipment, net 1,951 56,555 Other non-current assets — 1,759 Total Assets 8,524,858 6,059,128 LIABILITIES Accounts payable 107,568 570,504 Short-term borrowing 790,816 — Accrued salary and benefits 269,245 416,749 Accrued expenses and other current liabilities 951,817 518,357 Deferred revenue 276,812 157,793 Total Liabilities 2,396,258 1,663,403 For the years ended December 31, 2016 2017 2018 US$ US$ US$ Total revenue 4,070,864 8,353,270 9,542,004 Operating loss (87,032) (280,269) (105,639) Net loss (82,688) (297,852) (84,565) Net cash (used in) provide by operating activities (1,574,360) (2,645,362) 672,355 Net cash used in investing activities — (1,734) (59,498) Net cash provided by (used in) financing activities 716,773 45,673 (810,537) The VIEs’ assets are comprised of recognized and unrecognized revenue‑producing assets. The recognized revenue producing assets mainly include purchased servers, which are presented in the account of “Property and equipment, net.” The unrecognized revenue‑producing assets mainly consist of the Internet Content Provider license (“ICP” license), trademarks, copyrights and registered patents, which are not recognized in the consolidated balance sheets. Revenues of VIEs included in the consolidated financial statements mainly include revenue of advertising services and sales of virtual items for live social video community. The VIEs contributed 37%, 22% and 7% of the Group’s consolidated net revenues for years ended December 31, 2016, 2017 and 2018, respectively. As of December 31, 2017 and 2018, the VIEs accounted for an aggregate of 18% and 5% respectively, of the consolidated total assets, and 16% and 5% respectively, of the consolidated total liabilities. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs were ever to need financial support, the Group may, at its option and subject to statutory limits and restrictions, provide financial support to its VIE through loans to the shareholders of the VIEs. The Group believes that there are no assets held in the VIEs that can be used only to settle obligations of the VIEs, except for registered capital and the PRC statutory reserves. As the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the VIEs. Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of its statutory reserve and its share capital, to the Company in the form of loans and advances or cash dividends. Please refer to Note 20 for disclosure of restricted net assets. (c) Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s financial statements including but not limited to valuation of ordinary shares and preferred shares, valuation allowances of deferred tax assets, and valuation of share‑based compensation. Actual results may differ materially from those estimates. (d) Fair Value Fair value is considered to be the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows: · Level 1—Inputs are based on unadjusted quoted prices that are available in active markets for identical assets or liabilities at measurement date. · Level 2—Significant inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model‑derived valuations in which significant inputs and significant value drivers are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3—Significant unobservable inputs that cannot be corroborated by observable market data and reflect management’s estimates of assumptions that market participants would use to price an asset or liability. (e) Financial Instruments The Group's financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, amounts due from related parties, accounts payable, other current liabilities and bank borrowing. For cash and cash equivalents, restricted cash, accounts receivable, amounts due from related parties, accounts payable, other current liabilities, short-term borrowing and long-term debt-current portion, the carrying amounts of these financial instruments as of December 31, 2017 and 2018 were considered representative of their fair values due to their short-term nature. (f) Foreign Currency Translation The functional currency of the Group is the United States Dollar (“US$”). The functional currency of the subsidiaries and the VIEs in the PRC is Renminbi (“RMB”). The functional currency of all the other subsidiaries is US$. Foreign currency transactions have been translated into the functional currency at the exchange rates prevailing on the date of transactions. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at exchange rates prevailing on the balance sheet date. Exchange gains and losses have been included in the determination of net income. The Group has chosen the US$ as its reporting currency. Assets and liabilities have been translated using exchange rates prevailing on the balance sheet date. Equity accounts are translated at historical exchange rates. Income statement items have been translated using the average exchange rate for the year. Translation adjustments have been reported as cumulative translation adjustments and are shown as a component of other comprehensive income/loss in the statements of comprehensive loss and consolidated statements of changes in shareholders’ (deficit) equity. (g) Foreign Currency Risk The RMB is not a freely convertible currency. The State Administration for Foreign Exchange in the PRC, under the authority of the Peoples Bank of China, controls the conversion of RMB into other currencies. The value of the RMB is subject to changes in central government policies, international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The Group’s cash and cash equivalents and restricted cash denominated in RMB amounted to RMB100,419,401 (amounted to US$ 15,368,278) and RMB74,384,717 (amounted to US$10,838,197) as of December 31, 2017 and 2018, respectively. (h) Cash, Cash Equivalents and Restricted cash Cash and cash equivalents consist of cash on hand, demand deposits and floating rate financial instruments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less when purchased. The Group’s restricted cash represents amounts held in Group’s bank account as guarantee deposit for payments processing services provided by the bank. (i) Accounts Receivable, net Accounts receivable, net represents those receivables derived from the ordinary course of business and are recorded net of allowance for doubtful accounts. The Group maintains an allowance for doubtful accounts that reflect its best estimate of probable losses inherent in the accounts receivables. In determining collectability of the accounts receivables, the Group considers many factors, such as: creditworthiness of customers, aging of the receivables, payment history of customers, financial condition of the customers and market trends, and specific facts and circumstances. The allowance for doubtful accounts is reduced by subsequent collections of the specific allowances or by any write-off of customer accounts that are deemed uncollectible. The allowance for doubtful accounts was US$1,295,149 and US$1,286,120 at December 31, 2017 and 2018, respectively. There were no significant write-offs of the Group’s accounts receivable during the year ended December 31, 2017 and 2018. (j) Long-term investments Long-term investments consist of equity investments in other privately-held companies. The Group uses the equity method to account for an equity investment over which it has significant influence but does not own a majority equity interest or otherwise control. For equity investments over which the Group does not have significant influence or control, the Group records the investments at cost method. The Group reviews investments in equity investees for other-than-temporary impairment. The primary factors the Group considers in its determination are duration and severity of the decline in fair value, general market conditions, and operating performance and the prospects of the equity investees. If the equity investment’s estimated fair value is less than the cost of the investment and the Group determines the impairment to be other-than-temporary, the Group recognizes an impairment loss for the difference between the fair value and the cost basis of the investment. No impairment loss was recognized for the year ended December 31, 2018. (k) Property and Equipment, net Property and equipment is recorded at cost less accumulated depreciation and impairment. Depreciation expense of long‑lived assets is recorded as either cost of revenue or operating expenses, as appropriate. Depreciation is computed using the straight‑line method over the following estimated useful lives by major asset category: Electronic equipment and software 3 years Office equipment and furniture 3 - 5 years Motor vehicles 3 years Leasehold improvement Shorter of the lease term or expected useful life Repair and maintenance costs are charged directly to expense as incurred, whereas the cost of renewals and improvement that extend the useful lives of property and equipment are capitalized as additions to the related assets. (l) Impairment of Long‑lived Assets Long‑lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Factors considered important that could result in an impairment review include, but are not limited to, significant under‑performance relative to historical or planned operating results, significant changes in the manner of use or expected life of the assets or significant changes in our business strategies. An impairment analysis is performed at the lowest level of identifiable cash flows for an asset or asset group based on valuation techniques such as discounted cash flow analysis. An impairment charge is recognized when the estimated undiscounted cash flows expected to result from the use of the asset plus net proceeds expected from the disposition of the asset, if any, are less than the carrying value of the asset net of other liabilities. The estimation of future cash flows requires significant management judgment and actual results may differ from estimated amounts. No impairment was recognized for the years ended December 31, 2017 and 2018. (m) Revenue Recognition The Group generates substantially all of its revenue through mobile advertising, which accounted for 90%, 94% and 98% of total revenue as of December 31, 2016, 2017 and 2018, respectively. The Group also generates other revenues through live social video community and licensing of its Smart Inputs products. In accordance with the criteria set forth in ASC605, Revenue Recognition , the Group recognizes revenue when the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the selling price is fixed or determinable, and (4) collectability is reasonably assured. The Group provides advertising services to customers for promotion of their brands through its mobile applications. The Group offers two main advertising arrangements: brand advertisements and performance‑based advertising services. For brand advertisements, the Group recognizes revenue ratably based on the number of impressions delivered over the period that the advertising service is provided. For performance‑based advertising services, the Group charges fees to advertising customers based on the effectiveness of advertising links, which is measured by active clicks or other actions. Revenue from performance‑based advertising services is recognized when a user takes the action requested by the advertisement. We provide cash incentives in the form of sales rebates to certain advertising agencies, and account for such incentives as a reduction of revenue. We have estimated and recorded the rebates based on historical transactions and the agreed rebate rates with certain advertising agencies. For the years ended December 31, 2016, 2017 and 2018, the rebates recorded by the Group were US$666,741, US$1,833,085 and US$405,385, respectively. The Group engages in certain advertising barter transactions for which the fair value was not determinable and therefore no revenues or expenses derived from these barter transactions were recognized. Revenue also include sales of virtual items for live social video community of nil, US$1,177,375 and US$682,034; licensing fees for our Smart Inputs products US$351,572, US$239,915 and US$125,951; and services related to providing enterprises solution of nil, US$567,459 and US$1,764,135 for the years ended December 31, 2016, 2017 and 2018, respectively. (n) Deferred Revenue Deferred revenue primarily includes cash received in advance from users of live social video community and advertising customers for which the services has not been provided yet. (o) Cost of Revenue Cost of revenues consist direct costs primarily relating to generating advertising revenue, which include bandwidth costs, Voice‑over Internet Protocol (“VoIP”) related expense which are charged by telecommunication providers for the Group’s VoIP products, such as AhaCall and TouchPal Phonebook, depreciation expenses and service fees for internet data center, and salary and benefits expenses of operation and maintenance department. (p) Research and Development Expenses Research and development expenses primarily consist of (1) salary and benefits expenses incurred in the research and development of new products and new functionality, and (2) general expenses and depreciation expenses associated with the research and development activities. Expenditures incurred during the research phase are expensed as incurred and no research and development expenses were capitalized as of December 31, 2016, 2017 and 2018. (q) Sales and Marketing Expenses Sales and marketing expenses primarily consist of advertising expenses, salaries and benefits of sales and marketing personnel and fees paid to mobile device manufacturers to pre‑install the Group’s Smart Input products. Advertising expenses represent online advertising and promotions of the Group’s products via social media and demand‑side platforms. Such expenses amounted to US$5,132,485, US$12,858,629 and US$68,471,237, for the years ended December 31, 2016, 2017 and December 31, 2018, respectively. (r) Operating leases Leases where substantially all the rewards and risk of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight‑line basis over the lease term. (s) Income Taxes Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. The Group follows the asset and liability method of accounting for income taxes. In accordance with the provisions of ASC 740, Income Taxes, the Group recognizes in the financial statements the benefit of a tax position if the tax position is “more likely than not” to prevail based on the facts and technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. The Group estimates liability for unrecognized tax benefits which are periodically assessed and may be affected by changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and expiration of the statute of limitations. The ultimate outcome for a particular tax position may not be determined with certainty prior to the conclusion of a tax audit and, in some cases, appeal or litigation process. Under this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial statements carrying amounts and tax bases of assets and liabilities by applying enacted statutory tax rates that will be in effect in the period in which the temporary differences are expected to reverse. The Group considers positive and negative evidence when determining whether some portion or all of the deferred tax assets will not be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry‑forward periods, historical results of operations, and tax planning strategies. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The actual benefits that are ultimately realized may differ from estimates. As each audit is concluded, adjustments, if any, are recorded in the financial statements in the period in which the audit is concluded. Additionally, in future periods, changes in facts, circumstances and new information may require us to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in the period in which the changes occur. As of December 31, 2016, 2017 and 2018, the Group did not have any significant unrecognized uncertain tax positions. (t) Employee Contribution Plan Pursuant to the relevant labor rules and regulations in the PRC, the Group participates in defined contribution retirement schemes (the “Schemes”) organized by the relevant local government authorities for its eligible employees whereby the Group is required to make contributions to the Schemes at certain percentages of the deemed salary rate announced annually by the local government authorities. Contributions to the defined contribution plan are expensed as incurred. The Group has no other material obligation for payment of pension benefits except for the annual contributions described above. (u) Share‑based Compensation Fair value recognition provisions according to ASC718, Compensation—Stock Compensation: Overall , is applied to share‑based compensation, which requires the Group to recognize expense for the fair value of its share‑based compensation awards. Compensation expense adjusted for forfeiture effect on a straight‑line basis over the requisite service period, with a corresponding impact reflected in additional paid‑in capital. Employees’ share‑based awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at grant date if no vesting conditions are required, or b) using grade vesting method, net of actual forfeitures, over the requisite service, which is the vesting period. Prior to the IPO of the Group, the fair value of the share options and restricted share units were assessed using the income approach/discounted cash flow method, with a discount for lack of marketability given that the shares underlying the awards were not publicly traded at the time of grant. This assessment requires complex and subjective judgements regarding the Group's operating history and prospects at the time the grants were made. In addition, the binomial option pricing model is used to measure the value of the share options. The determination of the fair value is affected by the fair value of the ordinary shares volatility, actual and projected employee share-based awards exercise behavior, risk-free interest rates and expected dividends. The fair value of these awards was determined with the assistance from an independent valuation firm using management's estimates and assumptions. After the IPO of the Group, in determining the fair value of the share options and restricted share units, the closing market price of the underlying shares on the granted date is applied. The expected term represents the period that share‑based awards are expected to be outstanding, giving consideration to the contractual terms of the share‑based awards, vesting schedules and expectations of future employee exercise behavior. Volatility is estimated based on annualized standard deviation of daily stock price return of comparable companies for the period before valuation date and with similar span as the expected expiration term. The Group accounts for forfeitures of the share‑based awards when they occur. Previously recognized compensation cost for the awards is reversed in the period that the award is forfeited. Amortization of share‑based compensation is presented in the same line item in the consolidated statements of operations as the cash compensation of those employees receiving the award. (v) Comprehensive (Loss) Income Comprehensive (loss) Income includes all changes in equity except those resulting from investments by owners and distributions to owners. For the years presented, the Group’s total comprehensive income (loss) includes net loss and foreign currency translation adjustments. (w) (Loss) Earnings Per Share Basic (loss) earnings per share are computed by dividing net (loss) income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. The Group's convertible redeemable preferred shares are participating securities as the preferred shares participate in undistributed earnings on an as‑if‑converted basis. Accordingly, the Group uses the two‑class method of computing (loss) earnings per share, whereby undistributed net income is allocated on a pro rata basis to each participating share to the extent that each class may share net income for the period. Undistributed net loss is not allocated to preferred shares because they are not contractually obligated to participate in the loss of the Group. Diluted (loss) earnings per ordinary share reflects the potential dilution that could occur if securities were exercised or converted into ordinary shares. The Group had convertible redeemable preferred shares and share options, which could potentially dilute basic earnings per share in the future. To calculate the number of shares for diluted income per share, the effect of the convertible redeemable preferred shares is computed using the as‑if‑converted method; the effect of the stock options is computed using the treasury stock method. (x) Concentration and risks Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investment, accounts receivable and revenue. The Group places its cash and cash equivalents and short-term investment with financial institutions with high credit ratings and quality, and believes that no significant credit exists. The Group conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Group establ |
Accounts receivable, net
Accounts receivable, net | 12 Months Ended |
Dec. 31, 2018 | |
Accounts receivable, net | |
Accounts receivable, net | 3. Accounts receivable, net Accounts receivable, net, consists of the following: As of December 31, 2016 2017 2018 US$ US$ US$ Accounts receivable 2,506,398 12,274,970 24,660,089 Allowance for doubtful accounts: Balance at beginning of the year — — (1,295,149) Additions — (1,295,149) (11,422) Write-off — — 15,379 Foreign exchange effect — — 5,072 Balance at end of the year — (1,295,149) (1,286,120) Accounts receivable, net 2,506,398 10,979,821 23,373,969 |
Prepaid expenses and other curr
Prepaid expenses and other current assets | 12 Months Ended |
Dec. 31, 2018 | |
Prepaid expenses and other current assets | |
Prepaid expenses and other current assets | 4. Prepaid expenses and other current assets Prepaid expenses and other current assets consisted of the followings: As of December 31, 2017 2018 US$ US$ Value added tax (“VAT”) recoverable 2,883,914 2,484,881 Advance to suppliers 972,909 964,223 Funds deposited at third party payment platforms 693,930 88,693 Prepaid expenses 570,749 1,021,126 Deposits 270,234 383,362 Total 5,391,736 4,942,285 |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment, Net | |
Property, Plant and Equipment, Net | 5 . Property, Plant and Equipment, Net Property and equipment, net, consisted of the followings: As of December 31, 2017 2018 US$ US$ Electronic equipment and software 3,182,880 6,353,867 Office equipment and furniture 147,487 157,009 Motor vehicles 82,470 82,470 Leasehold improvements 485,131 596,345 Construction in progress 78,510 23,714 Total 3,976,478 7,213,405 Less: Accumulated depreciation (2,032,928) (3,002,354) Property, plant and equipment, net 1,943,550 4,211,051 For the years ended December 31, 2016, 2017 and 2018, depreciation expenses were US$555,762, US$899,018 and US$1,153,606, respectively. |
Long-term investment
Long-term investment | 12 Months Ended |
Dec. 31, 2018 | |
Long-term investment | |
Long-term investment | 6. Long-term investment In May 2018, the Group acquired 7.42% equity interests in a privately-held company for cash consideration of US$0.5 million, which the Group plans to hold for long term investment purpose. The Group accounted the investment under cost method since the Group does not have the ability to exert significant influence over this investment. No impairment was recognized for the year ended December 31, 2018. |
Other non-current assets
Other non-current assets | 12 Months Ended |
Dec. 31, 2018 | |
Other non-current assets | |
Other non-current assets | 7 . Other non‑current assets As of December 31, 2017 and 2018, the Group’s other non‑current assets in the amount of US$554,278 and US$555,922, respectively mainly consisted of prepaid service fees for internet data center. |
Bank Borrowings
Bank Borrowings | 12 Months Ended |
Dec. 31, 2018 | |
Bank Borrowings | |
Bank Borrowings | 8. Bank Borrowings The Group's bank borrowings consisted of the following: As of December 31, 2017 2018 US$ US$ Short-term borrowings 1,951,062 — Long-term borrowings, current portion 1,242,319 — Total 3,193,381 — In July 2016, the Group entered into a credit facility agreement with a commercial bank. The total credit available under this facility is US$6,000,000, of which US$2,000,000 designated for borrowings with maturity up to 12 months (“short‑term borrowings”) and the remaining US$4,000,000 designated for a maturity up to 24 months (“long‑term borrowings”). The short‑term borrowings under this facility bear interest at a rate per annum equal to the prevailing base lending rate for 6 months as announced by the People’s Bank of China (“PBOC”) plus 1.31%. The weighted average interest rate of short‑term borrowings was 5.66% in the year ended December 31, 2017. The long‑term borrowings under this facility bear interest at a rate per annum equal to the prevailing base lending rate for one year as announced by the PBOC plus 1.43%. The weighted average interest rate of long‑term borrowings was 6.18% in the year ended December 31, 2017. All the bank borrowing was fully repaid as of December 31, 2018. As of December 31, 2017 and 2018, the total available credit amount under facilities were US $6,000,000 and US $10,000,000, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 9. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: As of December 31, 2017 2018 US$ US$ Accrued expenses (Note 1) 1,466,139 2,658,420 Other tax payables 723,271 577,406 Contract deposits from customers 137,907 113,425 Deferred government subsidies 63,663 40,798 ADR reimbursement (Note 2) — 117,176 Others 31,333 74,935 Total 2,422,313 3,582,160 Note 1: Accrued expenses mainly consist accrued sales rebate, accrued expenses related to live social video community, accrued professional service fees and other miscellaneous accrued marketing and operation expenses. Note 2: According to the American Depositary Receipts (“ADR”) arrangement with Deutsche Bank, the Group has received reimbursements of US$0.7 million net off withholding tax after the closing of its IPO as a return for using Depositary Bank’s services. The received reimbursements are amortized over the contract term of six and half year as other operating income. As of December 31, 2018, US$117,176 and US$604,630 were recorded in accrued expenses and other current liabilities and other non-current liabilities, respectively. |
Income Taxes Expenses
Income Taxes Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes Expenses | |
Income Taxes Expenses | 10. Income Taxes Expenses For the years ended December 31, 2016, 2017 and 2018, income tax expense were nil, US$800 and US$220, respectively. Cayman Islands CooTek (Cayman) Inc. is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, CooTek (Cayman) Inc. is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands. Hong Kong Under the current Hong Kong Inland Revenue Ordinance, the Group’s subsidiaries domiciled in Hong Kong has introduced a two-tiered profits tax rate regime which is applicable to any year of assessment commencing on or after April 1, 2018. The profits tax rate for the first HK$2 million of profits of corporations will be lowered to 8.25%, while profits above that amount will continue to be subject to the tax rate of 16.5%. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Group are not subject to any Hong Kong withholding tax. PRC Under the Law of the People’s Republic of China on Enterprise Income Tax (“EIT Law”), the Group’s subsidiaries and VIEs incorporated in the PRC are subject to statutory rate of 25% with the exception of Chu Le. Chu Le is a foreign‑invested enterprise established in June, 2012 located in Shanghai, China. Chu Le was subject to an income tax rate of 15% for the year ended December 31, 2017. For the year ended December 31, 2018, Chu Le was eligible for a preferential tax rate of 15% due to the obtainment of a High and New Technology Enterprise (“HNTE”) certificate for a period of 3 years expiring in 2019. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Group has no deferred tax liabilities. The Group’s deferred tax assets were as follows: As of December 31, 2016 2017 2018 US$ US$ US$ Deferred tax assets: Net operating loss carry-forward 12,717,132 18,939,915 17,044,260 Accrued expenses 2,642,398 3,128,537 2,496,850 Advertising Fees 3,737,735 4,456,190 5,876,863 Deferred subsidies 33,013 7,425 71,705 Provision for doubtful accounts — 216,415 214,327 Total deferred tax assets 19,130,278 26,748,482 25,704,005 Valuation allowance on deferred tax assets (19,130,278) (26,748,482) (25,704,005) Net deferred tax assets — — — As of December 31, 2018, the PRC Companies had tax loss carry forwards amounted to US$63,440,959, of which US$373,498, US$2,164,351, US$7,010,971, US$14,169,491, US$3,411,002, US$36,311,646 will expire in 2019, 2020, 2021, 2022, 2023 and thereafter, respectively. As of December 31, 2018, the Hong Kong Companies had tax loss carry forwards of US$10,926,693, which can be offset in the future without anytime restriction. The Group operates its business through its subsidiaries and VIEs. The Group does not file consolidated tax returns, therefore, losses from individual subsidiaries or the VIEs may not be used to offset other subsidiaries’ or VIEs’ earnings within the Group. The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will be more likely than not realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses and forecasts of future profitability. These assumptions require significant judgment and the forecasts of future taxable income are consistent with the plans and estimates the Group is using to manage the underlying businesses. Valuation allowances are established for deferred tax assets based on a more likely than not threshold. The Group’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carry forward periods provided for in the tax law. The Group has provided a full valuation allowance for the deferred tax assets as of December 31, 2017 and 2018, as management is not able to conclude that the future realization of those net operating loss carry forwards and other deferred tax assets are more likely than not. The changes in valuation allowance are as follows: For the years ended December 31, 2016 2017 2018 US$ US$ US$ Balance at the beginning of the year 12,003,169 19,130,278 26,748,482 Movement 7,812,869 7,257,873 (567,897) Tax loss carry forwards expired — (398,718) (423,517) Exchange difference effect (685,760) 759,049 (53,063) Balance at the end of the year 19,130,278 26,748,482 25,704,005 Uncertainties exist with respect to how the current income tax law in the PRC applies to the Group’s overall operations, and more specifically, with regard to tax residency status. The EIT Law includes a provision specifying that legal entities organized outside of the PRC will be considered residents for Chinese Income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the EIT Law provide that non‑resident legal entities will be considered PRC residents if substantial and overall management and control over the manufacturing and business operations, personnel, accounting and properties, occurs within the PRC. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Group does not believe that the legal entities organized outside of the PRC within the Group should be treated as residents for EIT law purposes. If the PRC tax authorities subsequently determine that the Group and its subsidiaries registered outside the PRC should be deemed resident enterprises, the Group and its subsidiaries registered outside the PRC will be subject to the PRC income taxes, at a statutory income tax rate of 25%. The Group is not subject to any other uncertain tax position. According to PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or withholding agent. The statute of limitations will be extended five years under special circumstances, which are not clearly defined (but an underpayment of tax liability exceeding RMB0.1 million, equivalent to US$15,304, is specifically listed as a special circumstance). In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion. From inception to the calendar year of 2018, the Group is subject to examination of the PRC tax authorities. In accordance with the EIT Law, dividends, which arise from profits of foreign invested enterprises (“FIEs”) earned after January 1, 2008, are subject to a 10% withholding income tax. In addition, under tax treaty between the PRC and Hong Kong, if the foreign investor is incorporated in Hong Kong and qualifies as the beneficial owner, the applicable withholding tax rate is reduced to 5%, if the investor holds at least 25% in the FIE, or 10%, if the investor holds less than 25% in the FIE. A deferred tax liability should be recognized for the undistributed profits of PRC subsidiaries unless the Group has sufficient evidence to demonstrate that the undistributed dividends will be reinvested and the remittance of the dividends will be postponed indefinitely. Aggregate accumulated deficit of the Group's subsidiaries and VIEs located in the PRC was approximately US$75,858,456, US$94,847,639 and US$79,285,723 as of December 31, 2016, 2017 and 2018, respectively. Aggregate accumulated deficit of the Group's subsidiaries located in Hong Kong was approximately US$7,376,532, US$5,932,444 and US$11,801,220 as of December 31, 2016, 2017 and 2018, respectively. Accordingly, no deferred tax liability has been accrued for the PRC dividend withholding taxes that would be payable upon the distribution of those amounts to the Group as of December 31, 2017 and 2018. Reconciliations of the differences between PRC statutory income tax rate and the Group’s effective income tax rate for the years ended December 31, 2016, 2017 and 2018 are as follows: For the years ended December 31, 2016 2017 2018 Statutory income tax rate 25 % 25 % 25 % Valuation allowance (26) % (27) % (11) % Additional tax deduction 3 % 5 % (25) % Effect of different tax rate of subsidiary operation in other jurisdiction (2) % (3) % 8 % Expired tax loss — — 4 % Others — — (1) % Effective tax rate — — — |
Ordinary shares
Ordinary shares | 12 Months Ended |
Dec. 31, 2018 | |
Ordinary shares | |
Ordinary shares | 11. Ordinary shares In January 2017, the Group repurchased 14,158,256 shares of ordinary shares from certain founder shareholders, who are also employees of the Group, at the price of US$0.2119 per ordinary share. The repurchased shares were cancelled immediately. As the shares were repurchased above fair value, the Group recognized compensation expense which amounted to US$1,548,384 for the difference between the repurchase price and the fair value of the ordinary shares at the date of the repurchase. Prior to the consummation of the IPO, pursuant to the revised Articles of Association, the Group’s existing preferred shares and ordinary shares was reclassified and re-designated into Class A ordinary shares and Class B ordinary shares, with each Class A ordinary share being entitled to one vote and each Class B ordinary share being entitled to twenty-five votes on all matters that are subject to shareholder vote. Both Class A ordinary shares and Class B ordinary shares are entitled to the same dividend right. The holders of the Group’s ordinary shares are entitled to such dividends as may be declared by the board of directors subject to the Companies Law. The authorized 15,000,000,000 share of the Group was comprised of 13,750,000,000 Class A ordinary shares, 250,000,000 Class B ordinary shares and 1,000,000,000 shares designated as the board of directors may determine. Upon the completion of IPO in October 2018, the Group issued 217,500,000 Class A ordinary shares with the price of US$0.24 per share, totaling to US$48.5 million after net-off the underwriting and discounts and commissions. |
Treasury stocks
Treasury stocks | 12 Months Ended |
Dec. 31, 2018 | |
Treasury stocks | |
Treasury stocks | 12. Treasury stocks Treasury stocks represent shares repurchased by the Group that are no longer outstanding and are held by the Group. The entire purchase price of US$2.5 million was accounted for as the cost of the treasury stocks. As of December 31, 2018, under the repurchase plan, the Group had repurchased an aggregate of 15,550,500 ordinary shares on the open market for a total cash consideration of US$2,499,167. The repurchased shares were presented as "treasury stocks" in shareholders' equity on the Group's consolidated balance sheets. |
Convertible Redeemable Preferre
Convertible Redeemable Preferred Shares | 12 Months Ended |
Dec. 31, 2018 | |
Convertible Redeemable Preferred Shares | |
Convertible Redeemable Preferred Shares | 13. Convertible Redeemable Preferred Shares The Group's preferred shares consist of the following: As of December 31, 2017 2018 US$ US$ Series A preferred shares ( US$0.00001 par value; 442,174,065 and nil shares authorized, issued and outstanding with redemption value of US$6,168,328 and nil as of December 31, 2017 and 2018, respectively.) 4,112,218 — Series B preferred shares ( US$0.00001par value; 423,682,617 shares and nil authorized, issued and outstanding with redemption value of US$12,257,781 and nil as of December 31, 2017 and 2018) 7,288,964 — Series B+ preferred shares ( US$0.00001par value; 129,616,445 and nil shares authorized, issued and outstanding with redemption value of US$3,750,000 and nil as of December 31, 2017 and 2018) 2,500,000 — Series B-1 preferred shares ( US$0.00001 par value; 119,688,525 and nil shares authorized, issued and outstanding with redemption value of US$6,925,540 and nil as of December 31, 2017 and 2018) 7,166,628 — Series C preferred shares ( US$0.00001 par value; 651,629,045 and nil shares authorized, issued and outstanding with redemption value of US$103,950,000 and nil as of December 31, 2017 and 2018) 69,300,000 — Series D preferred shares ( US$0.00001 par value; 223,478,358 and nil shares authorized, issued and outstanding with redemption value of US$54,312,440 and nil as of December 31, 2017 and 2018) 46,000,000 — Series D-1 preferred shares ( US$0.00001 par value; 89,668,956 and nil shares authorized, issued and outstanding with redemption value of US$22,330,558 and nil as of December 31, 2017 and 2018, respectively) 20,000,000 — Total 156,367,810 — Series A preferred shares In connection with the reorganization described in Note 1, in August 2012, the Company issued 344,086,021 Series A Preferred Shares. One of the outside investors exercised warrants to acquire additional 107,526,882 Series A preferred shares at a per‑share purchase price of US$0.0093 for a total cash consideration of US$1 million. In January 2017, concurrent with the issuance of Series D‑1 Preferred Shares, the Company repurchased and cancelled 9,438,838 Series A Preferred Shares at the price of US$ 0.2119 per share. The per‑share fair value of the Series A Preferred Shares as determined by the Company with the assistance of independent valuation firm was below the repurchase price paid by the Company. As such, the amount of US$1,028,055 that was paid by the Company in excess of the fair value of the shares at the time of the repurchase as recognized as deemed dividend. Series B preferred shares & Series B‑1 preferred shares In October 2012, the Company issued 423,682,617 shares of series B preferred shares (“Series B Preferred Shares”) at a per‑share purchase price of US$0.0193 for total cash consideration of US$8,171,853 to a group of third party investors. In conjunction with the issuance of Series B Preferred Shares, the Company also granted warrants to certain Series B preferred shareholders to purchase convertible redeemable preferred shares up to US$4,679,804 at a per‑share exercise price of US$0.0386. The total cash consideration was allocated between Series B preferred shares and warrants based on a residual value method. The cash consideration was first allocated to warrants based on the fair value of the warrants of US$882,889 and the remaining cash consideration of US$7,288,964 was recorded as the initial carrying value of Series B Preferred Shares. The warrants were exercised subsequently in July 2014. As a result, 119,688,525 Series B‑1 Preferred Shares were issued for total cash proceeds of US$4,506,857. Series B+ preferred shares In May 2013, the Company issued 129,616,445 shares of Series B+ preferred shares (“Series B+ Preferred Shares”) at a per‑share purchase price of US$0.0193 for total cash consideration of US$2.5 million to a group of unrelated third party investors. Series C preferred shares In July 2014, the Company issued 651,629,045 shares of Series C preferred shares (“Series C Preferred Shares”) at a per‑share purchase price of US$0.1063 for total cash consideration of US$69.3 million to an unrelated third party investor. Series D preferred shares In July 2016, the Company issued 223,478,358 shares of Series D preferred shares (“Series D Preferred Shares”) at a per‑share purchase price of US$0.2058 for total cash consideration of US$46 million to a group of unrelated third party investors. Series D‑1 Preferred Shares In January 2017, the Company issued 89,668,956 shares of Series D‑1 preferred shares (“Series D‑1 Preferred Shares”) at a per‑share purchase price of US$0.2230 for total cash consideration of US$20 million to a group of unrelated third party investors. The key terms of the preferred Shares are as follows: Conversion Each holder of Preferred Shares shall have the right, at such holder’s sole discretion, to convert all or any portion of the Preferred Shares into ordinary shares based on a one‑for‑one basis at any time. The initial conversion price is the issuance price of Preferred Shares, subject to adjustment in the event of (1) stock splits, share combinations, share dividends and distribution, recapitalizations and similar events, and (2) issuance of new securities at a price per share less than the conversion price in effect on the date of or immediately prior to such issuance. In that case, the conversion price shall be reduced concurrently to the subscription price of such issuance. The Preferred Shares will be automatically converted into ordinary shares at the then applicable conversion price upon the earlier of (1) the closing of a Qualified Initial Public Offering (QIPO), which refers to a firm underwritten initial public offering resulting in (i) market capitalization of at least US$1,000,000,000, and (ii) gross proceeds to the Company of at least US$100,000,000; or (2) the vote or written consent of the holders of more than two thirds ( 2 / 3 ) of the then issued and outstanding Preferred Shares. The Group has determined that there was no beneficial conversion feature (BCF) attributable to the Preferred Shares, as the effective conversion price was greater than the fair value of the ordinary shares on the respective commitment dates. The Group will reevaluate whether additional BCF is required to be recorded upon the modification to the effective conversion price of the Preferred Shares, if any. Voting Rights The preferred shareholders are entitled to vote with ordinary shareholders on an as‑converted basis. Dividends The preferred shareholders participate in dividends on an as‑converted basis and must be paid prior to any payment on ordinary shares. Redemption Redemption date Upon the issuance of Series D Preferred Shares, Series A, B, B+, B‑1 and C Preferred Shares are redeemable at the option of each holder in the event that (i) a QIPO does not take place by June 30, 2020, (ii) there occurs any material breach by any companies of the Group or the founding shareholders which could reasonably be expected to have a Material Adverse Effect, (iii) there is any change in the PRC legal environment regarding the corporate structure of any Group Company which could reasonably be expected to have a material adverse effect, or (iv) any holder of previously issued Preferred Shares exercises its redemption right. Each Series D and D‑1 Preferred Share shall be redeemable at the option of each holder, in the event that (i) the Company fails to submit a formal application for QIPO at an securities exchange in the US or Hong Kong or PRC by June 30, 2019; (ii) the Company fails to complete a QIPO by June 30, 2020; (iii) any of the following events occurs (“Events of Default”):(1) there occurs any material breach of the preferred shares purchase agreement by any of the Group, founders or founder’s holding companies; (2) there occurs any event that causes a material adverse effect on the Group; (3) any of the key employees ceased to devote less than 80% of his business time and attention to the business of the Group; or (4) the Group is subject to any official criminal charge, investigation or conviction; or (vi) any holder of previously issued Preferred Shares exercises its redemption right. In conjunction with the issuance of Series D Preferred Shares, the Company modified Series A, B, B+, B‑1 and C Preferred Shares to extend the date of mandatory redemption as noted above. The Company does not consider this change as an extinguishment of Series A, B, B+, B‑1 and C Preferred Shares as the impact of this change was not significant. Redemption price The redemption price with respect to each Series A, B, B+, B‑1 and C Preferred Share shall be 150% of the issue price per Preferred Share (adjusted for any share splits, share transfer, share dividends, combinations, recapitalizations and similar transactions), plus all accumulated dividends declared and unpaid with respect to up to the date of redemption. The redemption price with respect to each Series D Preferred Share shall be the original issue price plus annual rate of return of 12%, excluding all the distributed dividends (if any). The redemption price with respect to each Series D‑1 Preferred Share is the same as Series D, plus the term that the applicable rate of return shall be replaced with 15% if the redemption is triggered by the occurrence of the any Event of Default. Management of the Group evaluated that redemption was not probable and therefore did not accrete the Preferred Shares to the redemption value. The redemption value as of December 31, 2017 would be US$209,694,647. Liquidation Upon any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, distributions to the holders of the Company shall be made in the following matters: Before any distribution or payment shall be made to the holders of any Series C, B‑1, B+, B and A Shares and any Ordinary Shares, each holder of Series D‑1 and D Preferred Shares shall be entitled to receive an amount equal to sum of (i) the issue price (adjusted for any share splits, share dividends, combinations, recapitalizations and similar transactions, as applicable), plus annual interest calculated at 12%. (The foregoing amount shall not exceed 155% of the issue price); (2) all dividends accrued and unpaid with respect to Series D‑1 and D Preferred Share then held by the holder. Before any distribution or payment shall be made to the holders of Series B‑1, B+, B and A Preferred Shares and Ordinary Shares, each holder of Series C Preferred Shares shall be entitled to receive an amount equal to 115% of the issue price (adjusted for any share splits, share dividends, combinations, recapitalizations and similar transactions, as applicable), plus all dividends accrued and unpaid with respect to Series C Preferred Share held by the holders. Before any distribution or payment shall be made to the holders of any Series A Preferred Shares and any Ordinary Shares, each holder of Series B‑1, B+ and B Preferred Shares shall be entitled to receive an amount equal to 130% of the issue price (adjusted for any share splits, share dividends, combinations, recapitalizations and similar transactions, as applicable), plus all dividends accrued and unpaid with respect to Series B‑1, B+, and B Preferred Share held by the holders. Before any distribution or payment shall be made to the holders of any Ordinary Shares, each holder of Series A Preferred Shares shall be entitled to receive an amount equal to the applicable the issue price (adjusted for any share splits, share dividends, combinations, recapitalizations and similar transactions, as applicable), plus all dividends accrued and unpaid with respect to the per Series A Preferred Share held by the holders. Deemed Liquidation The following events shall be treated as a liquidation unless waived by the holders of at least a majority of the issued and outstanding Series A, B, B+, B‑1, C, D and D‑1 Preferred Shares, each voting together as a single group on an as‑converted basis: (i) any consolidation, amalgamation or merger of the Company with or into any other person or other corporate reorganization (excluding any transaction effected solely for tax purposes or to change the Company’s domicile), in which the members of the Company immediately prior to such transactions, own less than 50% of the Company’s voting power immediately after the transactions to which the Company is a party in which in excess of 50% of the Company’s voting power is transferred; (ii) the sale, exchange, transfer or other disposition of a majority of the outstanding share capital of the Company to one person(s), under circumstances in which the holders of a majority in voting power of the outstanding share capital of the Company immediately prior to such transaction beneficially own less than a majority in voting power of the outstanding share capital of the surviving entity or the acquiring Person immediately following such transaction; (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company or any Group Company; or the exclusive licensing of all or substantially all of the Company’s or any Group Company’s intellectual property to a third party. On October 2, 2018, all of the preferred shares were converted to 2,079,938,011 shares of Class A ordinary shares immediately upon the completion of the Group's IPO. |
Share-Based Compensation
Share-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Share-Based Compensation | |
Share-Based Compensation | 14. Share‑Based Compensation In August 2012, The Group's shareholders adopted the share incentive plan (“2012 Option Plan”). Under the 2012 Option Plan, the Group's shareholders have authorized the issuance of up to 75,268,817 ordinary shares underlying all options (including incentive share options, or ISOs), restricted shares and restricted share units granted to a participant under the plan, or the awards. The 2012 Option Plan was amended in October 2012 to increase the maximum aggregate number of ordinary shares to 155,631,013 Shares. The 2012 Option Plan was amended in July 2014 to increase the maximum aggregate number of ordinary shares to 266,153,637 Shares. In August 2018, The Group's shareholders adopted the 2018 Share Incentive Plan ("2018 Plan). The maximum aggregate number of shares which may be issued under the 2018 Plan shall initially be 2.0% of the total number of shares issued and outstanding immediately following the completion of IPO, plus an annual increase on the first day of each of the first five (5) complete fiscal years after the completion of IPO and during the term of this plan commencing with the fiscal year beginning January 1, 2019, by an amount equal to 2.0% of the total number of shares issued and outstanding on the last day of the immediately preceding fiscal year (excluding issued shares reserved for future option exercise and restricted share unit vesting). Share Options The options have a contractual term of ten years. The vesting date starts on the grant date or the commencement date of a participant’s employment agreement. The options vest 20% on each of the five anniversary dates of the vesting date and upon continued employment. In the event of termination of a participant’s employment, the unvested options shall be terminated immediately. The participant’s right to exercise the vested options shall be terminated 2 or 3 months after the termination of the employment. The weighted average grant date fair values of options granted during the years ended December 31, 2016 and 2017 were US$0.04 and US$0.04, respectively, and no options granted during the year ended December 31, 2018. For the years ended December 31, 2016, 2017 and 2018, the Group recognized share‑based compensation expense of US$727,213, US$876,560 and US$779,582, respectively. The Group uses the binomial option pricing model and the following assumptions to estimate the fair value of the options at the date of granted: Year ended December 31 2016 2017 Average risk-free rate of interest 1.49% - 2.45% 2.27% - 2.45% Expected volatility 40.92% - 41.88% 40.47% - 41.32% Dividend yield 0% 0% Contractual term 10 years 10 years Fair value of the underlying shares on the date of option grants 0.08 - 0.10 0.10 - 0.16 On November 6, 2018, the Board of Directors approved an option modification to reduce the exercise price of certain options granted to employees. All other terms of the share options granted remain unchanged. The modification resulted in incremental compensation cost of US$285,661, of which US$12,914 was recorded during the year ended December 31, 2018. The remaining US$272,747 will be amortized over the remaining vesting period of the modified options, ranging from 2019 to 2021. The risk‑free rate of interest is based on the US Treasury yield curve as of valuation date. Volatility is estimated based on annualized standard deviation of daily stock price return of comparable companies for the period before valuation date and with similar span as the expected expiration term. The Group has never declared or paid any cash dividends on its capital stock, and the Group does not anticipate any dividend payments in the foreseeable future. A summary of the aggregate option activity and information regarding options outstanding as of December 31, 2018 is as follows: Weighted Weighted average average remaining Aggregate Number of exercise contractual intrinsic options price term value US$ US$ Outstanding on January 1, 2018 175,535,767 0.06 6.71 13,507,650 Granted — Forfeited (4,062,571) 0.16 Expired (1,500,260) 0.11 Outstanding on December 31, 2018 169,972,936 0.05 5.65 19,699,547 Exercisable on December 31, 2018 125,119,174 0.04 5.21 15,835,782 No options were exercised for the years ended December 31, 2018. As of December 31, 2018, there was US$1,384,784 in total unrecognized compensation cost related to non‑vested stock options, which is expected to be recognized over a weighted‑average period of 1.85 years. Restricted Share Units In 2018, the Group granted to certain employees 33,948,333 Restricted Share Units ("RSUs"). The RSUs have a contractual term of ten years and vest 25% on each anniversary over four years from the grant date. The vesting of these RSU is conditioned on continued employment. The exercise price of these shares is nil per share. Compensation expense based on fair value is amortized over the requisite service period of award using the straight line vesting attribution method. A summary of the RSU activity for the year ended December 31, 2018 is as follows: Weighted average grant date Number of restricted shares fair value US$ Nonvested restricted shares outstanding at January 1, 2018 — — Granted 33,948,333 0.27 Vested (150,000) (0.28) Forfeited (1,430,000) (0.31) Nonvested restricted shares outstanding at December 31, 2018 32,368,333 0.26 The share-based compensation expense related to RSUs of US$1,566,975 was recognized by the Group for the year ended December 31, 2018. As of December 31, 2018, there was US$6,986,236 in unrecognized compensation costs, net of actual forfeitures, related to unvested restricted shares, which is expected to be recognized over a weighted-average period of 3.37 years. |
Earnings (Loss) per share
Earnings (Loss) per share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings (Loss) per share | |
Earnings (Loss) per share | 15. Earnings (Loss) per share Net earnings (loss) per share was computed by dividing net (loss) income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding for the years ended December 31, 2016, 2017 and 2018: For the years ended December 31, 2016 2017 2018 US$ US$ US$ Numerator: Net (loss) Income—basic and diluted (30,706,599) (23,660,913) 10,147,465 Deemed dividend from repurchase of Series A Preferred Shares — (1,028,055) — Net (loss) Income attributable to ordinary shareholders (30,706,599) (24,688,968) 10,147,465 Shares (Denominator): Weighted average number of ordinary shares outstanding Basic 912,551,946 898,781,587 1,464,257,884 Diluted 912,551,946 898,781,587 1,591,094,630 Net (loss) earnings per share—basic and diluted (0.03) (0.03) 0.003 The Group has determined that its convertible redeemable preferred shares are participating securities as the preferred shares participate in undistributed earnings on an as‑if‑converted basis. The holders of the preferred shares are entitled to receive dividends on a pro rata basis, as if their shares had been converted into ordinary shares. Accordingly, the Group uses the two‑class method of computing net income per share for ordinary and preferred shares according to their participation rights in undistributed earnings. However, undistributed net loss is only allocated to ordinary shareholders because holders of preferred shares are not contractually obligated to share losses. Diluted earnings per share are computed using the more dilutive of (a) the two-class method or (b) the if-converted method. Diluted earnings per share for the year ended December 31, 2018 is computed using the two-class method as it is more dilutive than the if-converted method. As of December 31, 2016, 2017 and 2018, diluted net (loss) earnings per share does not include the following instruments as their inclusion would be antidilutive: As of December 31, 2016 2017 2018 Series A preferred shares 451,612,903 442,174,065 — Series B preferred shares 423,682,617 423,682,617 — Series B+ preferred shares 129,616,445 129,616,445 — Series B-1 preferred shares 119,688,525 119,688,525 — Series C preferred shares 651,629,045 651,629,045 — Series D preferred shares 223,478,358 223,478,358 — Series D-1 preferred shares — 89,668,956 — Share options 168,254,075 175,535,767 — Restricted shares units — — 14,495,000 Total 2,167,961,968 2,255,473,778 14,495,000 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions | |
Related Party Transactions | 16. Related Party Transactions In November 2016, the Group lent certain shareholder RMB500,000 (equivalent to US$74,734). The loan bears an interest rate of 4.08% and is repayable in cash under a 36‑month‑installment repayment scheme. The loan was repaid fully in February 2018. In April 2017, the Group lent certain shareholder RMB2,000,000 (equivalent to US$293,285). The loan bears an interest of 4.08% and term of 1 year. Repayment of principal and interest is due at maturity. The loan was repaid fully in March 2018. The following table presents amounts owed from related parties as of December 31, 2017 and 2018: As of December 31, 2017 2018 US$ US$ Current portion 340,955 — Non-current portion 24,442 — Total 365,397 — |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2018 | |
Commitments | |
Commitments | 17. Commitments Lease Obligations The Group leases certain office premises under operating leases. The term of each lease agreement vary and may contain renewal options. Rental payments under operating leases are charged to operating expenses on a straight‑line basis over the period of the lease based on contract terms. Rental expenses under operating leases for the years ended December 31, 2016, 2017 and 2018 were US$587,120, US$847,832 and US$1,011,379, respectively. Future lease payments under operating leases as of December 31, 2018 were as follows: Year ending December 31 US$ 2019 957,522 2020 432,492 2021 414,816 2022 292,520 Total 2,097,350 The Group did not have other significant capital commitments or significant guarantees as of December 31, 2017 and 2018, respectively. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Segment Information | 18. Segment Information The Group has only one reportable segment since the Group does not distinguish revenues, costs and expenses between segments in its internal reporting, and reports costs and expenses by nature as a whole. The Group’s chief operating decision maker, who has been identified as the Chief Executive Officer, reviews the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole. The Group does not distinguish among markets or segments for the purpose of internal reports. The following information about the Group’s revenue is presented based on revenue streams. For the years ended December 31, 2016 2017 2018 US$ US$ US$ Advertising revenue 9,967,282 35,032,557 131,287,334 Other revenue 1,062,797 2,302,409 2,822,298 Total net revenues 11,030,079 37,334,966 134,109,632 The following table summarizes the Group's revenues generated by the geographic location of customers’ headquarters. For the years ended December 31, 2016 2017 2018 US$ US$ US$ USA 5,423,026 20,246,637 108,309,547 PRC 5,135,689 15,393,590 25,502,479 Others 471,364 1,694,739 297,606 Total 11,030,079 37,334,966 134,109,632 Information about the Group’s non‑current assets is presented based on the geographical location of the assets as follows: As of December 31, 2017 2018 US$ US$ PRC 1,757,460 2,232,800 USA 764,810 3,034,205 Total 2,522,270 5,267,005 The following customers accounted for 10% or more of revenue: For the years ended December 31, 2016 2017 2018 USD % USD % USD % Company A 4,019,900 % 6,919,426 18.53 % * * Company B * * 7,467,645 20.00 % 73,116,840 54.52 % Company C * * * * 14,609,270 10.89 % |
Mainland China Contribution Pla
Mainland China Contribution Plan | 12 Months Ended |
Dec. 31, 2018 | |
Mainland China Contribution Plan | |
Mainland China Contribution Plan | 19. Mainland China Contribution Plan Full time employees of the Group in the PRC participate in a government‑mandated defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. The PRC labor regulations require the Group to accrue for these benefits based on certain percentages of the employees’ salaries. The total contributions for such employee benefits were US$2,370,359, US$3,383,205 and US$4,504,045 for the years ended December 31, 2016, 2017 and 2018, respectively. |
Restricted Net Assets
Restricted Net Assets | 12 Months Ended |
Dec. 31, 2018 | |
Restricted Net Assets | |
Restricted Net Assets | 20. Restricted Net Assets As a result of the PRC laws and regulations and the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance with PRC GAAP, the PRC entities are restricted from transferring a portion of their net assets to the Group. Amounts restricted include paid‑in capital, additional paid‑in capital and the statutory reserves of the Group's PRC subsidiaries, affiliates and VIEs. As of December 31, 2018, the total of restricted net assets were US$66,897,860. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Event | |
Subsequent Event | 21. Subsequent Event Pursuant to the repurchase shares program announced on November 26, 2018, 16,717,850 shares (equivalent to 334,357 ADSs) of the Group's Class A ordinary shares were purchased from January 1, 2019 through April 9, 2019 for a total cash consideration of US$3.2 million from the public market. |
SCHEDULE I-ADDITIONAL FINANCIAL
SCHEDULE I-ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY | 12 Months Ended |
Dec. 31, 2018 | |
SCHEDULE I-ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY | |
SCHEDULE I-ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY | SCHEDULE I—ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY COOTEK (CAYMAN) INC. CONDENSED BALANCE SHEETS As of December 31, 2017 2018 US$ US$ ASSETS Current assets: Cash and cash equivalents 1,307,136 11,044,673 Accounts receivable 5,971 7,222 Prepaid expenses and other current assets 30,596 34,027 Total current assets 1,343,703 11,085,922 Advances to subsidiaries and VIEs 30,102,549 74,814,760 TOTAL ASSETS 31,446,252 85,900,682 LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED SHARES AND SHAREHOLDERS' (DEFICITS) EQUITY Current liabilities: Accrued issuance costs — 809,952 Deferred ADR reimbursement — 117,176 Other current liabilities — 46,129 Total current liabilities — 973,257 Other non-current liabilities — 604,630 TOTAL LIABILITIES — 1,577,887 Convertible redeemable preferred shares (redemption value of US$209,694,647 and nil as of December 31, 2017 and December 31, 2018, respectively) 156,367,810 — SHAREHOLDERS' (DEFICITS) EQUITY: Ordinary shares 8,984 31,960 Treasury Stock (2,499,167) Additional paid-in capital 876,560 204,701,187 Accumulated deficit (126,899,750) (116,752,285) Accumulated other comprehensive income (loss) 1,092,648 (1,158,900) Total Shareholders ’ (Deficits) Equity (124,921,558) 84,322,795 TOTAL LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED SHARES AND SHAREHOLDERS' (DEFICITS) EQUITY 31,446,252 85,900,682 SCHEDULE I—ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY COOTEK (CAYMAN) INC. CONDENSED STATEMENTS OF OPERATIONS For Years ended December 31, 2016 2017 2018 US$ US$ US$ Net revenues 68,944 116,120 146,090 Cost of revenue (44,853) (66,231) (87,416) Gross profit 24,091 49,889 58,674 Operating expenses: General and administrative expenses (520,067) (2,043,737) (450,005) Research and development expenses (445,084) (544,786) (1,788,724) Sales and marketing expenses (35,298) (70,707) (127,095) Other operating income, net — — 9,374 Total operating expenses (1,000,449) (2,659,230) (2,356,450) Loss from operations (976,358) (2,609,341) (2,297,776) Foreign exchange (losses) gains (3,326,826) 2,792,646 9,604 Income (Loss) before income taxes and equity in earnings of subsidiaries (4,303,184) 183,305 (2,288,172) Net income (loss) before equity in earnings of subsidiaries (4,303,184) 183,305 (2,288,172) Equity in (loss) income of subsidiaries, VIEs and VIEs' subsidiaries (26,403,415) (23,844,218) 12,435,637 Net (loss) income attributed to CooTek (Cayman) Inc . (30,706,599) (23,660,913) 10,147,465 SCHEDULE I—ADDITIONAL INFORMATION OF PARENT COMPANY COOTEK (CAYMAN) INC CONDENSED STATEMENTS OF CASH FLOWS For Years ended December 31, 2016 2017 2018 US$ US$ US$ Operating activities: Net (loss)income (30,706,599) (23,660,913) 10,147,465 Equity in losses (income) of subsidiaries, VIEs and VIEs’ subsidiaries 26,403,415 23,844,218 (12,435,637) Adjustment to reconcile net loss to net cash provided by (used in) operating activities: Share-based compensation 727,213 876,560 2,359,471 Changes in assets and liabilities: Accounts receivable (2,033) (163) (1,251) Accrued expenses and other current liabilities 10,000 (10,000) 163,305 Other receivables, deposits and other assets — — (3,432) Other non-current liabilities — — 604,630 Net cash provided by (used in) operating activities (3,568,004) 1,049,702 834,551 Investing activities: Investment in subsidiaries — (21,500,000) 19,890,000 Advances to subsidiaries and VIEs (37,291,793) (252,465) (54,418,121) Net cash used in investing activities (37,291,793) (21,752,465) (34,528,121) Financing activities: Proceeds from issuance of preferred shares 46,000,000 20,000,000 — Issuance of ordinary shares for initial public offering (“IPO”) — — 45,930,274 Cash paid for other financing activities — (3,451,616) — Payment of share repurchase — — (2,499,167) Net cash provided by financing activities 46,000,000 16,548,384 43,431,107 Net increase (decrease) in cash, cash equivalents and restricted cash 5,140,203 (4,154,379) 9,737,537 Cash, cash equivalents and restricted cash at beginning of year 321,312 5,461,515 1,307,136 Cash, cash equivalents and restricted cash at end of year 5,461,515 1,307,136 11,044,673 SCHEDULE I—COOTEK (CAYMAN) INC CONDENSED FINANCIAL STATEMENTS Notes to Schedule I 1. Schedule I has been provided pursuant to the requirements of Rule 12‑04(a) and 5‑04(c) of Regulation S‑X, which require condensed financial information as to the financial position, changes in financial position and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. 2. The condensed financial information has been prepared using the same accounting policies as set out in the consolidated financial statements except that the equity method has been used to account for investments in its subsidiaries and VIEs and VIEs’ subsidiaries. For the parent company, the Company records its investments in subsidiaries VIEs and VIEs subsidiaries under the equity method of accounting as prescribed in ASC 323, Investments—Equity Method and Joint Ventures. Such investments are presented on the Condensed Balance Sheets as “Investment in subsidiaries VIEs and VIEs’ subsidiaries” and share of their earnings (losses) as “Equity in earnings (losses) of subsidiaries, VIEs and VIEs’ subsidiaries” on the Condensed Statements of Operations. 3. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The footnote disclosures provide certain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the accompanying consolidated financial statements. 4. As of December 31, 2017 and 2018, there were no material contingencies, significant provisions of long‑term obligations, mandatory dividend or redemption requirements of redeemable stocks or guarantees of the Company. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | (a) Basis of Presentation The consolidated financial statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). |
Principles of Consolidation | (b) Principles of Consolidation The consolidated financial statements include the financial information of the Company, its wholly owned subsidiaries and its consolidated variable interest entities (“VIEs”). All intercompany balances and transactions have been eliminated upon consolidation. Applicable PRC laws and regulations currently limit foreign ownership of companies that provide internet content distribution services and any other restrictions. The Company is deemed a foreign legal person under PRC laws and accordingly subsidiaries owned by the Company are not eligible to engage in provisions of internet content or online services. The Group therefore conducts its online business through the following consolidated VIEs: · Shanghai Han Xiang (CooTek) Information Technology Co., Ltd. (“Han Xiang”) · Shanghai Chu Bao (CooTek) Information Technology Co., Ltd. (“Chu Bao”) · Yingsun Information Technology Co., Ltd. (“Yingsun”) · Molihong Internet Technology Co., Ltd (“Molihong”) To provide the Group effective control over the VIEs and receive substantially all of the economic benefits of the VIEs, the Company’s wholly owned subsidiary, Shanghai ChuLe (CooTek) Information Technology Co., Ltd. (“Chu Le” of “WFOE”) entered into a series of contractual arrangements, described below, with The VIEs and their respective shareholders. Agreements that provide the Company effective control over the VIEs include: Voting Rights Proxy Agreements & Irrevocable Power of Attorney Pursuant to which each of the shareholders of VIEs has executed voting rights proxy agreements, appointing the WFOE, or any person designated by the WFOE, as their attorney‑ in‑fact to (i) call and attend shareholders’ meetings of VIEs and execute relevant shareholders’ resolutions; (ii) exercise on their behalf all his rights as a shareholder of VIEs, including those rights under PRC laws and regulations and the articles of association of VIEs, such as voting, appointing, replacing or removing directors, (iii) submit all documents as required by governmental authorities on behalf of VIEs, and (iv) assign the shareholding rights of VIEs, including receiving dividends, disposing of equity interest and enjoying the rights and interests during and after liquidation. Exclusive Call Option Agreements Pursuant to which each the VIE shareholders unconditionally and irrevocably granted the WFOE or its designee exclusive options to purchase, to the extent permitted under PRC laws and regulations, all or part of the equity interests in the VIEs. The WFOE has the sole discretion to decide when to exercise the options, and whether to exercise the options in part or in full. Without the WFOE’s written consent, the VIE shareholders may not sell, transfer, pledge or otherwise dispose of or create any encumbrance on any of VIEs’ assets or equity interests. Equity Pledge Agreements The VIE shareholders agreed to pledge their equity interests in VIEs to the WFOE to secure the performance of the VIEs’ obligations under the series of contractual agreements and any such agreements to be entered into in the future. Without prior written consent of the WFOE, the VIEs’ shareholders shall not transfer or dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests. If any economic interests were received by means of their equity interests in the VIEs, such interests belong to the WFOE. Agreements that transfer economic benefits of VIEs to the Group include: Exclusive Business Cooperation Agreements Under the exclusive services agreement, the Company and the WFOE have the exclusive right to provide comprehensive technical and business support services to the VIEs. In exchange, the VIEs pay monthly service fees to the WFOE in the amount equivalent to all of their net income as confirmed by the WFOE. The WFOE has the right to adjust the service fee rates at its sole discretion. The agreement can be early terminated by the WFOE by giving a 30‑day prior notice, but not by the VIEs or VIE shareholders. Loan Agreements The WFOE entered into loan agreements with each shareholder of the VIEs. Pursuant to the terms of these loan agreements, the WFOE granted an interest‑free loan to each shareholder of the VIEs for the explicit purpose of making a capital contribution to the VIEs. The term of the loans are 10 years and shall be renewed automatically every 3 years for an additional 3 years unless the WFOE terminates the agreement (which option is at the WFOE’s sole discretion) at which point the loans are payable on demand. The shareholders of the VIEs may not prepay all or any portion of the loans without the WFOE’s consent. The WFOE did not enter into loan agreements with shareholders of Han Xiang, as the capital paid is sufficient for operation. Voting Rights Proxy Agreements & Irrevocable Powers of Attorney provide the Company effective control over the VIEs and its subsidiaries, while the Equity Pledge Agreements secure the obligations of the shareholders of the VIEs under the relevant agreements. Because the Company, through the WFOE, has (i) the power to direct the activities of the VIEs that most significantly affect the entity’s economic performance and (ii) the right to receive substantially all of the benefits from the VIEs, the Company is deemed the primary beneficiary of the VIEs. Accordingly, the Company has consolidated the VIEs’ financial results of operations, assets and liabilities in the Group’s consolidated financial statements. The aforementioned agreements are effective agreements between a parent and consolidated subsidiaries, neither of which is accounted for in the consolidated financial statements or are ultimately eliminated upon consolidation (i.e. service fees under the Exclusive Business Cooperation Agreement). The Group believes that the contractual arrangements with the VIEs are in compliance with PRC law and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could: · revoke the business and operating licenses of the Company’s PRC subsidiaries and VIEs; · discontinue or restrict the operations of any related‑party transactions between the Company’s PRC subsidiaries and VIEs; · limit the Group’s business expansion in China by way of entering into contractual arrangements; · impose fines or other requirements with which the Company’s PRC subsidiaries and VIEs may not be able to comply; · require the Company or the Company’s PRC subsidiaries or VIEs to restructure the relevant ownership structure or operations; or · restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance the Group’s business and operations in China. The following consolidated financial statement balances and amounts of the Group’s VIEs were included in the accompanying consolidated financial statements after the elimination of intercompany balances and transactions among the Company, its subsidiaries and its VIEs. As of December 31, 2017 2018 US$ US$ ASSETS Cash and cash equivalents 2,485,998 1,114,076 Restricted cash 306,082 — Account Receivable, net 2,065,324 2,273,325 Prepaid expense and other assets 3,665,503 2,613,413 Property and equipment, net 1,951 56,555 Other non-current assets — 1,759 Total Assets 8,524,858 6,059,128 LIABILITIES Accounts payable 107,568 570,504 Short-term borrowing 790,816 — Accrued salary and benefits 269,245 416,749 Accrued expenses and other current liabilities 951,817 518,357 Deferred revenue 276,812 157,793 Total Liabilities 2,396,258 1,663,403 For the years ended December 31, 2016 2017 2018 US$ US$ US$ Total revenue 4,070,864 8,353,270 9,542,004 Operating loss (87,032) (280,269) (105,639) Net loss (82,688) (297,852) (84,565) Net cash (used in) provide by operating activities (1,574,360) (2,645,362) 672,355 Net cash used in investing activities — (1,734) (59,498) Net cash provided by (used in) financing activities 716,773 45,673 (810,537) The VIEs’ assets are comprised of recognized and unrecognized revenue‑producing assets. The recognized revenue producing assets mainly include purchased servers, which are presented in the account of “Property and equipment, net.” The unrecognized revenue‑producing assets mainly consist of the Internet Content Provider license (“ICP” license), trademarks, copyrights and registered patents, which are not recognized in the consolidated balance sheets. Revenues of VIEs included in the consolidated financial statements mainly include revenue of advertising services and sales of virtual items for live social video community. The VIEs contributed 37%, 22% and 7% of the Group’s consolidated net revenues for years ended December 31, 2016, 2017 and 2018, respectively. As of December 31, 2017 and 2018, the VIEs accounted for an aggregate of 18% and 5% respectively, of the consolidated total assets, and 16% and 5% respectively, of the consolidated total liabilities. There are no terms in any arrangements, considering both explicit arrangements and implicit variable interests that require the Company or its subsidiaries to provide financial support to the VIEs. However, if the VIEs were ever to need financial support, the Group may, at its option and subject to statutory limits and restrictions, provide financial support to its VIE through loans to the shareholders of the VIEs. The Group believes that there are no assets held in the VIEs that can be used only to settle obligations of the VIEs, except for registered capital and the PRC statutory reserves. As the VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company for any of the liabilities of the VIEs. Relevant PRC laws and regulations restrict the VIEs from transferring a portion of their net assets, equivalent to the balance of its statutory reserve and its share capital, to the Company in the form of loans and advances or cash dividends. Please refer to Note 20 for disclosure of restricted net assets. |
Use of Estimates | (c) Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates. The Group bases its estimates on historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant accounting estimates reflected in the Group’s financial statements including but not limited to valuation of ordinary shares and preferred shares, valuation allowances of deferred tax assets, and valuation of share‑based compensation. Actual results may differ materially from those estimates. |
Fair Value | (d) Fair Value Fair value is considered to be the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. Authoritative literature provides a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows: · Level 1—Inputs are based on unadjusted quoted prices that are available in active markets for identical assets or liabilities at measurement date. · Level 2—Significant inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model‑derived valuations in which significant inputs and significant value drivers are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3—Significant unobservable inputs that cannot be corroborated by observable market data and reflect management’s estimates of assumptions that market participants would use to price an asset or liability. |
Financial Instruments | (e) Financial Instruments The Group's financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, amounts due from related parties, accounts payable, other current liabilities and bank borrowing. For cash and cash equivalents, restricted cash, accounts receivable, amounts due from related parties, accounts payable, other current liabilities, short-term borrowing and long-term debt-current portion, the carrying amounts of these financial instruments as of December 31, 2017 and 2018 were considered representative of their fair values due to their short-term nature. |
Foreign Currency Translation | (f) Foreign Currency Translation The functional currency of the Group is the United States Dollar (“US$”). The functional currency of the subsidiaries and the VIEs in the PRC is Renminbi (“RMB”). The functional currency of all the other subsidiaries is US$. Foreign currency transactions have been translated into the functional currency at the exchange rates prevailing on the date of transactions. Foreign currency denominated monetary assets and liabilities are re-measured into the functional currency at exchange rates prevailing on the balance sheet date. Exchange gains and losses have been included in the determination of net income. The Group has chosen the US$ as its reporting currency. Assets and liabilities have been translated using exchange rates prevailing on the balance sheet date. Equity accounts are translated at historical exchange rates. Income statement items have been translated using the average exchange rate for the year. Translation adjustments have been reported as cumulative translation adjustments and are shown as a component of other comprehensive income/loss in the statements of comprehensive loss and consolidated statements of changes in shareholders’ (deficit) equity. |
Foreign Currency Risk | (g) Foreign Currency Risk The RMB is not a freely convertible currency. The State Administration for Foreign Exchange in the PRC, under the authority of the Peoples Bank of China, controls the conversion of RMB into other currencies. The value of the RMB is subject to changes in central government policies, international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. The Group’s cash and cash equivalents and restricted cash denominated in RMB amounted to RMB100,419,401 (amounted to US$ 15,368,278) and RMB74,384,717 (amounted to US$10,838,197) as of December 31, 2017 and 2018, respectively. |
Cash, Cash Equivalents and Restricted cash | (h) Cash, Cash Equivalents and Restricted cash Cash and cash equivalents consist of cash on hand, demand deposits and floating rate financial instruments which are unrestricted as to withdrawal or use, and which have original maturities of three months or less when purchased. The Group’s restricted cash represents amounts held in Group’s bank account as guarantee deposit for payments processing services provided by the bank. |
Accounts Receivable, net | (i) Accounts Receivable, net Accounts receivable, net represents those receivables derived from the ordinary course of business and are recorded net of allowance for doubtful accounts. The Group maintains an allowance for doubtful accounts that reflect its best estimate of probable losses inherent in the accounts receivables. In determining collectability of the accounts receivables, the Group considers many factors, such as: creditworthiness of customers, aging of the receivables, payment history of customers, financial condition of the customers and market trends, and specific facts and circumstances. The allowance for doubtful accounts is reduced by subsequent collections of the specific allowances or by any write-off of customer accounts that are deemed uncollectible. The allowance for doubtful accounts was US$1,295,149 and US$1,286,120 at December 31, 2017 and 2018, respectively. There were no significant write-offs of the Group’s accounts receivable during the year ended December 31, 2017 and 2018. |
Long-term investments | (j) Long-term investments Long-term investments consist of equity investments in other privately-held companies. The Group uses the equity method to account for an equity investment over which it has significant influence but does not own a majority equity interest or otherwise control. For equity investments over which the Group does not have significant influence or control, the Group records the investments at cost method. The Group reviews investments in equity investees for other-than-temporary impairment. The primary factors the Group considers in its determination are duration and severity of the decline in fair value, general market conditions, and operating performance and the prospects of the equity investees. If the equity investment’s estimated fair value is less than the cost of the investment and the Group determines the impairment to be other-than-temporary, the Group recognizes an impairment loss for the difference between the fair value and the cost basis of the investment. No impairment loss was recognized for the year ended December 31, 2018. |
Property and Equipment, net | (k) Property and Equipment, net Property and equipment is recorded at cost less accumulated depreciation and impairment. Depreciation expense of long‑lived assets is recorded as either cost of revenue or operating expenses, as appropriate. Depreciation is computed using the straight‑line method over the following estimated useful lives by major asset category: Electronic equipment and software 3 years Office equipment and furniture 3 - 5 years Motor vehicles 3 years Leasehold improvement Shorter of the lease term or expected useful life Repair and maintenance costs are charged directly to expense as incurred, whereas the cost of renewals and improvement that extend the useful lives of property and equipment are capitalized as additions to the related assets. |
Impairment of Long-lived Assets | (l) Impairment of Long‑lived Assets Long‑lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Factors considered important that could result in an impairment review include, but are not limited to, significant under‑performance relative to historical or planned operating results, significant changes in the manner of use or expected life of the assets or significant changes in our business strategies. An impairment analysis is performed at the lowest level of identifiable cash flows for an asset or asset group based on valuation techniques such as discounted cash flow analysis. An impairment charge is recognized when the estimated undiscounted cash flows expected to result from the use of the asset plus net proceeds expected from the disposition of the asset, if any, are less than the carrying value of the asset net of other liabilities. The estimation of future cash flows requires significant management judgment and actual results may differ from estimated amounts. No impairment was recognized for the years ended December 31, 2017 and 2018. |
Revenue Recognition | (m) Revenue Recognition The Group generates substantially all of its revenue through mobile advertising, which accounted for 90%, 94% and 98% of total revenue as of December 31, 2016, 2017 and 2018, respectively. The Group also generates other revenues through live social video community and licensing of its Smart Inputs products. In accordance with the criteria set forth in ASC605, Revenue Recognition , the Group recognizes revenue when the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the selling price is fixed or determinable, and (4) collectability is reasonably assured. The Group provides advertising services to customers for promotion of their brands through its mobile applications. The Group offers two main advertising arrangements: brand advertisements and performance‑based advertising services. For brand advertisements, the Group recognizes revenue ratably based on the number of impressions delivered over the period that the advertising service is provided. For performance‑based advertising services, the Group charges fees to advertising customers based on the effectiveness of advertising links, which is measured by active clicks or other actions. Revenue from performance‑based advertising services is recognized when a user takes the action requested by the advertisement. We provide cash incentives in the form of sales rebates to certain advertising agencies, and account for such incentives as a reduction of revenue. We have estimated and recorded the rebates based on historical transactions and the agreed rebate rates with certain advertising agencies. For the years ended December 31, 2016, 2017 and 2018, the rebates recorded by the Group were US$666,741, US$1,833,085 and US$405,385, respectively. The Group engages in certain advertising barter transactions for which the fair value was not determinable and therefore no revenues or expenses derived from these barter transactions were recognized. Revenue also include sales of virtual items for live social video community of nil, US$1,177,375 and US$682,034; licensing fees for our Smart Inputs products US$351,572, US$239,915 and US$125,951; and services related to providing enterprises solution of nil, US$567,459 and US$1,764,135 for the years ended December 31, 2016, 2017 and 2018, respectively. |
Deferred Revenue | (n) Deferred Revenue Deferred revenue primarily includes cash received in advance from users of live social video community and advertising customers for which the services has not been provided yet. |
Cost of Revenue | (o) Cost of Revenue Cost of revenues consist direct costs primarily relating to generating advertising revenue, which include bandwidth costs, Voice‑over Internet Protocol (“VoIP”) related expense which are charged by telecommunication providers for the Group’s VoIP products, such as AhaCall and TouchPal Phonebook, depreciation expenses and service fees for internet data center, and salary and benefits expenses of operation and maintenance department. |
Research and Development Expenses | (p) Research and Development Expenses Research and development expenses primarily consist of (1) salary and benefits expenses incurred in the research and development of new products and new functionality, and (2) general expenses and depreciation expenses associated with the research and development activities. Expenditures incurred during the research phase are expensed as incurred and no research and development expenses were capitalized as of December 31, 2016, 2017 and 2018. |
Sales and Marketing Expenses | (q) Sales and Marketing Expenses Sales and marketing expenses primarily consist of advertising expenses, salaries and benefits of sales and marketing personnel and fees paid to mobile device manufacturers to pre‑install the Group’s Smart Input products. Advertising expenses represent online advertising and promotions of the Group’s products via social media and demand‑side platforms. Such expenses amounted to US$5,132,485, US$12,858,629 and US$68,471,237, for the years ended December 31, 2016, 2017 and December 31, 2018, respectively. |
Operating leases | (r) Operating leases Leases where substantially all the rewards and risk of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight‑line basis over the lease term. |
Income Taxes | (s) Income Taxes Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. The Group follows the asset and liability method of accounting for income taxes. In accordance with the provisions of ASC 740, Income Taxes, the Group recognizes in the financial statements the benefit of a tax position if the tax position is “more likely than not” to prevail based on the facts and technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. The Group estimates liability for unrecognized tax benefits which are periodically assessed and may be affected by changing interpretations of laws, rulings by tax authorities, changes and/or developments with respect to tax audits, and expiration of the statute of limitations. The ultimate outcome for a particular tax position may not be determined with certainty prior to the conclusion of a tax audit and, in some cases, appeal or litigation process. Under this method, deferred tax assets and liabilities are determined based on the temporary differences between the financial statements carrying amounts and tax bases of assets and liabilities by applying enacted statutory tax rates that will be in effect in the period in which the temporary differences are expected to reverse. The Group considers positive and negative evidence when determining whether some portion or all of the deferred tax assets will not be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry‑forward periods, historical results of operations, and tax planning strategies. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The actual benefits that are ultimately realized may differ from estimates. As each audit is concluded, adjustments, if any, are recorded in the financial statements in the period in which the audit is concluded. Additionally, in future periods, changes in facts, circumstances and new information may require us to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recognized in the period in which the changes occur. As of December 31, 2016, 2017 and 2018, the Group did not have any significant unrecognized uncertain tax positions. |
Employee Contribution Plan | (t) Employee Contribution Plan Pursuant to the relevant labor rules and regulations in the PRC, the Group participates in defined contribution retirement schemes (the “Schemes”) organized by the relevant local government authorities for its eligible employees whereby the Group is required to make contributions to the Schemes at certain percentages of the deemed salary rate announced annually by the local government authorities. Contributions to the defined contribution plan are expensed as incurred. The Group has no other material obligation for payment of pension benefits except for the annual contributions described above. |
Share-based Compensation | (u) Share‑based Compensation Fair value recognition provisions according to ASC718, Compensation—Stock Compensation: Overall , is applied to share‑based compensation, which requires the Group to recognize expense for the fair value of its share‑based compensation awards. Compensation expense adjusted for forfeiture effect on a straight‑line basis over the requisite service period, with a corresponding impact reflected in additional paid‑in capital. Employees’ share‑based awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at grant date if no vesting conditions are required, or b) using grade vesting method, net of actual forfeitures, over the requisite service, which is the vesting period. Prior to the IPO of the Group, the fair value of the share options and restricted share units were assessed using the income approach/discounted cash flow method, with a discount for lack of marketability given that the shares underlying the awards were not publicly traded at the time of grant. This assessment requires complex and subjective judgements regarding the Group's operating history and prospects at the time the grants were made. In addition, the binomial option pricing model is used to measure the value of the share options. The determination of the fair value is affected by the fair value of the ordinary shares volatility, actual and projected employee share-based awards exercise behavior, risk-free interest rates and expected dividends. The fair value of these awards was determined with the assistance from an independent valuation firm using management's estimates and assumptions. After the IPO of the Group, in determining the fair value of the share options and restricted share units, the closing market price of the underlying shares on the granted date is applied. The expected term represents the period that share‑based awards are expected to be outstanding, giving consideration to the contractual terms of the share‑based awards, vesting schedules and expectations of future employee exercise behavior. Volatility is estimated based on annualized standard deviation of daily stock price return of comparable companies for the period before valuation date and with similar span as the expected expiration term. The Group accounts for forfeitures of the share‑based awards when they occur. Previously recognized compensation cost for the awards is reversed in the period that the award is forfeited. Amortization of share‑based compensation is presented in the same line item in the consolidated statements of operations as the cash compensation of those employees receiving the award. |
Comprehensive (Loss) Income | (v) Comprehensive (Loss) Income Comprehensive (loss) Income includes all changes in equity except those resulting from investments by owners and distributions to owners. For the years presented, the Group’s total comprehensive income (loss) includes net loss and foreign currency translation adjustments. |
(Loss) Earnings Per Share | (w) (Loss) Earnings Per Share Basic (loss) earnings per share are computed by dividing net (loss) income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. The Group's convertible redeemable preferred shares are participating securities as the preferred shares participate in undistributed earnings on an as‑if‑converted basis. Accordingly, the Group uses the two‑class method of computing (loss) earnings per share, whereby undistributed net income is allocated on a pro rata basis to each participating share to the extent that each class may share net income for the period. Undistributed net loss is not allocated to preferred shares because they are not contractually obligated to participate in the loss of the Group. Diluted (loss) earnings per ordinary share reflects the potential dilution that could occur if securities were exercised or converted into ordinary shares. The Group had convertible redeemable preferred shares and share options, which could potentially dilute basic earnings per share in the future. To calculate the number of shares for diluted income per share, the effect of the convertible redeemable preferred shares is computed using the as‑if‑converted method; the effect of the stock options is computed using the treasury stock method. |
Concentration and risks | (x) Concentration and risks Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investment, accounts receivable and revenue. The Group places its cash and cash equivalents and short-term investment with financial institutions with high credit ratings and quality, and believes that no significant credit exists. The Group conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Group establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers. The following customers accounted for 10% or more of accounts receivable: As of December 31, 2017 2018 US$ % US$ % Company B % 8,856,527 37.89 % Company C 21.90 % 2,928,045 12.53 % |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of consolidated financial statement balances and amounts of the Group's VIEs | As of December 31, 2017 2018 US$ US$ ASSETS Cash and cash equivalents 2,485,998 1,114,076 Restricted cash 306,082 — Account Receivable, net 2,065,324 2,273,325 Prepaid expense and other assets 3,665,503 2,613,413 Property and equipment, net 1,951 56,555 Other non-current assets — 1,759 Total Assets 8,524,858 6,059,128 LIABILITIES Accounts payable 107,568 570,504 Short-term borrowing 790,816 — Accrued salary and benefits 269,245 416,749 Accrued expenses and other current liabilities 951,817 518,357 Deferred revenue 276,812 157,793 Total Liabilities 2,396,258 1,663,403 For the years ended December 31, 2016 2017 2018 US$ US$ US$ Total revenue 4,070,864 8,353,270 9,542,004 Operating loss (87,032) (280,269) (105,639) Net loss (82,688) (297,852) (84,565) Net cash (used in) provide by operating activities (1,574,360) (2,645,362) 672,355 Net cash used in investing activities — (1,734) (59,498) Net cash provided by (used in) financing activities 716,773 45,673 (810,537) |
Schedule of estimated useful lives by major asset category | Electronic equipment and software 3 years Office equipment and furniture 3 - 5 years Motor vehicles 3 years Leasehold improvement Shorter of the lease term or expected useful life |
Accounts receivables | Credit concentration risk | |
Summary of Significant Accounting Policies | |
Schedule of concentration risk | As of December 31, 2017 2018 US$ % US$ % Company B % 8,856,527 37.89 % Company C 21.90 % 2,928,045 12.53 % |
Accounts receivable, net (Table
Accounts receivable, net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounts receivable, net | |
Schedule of accounts receivable, net | As of December 31, 2016 2017 2018 US$ US$ US$ Accounts receivable 2,506,398 12,274,970 24,660,089 Allowance for doubtful accounts: Balance at beginning of the year — — (1,295,149) Additions — (1,295,149) (11,422) Write-off — — 15,379 Foreign exchange effect — — 5,072 Balance at end of the year — (1,295,149) (1,286,120) Accounts receivable, net 2,506,398 10,979,821 23,373,969 |
Prepaid expenses and other cu_2
Prepaid expenses and other current assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Prepaid expenses and other current assets | |
Schedule of prepaid expenses and other current assets | As of December 31, 2017 2018 US$ US$ Value added tax (“VAT”) recoverable 2,883,914 2,484,881 Advance to suppliers 972,909 964,223 Funds deposited at third party payment platforms 693,930 88,693 Prepaid expenses 570,749 1,021,126 Deposits 270,234 383,362 Total 5,391,736 4,942,285 |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment, Net | |
Schedule of property and equipment, net | As of December 31, 2017 2018 US$ US$ Electronic equipment and software 3,182,880 6,353,867 Office equipment and furniture 147,487 157,009 Motor vehicles 82,470 82,470 Leasehold improvements 485,131 596,345 Construction in progress 78,510 23,714 Total 3,976,478 7,213,405 Less: Accumulated depreciation (2,032,928) (3,002,354) Property, plant and equipment, net 1,943,550 4,211,051 |
Bank Borrowings (Tables)
Bank Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Bank Borrowings | |
Schedule of bank borrowings | As of December 31, 2017 2018 US$ US$ Short-term borrowings 1,951,062 — Long-term borrowings, current portion 1,242,319 — Total 3,193,381 — |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | As of December 31, 2017 2018 US$ US$ Accrued expenses (Note 1) 1,466,139 2,658,420 Other tax payables 723,271 577,406 Contract deposits from customers 137,907 113,425 Deferred government subsidies 63,663 40,798 ADR reimbursement (Note 2) — 117,176 Others 31,333 74,935 Total 2,422,313 3,582,160 Note 1: Accrued expenses mainly consist accrued sales rebate, accrued expenses related to live social video community, accrued professional service fees and other miscellaneous accrued marketing and operation expenses. Note 2: According to the American Depositary Receipts (“ADR”) arrangement with Deutsche Bank, the Group has received reimbursements of US$0.7 million net off withholding tax after the closing of its IPO as a return for using Depositary Bank’s services. The received reimbursements are amortized over the contract term of six and half year as other operating income. As of December 31, 2018, US$117,176 and US$604,630 were recorded in accrued expenses and other current liabilities and other non-current liabilities, respectively. |
Income Taxes Expenses (Tables)
Income Taxes Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes Expenses | |
Schedule of Group's deferred tax assets | As of December 31, 2016 2017 2018 US$ US$ US$ Deferred tax assets: Net operating loss carry-forward 12,717,132 18,939,915 17,044,260 Accrued expenses 2,642,398 3,128,537 2,496,850 Advertising Fees 3,737,735 4,456,190 5,876,863 Deferred subsidies 33,013 7,425 71,705 Provision for doubtful accounts — 216,415 214,327 Total deferred tax assets 19,130,278 26,748,482 25,704,005 Valuation allowance on deferred tax assets (19,130,278) (26,748,482) (25,704,005) Net deferred tax assets — — — |
Schedule of changes in valuation allowance | For the years ended December 31, 2016 2017 2018 US$ US$ US$ Balance at the beginning of the year 12,003,169 19,130,278 26,748,482 Movement 7,812,869 7,257,873 (567,897) Tax loss carry forwards expired — (398,718) (423,517) Exchange difference effect (685,760) 759,049 (53,063) Balance at the end of the year 19,130,278 26,748,482 25,704,005 |
Schedule of reconciliations of differences between PRC statutory income tax rate and the Group's effective income tax rate | For the years ended December 31, 2016 2017 2018 Statutory income tax rate 25 % 25 % 25 % Valuation allowance (26) % (27) % (11) % Additional tax deduction 3 % 5 % (25) % Effect of different tax rate of subsidiary operation in other jurisdiction (2) % (3) % 8 % Expired tax loss — — 4 % Others — — (1) % Effective tax rate — — — |
Convertible Redeemable Prefer_2
Convertible Redeemable Preferred Shares (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Convertible Redeemable Preferred Shares | |
Schedule of the Group's preferred shares | As of December 31, 2017 2018 US$ US$ Series A preferred shares ( US$0.00001 par value; 442,174,065 and nil shares authorized, issued and outstanding with redemption value of US$6,168,328 and nil as of December 31, 2017 and 2018, respectively.) 4,112,218 — Series B preferred shares ( US$0.00001par value; 423,682,617 shares and nil authorized, issued and outstanding with redemption value of US$12,257,781 and nil as of December 31, 2017 and 2018) 7,288,964 — Series B+ preferred shares ( US$0.00001par value; 129,616,445 and nil shares authorized, issued and outstanding with redemption value of US$3,750,000 and nil as of December 31, 2017 and 2018) 2,500,000 — Series B-1 preferred shares ( US$0.00001 par value; 119,688,525 and nil shares authorized, issued and outstanding with redemption value of US$6,925,540 and nil as of December 31, 2017 and 2018) 7,166,628 — Series C preferred shares ( US$0.00001 par value; 651,629,045 and nil shares authorized, issued and outstanding with redemption value of US$103,950,000 and nil as of December 31, 2017 and 2018) 69,300,000 — Series D preferred shares ( US$0.00001 par value; 223,478,358 and nil shares authorized, issued and outstanding with redemption value of US$54,312,440 and nil as of December 31, 2017 and 2018) 46,000,000 — Series D-1 preferred shares ( US$0.00001 par value; 89,668,956 and nil shares authorized, issued and outstanding with redemption value of US$22,330,558 and nil as of December 31, 2017 and 2018, respectively) 20,000,000 — Total 156,367,810 — |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share-Based Compensation | |
Schedule of assumptions used to estimate the fair value of options at the date of granted | Year ended December 31 2016 2017 Average risk-free rate of interest 1.49% - 2.45% 2.27% - 2.45% Expected volatility 40.92% - 41.88% 40.47% - 41.32% Dividend yield 0% 0% Contractual term 10 years 10 years Fair value of the underlying shares on the date of option grants 0.08 - 0.10 0.10 - 0.16 |
Summary of aggregate option activity and information regarding options outstanding | Weighted Weighted average average remaining Aggregate Number of exercise contractual intrinsic options price term value US$ US$ Outstanding on January 1, 2018 175,535,767 0.06 6.71 13,507,650 Granted — Forfeited (4,062,571) 0.16 Expired (1,500,260) 0.11 Outstanding on December 31, 2018 169,972,936 0.05 5.65 19,699,547 Exercisable on December 31, 2018 125,119,174 0.04 5.21 15,835,782 |
Summary of the RSU activity | Weighted average grant date Number of restricted shares fair value US$ Nonvested restricted shares outstanding at January 1, 2018 — — Granted 33,948,333 0.27 Vested (150,000) (0.28) Forfeited (1,430,000) (0.31) Nonvested restricted shares outstanding at December 31, 2018 32,368,333 0.26 |
Earnings (Loss) per share (Tabl
Earnings (Loss) per share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings (Loss) per share | |
Schedule of computation of basic and diluted net earnings (loss) per share | For the years ended December 31, 2016 2017 2018 US$ US$ US$ Numerator: Net (loss) Income—basic and diluted (30,706,599) (23,660,913) 10,147,465 Deemed dividend from repurchase of Series A Preferred Shares — (1,028,055) — Net (loss) Income attributable to ordinary shareholders (30,706,599) (24,688,968) 10,147,465 Shares (Denominator): Weighted average number of ordinary shares outstanding Basic 912,551,946 898,781,587 1,464,257,884 Diluted 912,551,946 898,781,587 1,591,094,630 Net (loss) earnings per share—basic and diluted (0.03) (0.03) 0.003 |
Schedule of instruments excluded from calculation of diluted net (loss) earnings per share | As of December 31, 2016 2017 2018 Series A preferred shares 451,612,903 442,174,065 — Series B preferred shares 423,682,617 423,682,617 — Series B+ preferred shares 129,616,445 129,616,445 — Series B-1 preferred shares 119,688,525 119,688,525 — Series C preferred shares 651,629,045 651,629,045 — Series D preferred shares 223,478,358 223,478,358 — Series D-1 preferred shares — 89,668,956 — Share options 168,254,075 175,535,767 — Restricted shares units — — 14,495,000 Total 2,167,961,968 2,255,473,778 14,495,000 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions | |
Schedule of amounts owed from related parties | As of December 31, 2017 2018 US$ US$ Current portion 340,955 — Non-current portion 24,442 — Total 365,397 — |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments | |
Schedule of future lease payments under operating leases | Future lease payments under operating leases as of December 31, 2018 were as follows: Year ending December 31 US$ 2019 957,522 2020 432,492 2021 414,816 2022 292,520 Total 2,097,350 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Schedule of revenue based on revenue streams | For the years ended December 31, 2016 2017 2018 US$ US$ US$ Advertising revenue 9,967,282 35,032,557 131,287,334 Other revenue 1,062,797 2,302,409 2,822,298 Total net revenues 11,030,079 37,334,966 134,109,632 |
Schedule of revenues generated by geographic location of customers' headquarters | For the years ended December 31, 2016 2017 2018 US$ US$ US$ USA 5,423,026 20,246,637 108,309,547 PRC 5,135,689 15,393,590 25,502,479 Others 471,364 1,694,739 297,606 Total 11,030,079 37,334,966 134,109,632 |
Schedule of non-current assets based on geographical location of the assets | As of December 31, 2017 2018 US$ US$ PRC 1,757,460 2,232,800 USA 764,810 3,034,205 Total 2,522,270 5,267,005 |
Revenue | Customer risk | |
Segment Information | |
Schedule of concentration risk | For the years ended December 31, 2016 2017 2018 USD % USD % USD % Company A 4,019,900 % 6,919,426 18.53 % * * Company B * * 7,467,645 20.00 % 73,116,840 54.52 % Company C * * * * 14,609,270 10.89 % |
Organization and Principal Ac_2
Organization and Principal Activities (Details) | Oct. 02, 2018USD ($)shares | Dec. 31, 2018USD ($) | Oct. 31, 2010item |
Organization and Principal Activities | |||
Proceeds from initial public offering, net of issuance costs paid of US$2,615,726 | $ | $ 45,100,000 | $ 45,930,274 | |
IPO | Ordinary shares | |||
Organization and Principal Activities | |||
Number of shares issued during the period | 217,500,000 | ||
IPO | American depositary shares | |||
Organization and Principal Activities | |||
Number of shares issued during the period | 4,350,000 | ||
Han Xiang | |||
Organization and Principal Activities | |||
Number of Investors | item | 3 | ||
Three Investors | Han Xiang | |||
Organization and Principal Activities | |||
Percentage of interest acquired by outside investors | 24.24% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Exclusive Business Cooperation Agreements and Loan Agreements (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Loan Agreements | |
Exclusive Business Cooperation Agreements and Loan Agreements | |
Term of the loans | 10 years |
Renewal period of loans | 3 years |
Renewed period of loans | 3 years |
Chu Le of WFOE | Exclusive Business Cooperation Agreements | |
Exclusive Business Cooperation Agreements and Loan Agreements | |
Notice period for termination of agreement | 30 days |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Consolidated financial statement balances and amounts of the Group's VIEs (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
ASSETS | |||
Cash and cash equivalents | $ 84,859,915 | $ 26,720,158 | $ 41,056,314 |
Restricted cash | 306,082 | 288,309 | |
Account receivable, net | 23,373,969 | 10,979,821 | 2,506,398 |
Prepaid expense and other assets | 4,942,285 | 5,391,736 | |
Property and equipment, net | 4,211,051 | 1,943,550 | |
Other non-current assets | 555,922 | 554,278 | |
TOTAL ASSETS | 118,443,174 | 46,261,022 | |
LIABILITIES | |||
Accounts payable | 24,780,899 | 5,432,505 | |
Short-term borrowing | 1,951,062 | ||
Accrued salary and benefits | 4,535,133 | 3,244,931 | |
Accrued expenses and other current liabilities | 3,582,160 | 2,422,313 | |
Deferred revenue | 344,361 | 521,640 | |
Total LIABILITIES | 34,120,379 | 14,814,770 | |
Total revenue | 134,109,632 | 37,334,966 | 11,030,079 |
Operating loss | 10,002,988 | (23,972,489) | (30,530,855) |
Net Profit (loss) | 10,147,465 | (23,660,913) | (30,706,599) |
Net cash (used in) provide by operating activities | 23,106,005 | (28,049,152) | (28,435,452) |
Net cash used in investing activities | (3,655,042) | (1,758,412) | (831,393) |
Net cash provided by (used in) financing activities | 40,169,171 | 14,401,620 | 51,306,960 |
Assets held in VIEs that can be used only to settle obligations of VIEs | 0 | ||
VIEs | |||
ASSETS | |||
Cash and cash equivalents | 1,114,076 | 2,485,998 | |
Restricted cash | 306,082 | ||
Account receivable, net | 2,273,325 | 2,065,324 | |
Prepaid expense and other assets | 2,613,413 | 3,665,503 | |
Property and equipment, net | 56,555 | 1,951 | |
Other non-current assets | 1,759 | ||
TOTAL ASSETS | 6,059,128 | 8,524,858 | |
LIABILITIES | |||
Accounts payable | 570,504 | 107,568 | |
Short-term borrowing | 790,816 | ||
Accrued salary and benefits | 416,749 | 269,245 | |
Accrued expenses and other current liabilities | 518,357 | 951,817 | |
Deferred revenue | 157,793 | 276,812 | |
Total LIABILITIES | 1,663,403 | 2,396,258 | |
Total revenue | 9,542,004 | 8,353,270 | 4,070,864 |
Operating loss | (105,639) | (280,269) | (87,032) |
Net Profit (loss) | (84,565) | (297,852) | (82,688) |
Net cash (used in) provide by operating activities | 672,355 | (2,645,362) | (1,574,360) |
Net cash used in investing activities | (59,498) | (1,734) | |
Net cash provided by (used in) financing activities | $ (810,537) | $ 45,673 | $ 716,773 |
Percentage of consolidated net revenues | 7.00% | 22.00% | 37.00% |
Percentage of consolidated total assets | 5.00% | 18.00% | |
Percentage of consolidated total liabilities | 5.00% | 16.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Foreign Currency Risk (Details) | Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Foreign Currency Risk | ||||||
The Group's cash and cash equivalents and restricted cash | $ 84,859,915 | $ 27,026,240 | $ 41,344,623 | $ 19,845,488 | ||
RMB | ||||||
Foreign Currency Risk | ||||||
The Group's cash and cash equivalents and restricted cash | ¥ 74,384,717 | $ 10,838,197 | ¥ 100,419,401 | $ 15,368,278 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Accounts Receivable, Net and Long-term Investments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies | ||
Allowance for doubtful accounts | $ 1,286,120 | $ 1,295,149 |
Impairment loss recognized | $ 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Property and Equipment, net (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Electronic equipment and software | |
Property, Plant and Equipment, Net | |
Estimated useful life | 3 years |
Office equipment and furniture | Minimum | |
Property, Plant and Equipment, Net | |
Estimated useful life | 3 years |
Office equipment and furniture | Maximum | |
Property, Plant and Equipment, Net | |
Estimated useful life | 5 years |
Motor vehicles | |
Property, Plant and Equipment, Net | |
Estimated useful life | 3 years |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Impairment of Long-lived Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of Significant Accounting Policies | ||
Impairment of long-lived assets | $ 0 | $ 0 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Revenue Recognition (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Revenue Recognition | |||
Number of advertising arrangements | item | 2 | ||
Sales rebates | $ 405,385 | $ 1,833,085 | $ 666,741 |
Net revenues | 134,109,632 | 37,334,966 | 11,030,079 |
Advertising | |||
Revenue Recognition | |||
Net revenues | 131,287,334 | 35,032,557 | 9,967,282 |
Virtual items for live social video community | |||
Revenue Recognition | |||
Net revenues | 682,034 | 1,177,375 | 0 |
Licensing fees for Smart Input products | |||
Revenue Recognition | |||
Net revenues | 125,951 | 239,915 | 351,572 |
Enterprises solution services | |||
Revenue Recognition | |||
Net revenues | $ 1,764,135 | $ 567,459 | $ 0 |
Revenue | Advertising | |||
Revenue Recognition | |||
Concentration risk (as a percent) | 98.00% | 94.00% | 90.00% |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Research and Development Expenses (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Summary of Significant Accounting Policies | |||
Research and development expenses capitalized | $ 0 | $ 0 | $ 0 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Sales and Marketing Expenses (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |||
Advertising expenses | $ 68,471,237 | $ 12,858,629 | $ 5,132,485 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Concentration and risks (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Concentration and risks | |||
Account receivable, net | $ 23,373,969 | $ 10,979,821 | $ 2,506,398 |
Customer risk | Accounts receivables | Company B | |||
Concentration and risks | |||
Account receivable, net | $ 8,856,527 | $ 2,880,119 | |
Concentration risk (as a percent) | 37.89% | 26.23% | |
Customer risk | Accounts receivables | Company C | |||
Concentration and risks | |||
Account receivable, net | $ 2,928,045 | $ 2,404,672 | |
Concentration risk (as a percent) | 12.53% | 21.90% |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) | Dec. 31, 2018USD ($) |
Summary of Significant Accounting Policies | |
Future minimum operating lease commitments | $ 2,097,350 |
Accounts receivable, net (Detai
Accounts receivable, net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accounts receivable, net | |||
Accounts receivable | $ 24,660,089 | $ 12,274,970 | $ 2,506,398 |
Allowance for doubtful accounts: | |||
Balance at beginning of the year | (1,295,149) | ||
Additions | (11,422) | (1,295,149) | |
Write-off | 15,379 | ||
Foreign exchange effect | 5,072 | ||
Balance at end of the year | (1,286,120) | (1,295,149) | |
Accounts receivable, net | $ 23,373,969 | $ 10,979,821 | $ 2,506,398 |
Prepaid expenses and other cu_3
Prepaid expenses and other current assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Prepaid expenses and other current assets | ||
Value added tax ("VAT") recoverable | $ 2,484,881 | $ 2,883,914 |
Advance to suppliers | 964,223 | 972,909 |
Funds deposited at third party payment platforms | 88,693 | 693,930 |
Prepaid expenses | 1,021,126 | 570,749 |
Deposits | 383,362 | 270,234 |
Total | $ 4,942,285 | $ 5,391,736 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment, Net | |||
Total | $ 7,213,405 | $ 3,976,478 | |
Less: Accumulated depreciation | (3,002,354) | (2,032,928) | |
Property, plant and equipment, net | 4,211,051 | 1,943,550 | |
Depreciation expenses | 1,153,606 | 899,018 | $ 555,762 |
Electronic equipment and software | |||
Property, Plant and Equipment, Net | |||
Total | 6,353,867 | 3,182,880 | |
Office equipment and furniture | |||
Property, Plant and Equipment, Net | |||
Total | 157,009 | 147,487 | |
Motor vehicles | |||
Property, Plant and Equipment, Net | |||
Total | 82,470 | 82,470 | |
Leasehold improvements | |||
Property, Plant and Equipment, Net | |||
Total | 596,345 | 485,131 | |
Construction in Progress | |||
Property, Plant and Equipment, Net | |||
Total | $ 23,714 | $ 78,510 |
Long-term investment (Details)
Long-term investment (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
May 31, 2018 | Dec. 31, 2018 | |
Long-term investment | ||
Equity interests in a privately hold company | 7.42% | |
Cash consideration paid under the cost method investment | $ 500,000 | $ 500,032 |
Impairment loss recognized | $ 0 |
Other non-current assets (Detai
Other non-current assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Other non-current assets | ||
Other non-current assets | ||
Prepaid service fees | $ 555,922 | $ 554,278 |
Bank Borrowings - Short-term an
Bank Borrowings - Short-term and Long-term borrowings (Details) | Dec. 31, 2017USD ($) |
Bank Borrowings | |
Short-term borrowings | $ 1,951,062 |
Long-term borrowings, current portion | 1,242,319 |
Total | $ 3,193,381 |
Bank Borrowings - Credit facili
Bank Borrowings - Credit facility (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jul. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2018 | |
Credit facility | |||
Total available credit amount | $ 6,000,000 | $ 10,000,000 | |
Credit facility | |||
Credit facility | |||
Total credit available under this facility | $ 6,000,000 | ||
Credit facility, short-term borrowings | |||
Credit facility | |||
Total credit available under this facility | $ 2,000,000 | ||
Weighted average interest rate of short-term borrowings (as a percent) | 5.66% | ||
Credit facility, short-term borrowings | PBOC rate, 6 months | |||
Credit facility | |||
Variable interest rate (as a percent) | 1.31% | ||
Credit facility, short-term borrowings | Maximum | |||
Credit facility | |||
Maturity period (in years) | 12 months | ||
Credit facility, long-term borrowings | |||
Credit facility | |||
Total credit available under this facility | $ 4,000,000 | ||
Weighted average interest rate of long-term borrowings (as a percent) | 6.18% | ||
Credit facility, long-term borrowings | PBOC rate, one year | |||
Credit facility | |||
Variable interest rate (as a percent) | 1.43% | ||
Credit facility, long-term borrowings | Maximum | |||
Credit facility | |||
Maturity period (in years) | 24 months |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accrued expenses | $ 2,658,420 | $ 1,466,139 |
Other tax payables | 577,406 | 723,271 |
Contract deposits from customers | 113,425 | 137,907 |
Deferred government subsidies | 40,798 | 63,663 |
ADR reimbursement | 117,176 | |
Others current liabilities | 74,935 | 31,333 |
Total | 3,582,160 | $ 2,422,313 |
ADR reimbursements net off withholding tax after closing IPO | $ 700,000 | |
Recognition term for ADR reimbursements (in years) | 6 years 6 months | |
Accrued expenses and other current liabilities | ||
ADR reimbursement | $ 117,176 | |
Other non-current liabilities | ||
ADR reimbursement | $ 604,630 |
Income Taxes Expenses - Tax rat
Income Taxes Expenses - Tax rates (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2018HKD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Income Taxes Expenses | ||||
Income tax expense | $ 220 | $ 800 | $ 0 | |
Statutory income tax rate (in percent) | 25.00% | 25.00% | 25.00% | 25.00% |
Deferred tax liabilities | $ 0 | |||
Hong Kong | ||||
Income Taxes Expenses | ||||
Maximum profits, tier one income tax rate | $ 2 | |||
Income tax rate, tier one | 8.25% | 8.25% | ||
Income tax rate, tier two | 16.50% | 16.50% | ||
PRC | ||||
Income Taxes Expenses | ||||
Statutory income tax rate (in percent) | 25.00% | 25.00% | ||
PRC | Chu Le of WFOE | ||||
Income Taxes Expenses | ||||
Statutory income tax rate (in percent) | 15.00% | |||
PRC | Chu Le of WFOE | High And New Technology Enterprises | ||||
Income Taxes Expenses | ||||
Preferential income tax rate (in percent) | 15.00% | 15.00% | ||
Preferential tax rate period | 3 years | 3 years |
Income Taxes Expenses - Deferre
Income Taxes Expenses - Deferred tax liabilities and assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||||
Net operating loss carry-forward | $ 17,044,260 | $ 18,939,915 | $ 12,717,132 | |
Accrued expenses | 2,496,850 | 3,128,537 | 2,642,398 | |
Advertising Fees | 5,876,863 | 4,456,190 | 3,737,735 | |
Deferred subsidies | 71,705 | 7,425 | 33,013 | |
Provision for doubtful accounts | 214,327 | 216,415 | ||
Total deferred tax assets | 25,704,005 | 26,748,482 | 19,130,278 | |
Valuation allowance on deferred tax assets | $ (25,704,005) | $ (26,748,482) | $ (19,130,278) | $ (12,003,169) |
Income Taxes Expenses - Tax los
Income Taxes Expenses - Tax loss carry forwards (Details) | Dec. 31, 2018USD ($) |
PRC | |
Operating Loss Carryforwards [Line Items] | |
Tax loss carry forwards | $ 63,440,959 |
Tax loss carry forwards expiring in 2019 | 373,498 |
Tax loss carry forwards expiring in 2020 | 2,164,351 |
Tax loss carry forwards expiring in 2021 | 7,010,971 |
Tax loss carry forwards expiring in 2022 | 14,169,491 |
Tax loss carry forwards expiring in 2023 | 3,411,002 |
Thereafter | 36,311,646 |
Hong Kong | |
Operating Loss Carryforwards [Line Items] | |
Tax loss carry forwards | $ 10,926,693 |
Income Taxes Expenses - Changes
Income Taxes Expenses - Changes in valuation allowance (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes Expenses | |||
Balance at the beginning of the year | $ 26,748,482 | $ 19,130,278 | $ 12,003,169 |
Movement | (567,897) | 7,257,873 | 7,812,869 |
Tax loss carry forwards expired | (423,517) | (398,718) | |
Exchange difference effect | (53,063) | 759,049 | (685,760) |
Balance at the end of the year | $ 25,704,005 | $ 26,748,482 | $ 19,130,278 |
Income Taxes Expenses - Uncerta
Income Taxes Expenses - Uncertainties on application of income tax law in PRC (Details) ¥ in Millions | 12 Months Ended | |||
Dec. 31, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2018USD ($) | |
Income Taxes Expenses | ||||
Statutory income tax rate (in percent) | 25.00% | 25.00% | 25.00% | |
Aggregate accumulated deficit | $ (126,899,750) | $ (116,752,285) | ||
Deferred tax liability for the PRC dividend withholding taxes | 0 | 0 | ||
PRC | ||||
Income Taxes Expenses | ||||
Statutory income tax rate (in percent) | 25.00% | |||
Statute of limitations period for underpayment of taxes due to computational errors | 3 years | |||
Extended period of statute of limitations under special circumstances | 5 years | |||
Minimum underpayment of tax liability for special circumstance | ¥ 0.1 | 15,304 | ||
Statute of limitations period for related party transactions | 10 years | |||
Withholding tax rate on dividends (as a percent) | 10.00% | |||
Withholding tax rate on dividends if investors qualifies as beneficial owner with holdings above the threshold percentage (as a percent) | 5.00% | |||
Threshold beneficial owner percentage determining withholding income tax rate (as a percent) | 25.00% | |||
Withholding tax rate on dividends if investors qualifies as beneficial owner with holdings below the threshold percentage (as a percent) | 10.00% | |||
PRC | Subsidiaries and VIEs | ||||
Income Taxes Expenses | ||||
Aggregate accumulated deficit | 94,847,639 | $ 75,858,456 | 79,285,723 | |
Hong Kong | Subsidiaries | ||||
Income Taxes Expenses | ||||
Aggregate accumulated deficit | $ 5,932,444 | $ 7,376,532 | $ 11,801,220 |
Income Taxes Expenses - Reconci
Income Taxes Expenses - Reconciliation of effective income tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliations of effective income tax rate | |||
Statutory income tax rate | 25.00% | 25.00% | 25.00% |
Valuation allowance | (11.00%) | (27.00%) | (26.00%) |
Additional tax deduction | (25.00%) | 5.00% | 3.00% |
Effect of different tax rate of subsidiary operation in other jurisdiction | 8.00% | (3.00%) | (2.00%) |
Expired tax loss | 4.00% | ||
Others | (1.00%) |
Ordinary shares (Details)
Ordinary shares (Details) | Oct. 02, 2018shares | Oct. 31, 2018USD ($)$ / sharesshares | Jan. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2018Voteshares | Dec. 31, 2017shares |
Ordinary shares | |||||
Authorized ordinary shares (in shares) | 15,000,000,000 | 2,920,061,989 | |||
Ordinary shares designated | 1,000,000,000 | ||||
Class A | |||||
Ordinary shares | |||||
Number of votes entitled per share | Vote | 1 | ||||
Authorized ordinary shares (in shares) | 13,750,000,000 | ||||
Class A | IPO | |||||
Ordinary shares | |||||
Number of shares issued during the period | 217,500,000 | ||||
Shares issued, price per share | $ / shares | $ 0.24 | ||||
Proceeds from issuance of common stock | $ | $ 48,500,000 | ||||
Class B | |||||
Ordinary shares | |||||
Number of votes entitled per share | Vote | 25 | ||||
Authorized ordinary shares (in shares) | 250,000,000 | ||||
Ordinary shares | |||||
Ordinary shares | |||||
Repurchase of ordinary shares (in shares) | 14,158,256 | 14,158,256 | |||
Repurchase of ordinary shares (in dollars per share) | $ / shares | $ 0.2119 | ||||
Compensation expense related to ordinary share repurchase | $ | $ 1,548,384 | ||||
Ordinary shares | IPO | |||||
Ordinary shares | |||||
Number of shares issued during the period | 217,500,000 | ||||
Ordinary shares | Class A | |||||
Ordinary shares | |||||
Number of shares issued during the period | 217,500,000 |
Treasury stocks (Details)
Treasury stocks (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Treasury stocks | ||
Purchase price of treasury stock accounted for using the cost method | $ 2,500,000 | |
Aggregate ordinary shares repurchased (in shares) | 15,550,500 | 0 |
Total cash consideration for aggregate ordinary shares repurchased | $ 2,499,167 |
Convertible Redeemable Prefer_3
Convertible Redeemable Preferred Shares - Issuance (Details) | 1 Months Ended | 12 Months Ended | ||||||
Jan. 31, 2017USD ($)$ / sharesshares | Jul. 31, 2016USD ($)$ / sharesshares | Jul. 31, 2014USD ($)$ / sharesshares | May 31, 2013USD ($)$ / sharesshares | Oct. 31, 2012USD ($)$ / sharesshares | Aug. 31, 2012USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | |
Convertible Redeemable Preferred Shares | ||||||||
Convertible redeemable preferred shares | $ | $ 156,367,810 | |||||||
Deemed dividend from repurchase of preferred shareholders | $ | 1,028,055 | |||||||
Number of preferred shares converted to ordinary shares | 1 | |||||||
Minimum market capitalization criteria for qualified IPO | $ | $ 1,000,000,000 | |||||||
Minimum gross proceeds criteria for qualified IPO | $ | $ 100,000,000 | |||||||
Minimum percentage of holders consent for qualified IPO | 0.67 | |||||||
Series A preferred shares | ||||||||
Convertible Redeemable Preferred Shares | ||||||||
Convertible redeemable preferred shares | $ | $ 4,112,218 | |||||||
Par value | $ / shares | $ 0.00001 | $ 0.00001 | ||||||
Number of preferred shares authorized | 0 | 442,174,065 | ||||||
Number of preferred shares issued | 0 | 442,174,065 | ||||||
Number of preferred shares outstanding | 0 | 442,174,065 | ||||||
Redemption value of preferred shares | $ | $ 0 | $ 6,168,328 | ||||||
Number of shares issued during the period | 344,086,021 | |||||||
Number of preferred shares repurchased and cancelled | 9,438,838 | |||||||
Price of repurchased and cancelled shares | $ / shares | $ 0.2119 | |||||||
Deemed dividend from repurchase of preferred shareholders | $ | $ 1,028,055 | |||||||
Series A preferred shares | Investor | ||||||||
Convertible Redeemable Preferred Shares | ||||||||
Number of additional shares issued during the period | 107,526,882 | |||||||
Purchase price per share | $ / shares | $ 0.0093 | |||||||
Cash consideration received from the issuance of redeemable preferred shares | $ | $ 1,000,000 | |||||||
Series B preferred shares | ||||||||
Convertible Redeemable Preferred Shares | ||||||||
Convertible redeemable preferred shares | $ | $ 7,288,964 | |||||||
Par value | $ / shares | $ 0.00001 | $ 0.00001 | ||||||
Number of preferred shares authorized | 0 | 423,682,617 | ||||||
Number of preferred shares issued | 0 | 423,682,617 | ||||||
Number of preferred shares outstanding | 0 | 423,682,617 | ||||||
Redemption value of preferred shares | $ | $ 0 | $ 12,257,781 | ||||||
Number of shares issued during the period | 423,682,617 | |||||||
Purchase price per share | $ / shares | $ 0.0193 | |||||||
Cash consideration received from the issuance of redeemable preferred shares | $ | $ 8,171,853 | |||||||
Number of warrants granted | $ | $ 4,679,804 | |||||||
Purchase price per warrant | $ / shares | $ 0.0386 | |||||||
Cash consideration received from issuance of warrants | $ | $ 882,889 | |||||||
Carrying value of the preferred shares | $ | $ 7,288,964 | |||||||
Series B + preferred shares | ||||||||
Convertible Redeemable Preferred Shares | ||||||||
Convertible redeemable preferred shares | $ | $ 2,500,000 | |||||||
Par value | $ / shares | $ 0.00001 | $ 0.00001 | ||||||
Number of preferred shares authorized | 0 | 129,616,445 | ||||||
Number of preferred shares issued | 0 | 129,616,445 | ||||||
Number of preferred shares outstanding | 0 | 129,616,445 | ||||||
Redemption value of preferred shares | $ | $ 0 | $ 3,750,000 | ||||||
Number of shares issued during the period | 129,616,445 | |||||||
Purchase price per share | $ / shares | $ 0.0193 | |||||||
Cash consideration received from the issuance of redeemable preferred shares | $ | $ 2,500,000 | |||||||
Series B -1 preferred shares | ||||||||
Convertible Redeemable Preferred Shares | ||||||||
Convertible redeemable preferred shares | $ | $ 7,166,628 | |||||||
Par value | $ / shares | $ 0.00001 | $ 0.00001 | ||||||
Number of preferred shares authorized | 0 | 119,688,525 | ||||||
Number of preferred shares issued | 0 | 119,688,525 | ||||||
Number of preferred shares outstanding | 0 | 119,688,525 | ||||||
Redemption value of preferred shares | $ | $ 0 | $ 6,925,540 | ||||||
Number of shares issued during the period | 119,688,525 | |||||||
Cash consideration received from the issuance of redeemable preferred shares | $ | $ 4,506,857 | |||||||
Series C preferred shares | ||||||||
Convertible Redeemable Preferred Shares | ||||||||
Convertible redeemable preferred shares | $ | $ 69,300,000 | |||||||
Par value | $ / shares | $ 0.00001 | $ 0.00001 | ||||||
Number of preferred shares authorized | 0 | 651,629,045 | ||||||
Number of preferred shares issued | 0 | 651,629,045 | ||||||
Number of preferred shares outstanding | 0 | 651,629,045 | ||||||
Redemption value of preferred shares | $ | $ 0 | $ 103,950,000 | ||||||
Number of shares issued during the period | 651,629,045 | |||||||
Purchase price per share | $ / shares | $ 0.1063 | |||||||
Cash consideration received from the issuance of redeemable preferred shares | $ | $ 69,300,000 | |||||||
Series D preferred shares | ||||||||
Convertible Redeemable Preferred Shares | ||||||||
Convertible redeemable preferred shares | $ | $ 46,000,000 | |||||||
Par value | $ / shares | $ 0.00001 | $ 0.00001 | ||||||
Number of preferred shares authorized | 0 | 223,478,358 | ||||||
Number of preferred shares issued | 0 | 223,478,358 | ||||||
Number of preferred shares outstanding | 0 | 223,478,358 | ||||||
Redemption value of preferred shares | $ | $ 0 | $ 54,312,440 | ||||||
Number of shares issued during the period | 223,478,358 | |||||||
Purchase price per share | $ / shares | $ 0.2058 | |||||||
Cash consideration received from the issuance of redeemable preferred shares | $ | $ 46,000,000 | |||||||
Series D-1 preferred shares | ||||||||
Convertible Redeemable Preferred Shares | ||||||||
Convertible redeemable preferred shares | $ | $ 20,000,000 | |||||||
Par value | $ / shares | $ 0.00001 | $ 0.00001 | ||||||
Number of preferred shares authorized | 0 | 89,668,956 | ||||||
Number of preferred shares issued | 0 | 89,668,956 | ||||||
Number of preferred shares outstanding | 0 | 89,668,956 | ||||||
Redemption value of preferred shares | $ | $ 0 | $ 22,330,558 | ||||||
Number of shares issued during the period | 89,668,956 | |||||||
Purchase price per share | $ / shares | $ 0.2230 | |||||||
Cash consideration received from the issuance of redeemable preferred shares | $ | $ 20,000,000 |
Convertible Redeemable Prefer_4
Convertible Redeemable Preferred Shares - Redemption Price and Deemed Liquidation (Details) - USD ($) | Oct. 02, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Convertible Redeemable Preferred Shares | |||
Percentage of Key employees ceased to devote | 80.00% | ||
Percentage of redemption price | 150.00% | ||
Convertible redeemable preferred shares, redemption value | $ 0 | $ 209,694,647 | |
Threshold limit on voting power | 50.00% | ||
Series A preferred shares | |||
Convertible Redeemable Preferred Shares | |||
Percentage of liquidation preference on preferred share issue price | 130.00% | ||
Series C preferred shares | |||
Convertible Redeemable Preferred Shares | |||
Percentage of liquidation preference on preferred share issue price | 115.00% | ||
Series D preferred shares | |||
Convertible Redeemable Preferred Shares | |||
Percentage of redemption price on annual rate of return | 12.00% | ||
Percentage of annual interest | 12.00% | ||
Series D-1 preferred shares | |||
Convertible Redeemable Preferred Shares | |||
Percentage of redemption price on annual rate of return | 15.00% | ||
Percentage of liquidation preference on preferred share issue price | 155.00% | ||
Class A | |||
Convertible Redeemable Preferred Shares | |||
Conversion of preferred shares into Class A ordinary shares upon IPO (in shares) | 2,079,938,011 |
Share-Based Compensation - Summ
Share-Based Compensation - Summary (Details) - shares | 1 Months Ended | |||
Aug. 31, 2018 | Jul. 31, 2014 | Oct. 31, 2012 | Aug. 31, 2012 | |
2012 Option Plan | ||||
Share-Based Compensation | ||||
Number of shares authorized | 266,153,637 | 155,631,013 | 75,268,817 | |
2018 Plan | ||||
Share-Based Compensation | ||||
Maximum number of shares issued (in percent) | 2.00% | |||
Number of years considered for annual increase | 5 years |
Share-Based Compensation - Shar
Share-Based Compensation - Share options (Details) - Stock options - 2012 Option Plan | 12 Months Ended | ||
Dec. 31, 2018USD ($)itemshares | Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2016USD ($)$ / shares | |
Share-Based Compensation | |||
Contractual term | 10 years | ||
Annual vesting percentage | 20.00% | ||
Vesting number of anniversaries | item | 5 | ||
Weighted average grant date fair value of options granted (in dollars per share) | $ / shares | $ 0.04 | $ 0.04 | |
Options granted (in shares) | shares | 0 | ||
Share-based compensation expense | $ | $ 779,582 | $ 876,560 | $ 727,213 |
Minimum | |||
Share-Based Compensation | |||
Participant right to exercise options cease period after termination of employment | 2 months | ||
Maximum | |||
Share-Based Compensation | |||
Participant right to exercise options cease period after termination of employment | 3 months |
Share-Based Compensation - Assu
Share-Based Compensation - Assumptions to estimate the fair value of the options (Details) - USD ($) | Nov. 06, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2021 |
Share-Based Compensation | |||||
Incremental compensation cost | $ 285,661 | $ 12,914 | $ 272,747 | ||
Stock options | |||||
Share-Based Compensation | |||||
Average risk-free rate of interest, minimum (as a percent) | 2.27% | 1.49% | |||
Average risk-free rate of interest, maximum (as a percent) | 2.45% | 2.45% | |||
Expected volatility, minimum (as a percent) | 40.47% | 40.92% | |||
Expected volatility, maximum (as a percent) | 41.32% | 41.88% | |||
Dividend yield (as a percent) | 0.00% | 0.00% | |||
Contractual term | 10 years | 10 years | |||
Fair value of the underlying shares on the date of option grants, minimum (in dollars per share) | $ 0.10 | $ 0.08 | |||
Fair value of the underlying shares on the date of option grants, maximum (in dollars per share) | $ 0.16 | $ 0.10 |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of aggregate option activity (Details) - Stock options - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of options | ||
Outstanding at beginning of the year (in shares) | 175,535,767 | |
Forfeited (in shares) | (4,062,571) | |
Expired (in shares) | (1,500,260) | |
Outstanding at end of the year (in shares) | 169,972,936 | 175,535,767 |
Exercisable on end of the year (in shares) | 125,119,174 | |
Weighted average exercise price | ||
Outstanding at beginning of the year (in dollars per share) | $ 0.06 | |
Forfeited (in dollars per share) | 0.16 | |
Expired (in dollars per share) | 0.11 | |
Outstanding at end of the year (in dollars per share) | 0.05 | $ 0.06 |
Exercisable on end of the year (in dollars per share) | $ 0.04 | |
Weighted average remaining contractual term | ||
Outstanding at end of the year | 5 years 7 months 24 days | 6 years 8 months 16 days |
Exercisable on end of the year | 5 years 2 months 16 days | |
Aggregate intrinsic value | ||
Outstanding at end of the year (in dollars) | $ 19,699,547 | $ 13,507,650 |
Exercisable on end of the year (in dollars) | $ 15,835,782 | |
Options exercised (in shares) | 0 | |
Unrecognized compensation cost related to non-vested stock options | $ 1,384,784 | |
Weighted-average recognition period for unrecognized compensation cost | 1 year 10 months 6 days |
Share-Based Compensation - RSU
Share-Based Compensation - RSU activity (Details) - Restricted shares units | 12 Months Ended |
Dec. 31, 2018USD ($)item$ / sharesshares | |
Share-Based Compensation | |
Contractual term | 10 years |
Annual Vesting percentage | 25.00% |
Vesting number of anniversaries | item | 4 |
Exercise price (in dollars per share) | $ 0 |
Number of restricted shares | |
Nonvested restricted shares outstanding at beginning of the year (in shares) | shares | 0 |
Granted (in shares) | shares | 33,948,333 |
Vested (in shares) | shares | (150,000) |
Forfeited (in shares) | shares | (1,430,000) |
Nonvested restricted shares outstanding at end of the year (in shares) | shares | 32,368,333 |
Weighted average grant date fair value | |
Nonvested restricted shares outstanding at beginning of the year (in dollars per share) | $ 0 |
Granted (in dollars per share) | 0.27 |
Vested (in dollars per share) | (0.28) |
Forfeited (in dollars per share) | (0.31) |
Nonvested restricted shares outstanding at end of the year (in dollars per share) | $ 0.26 |
Share-based compensation expense | $ | $ 1,566,975 |
Unrecognized compensation cost related to unvested awards | $ | $ 6,986,236 |
Weighted-average recognition period for unrecognized compensation cost | 3 years 4 months 13 days |
Earnings (Loss) per share - Com
Earnings (Loss) per share - Computation of basic and diluted net earnings (loss) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | |||
Net (Loss) Income | $ 10,147,465 | $ (23,660,913) | $ (30,706,599) |
Deemed dividend from repurchase of Series A preferred shareholders | (1,028,055) | ||
Net (loss) Income attributable to ordinary shareholders | $ 10,147,465 | $ (24,688,968) | $ (30,706,599) |
Shares (Denominator): | |||
Weighted average number of ordinary shares outstanding, Basic (in shares) | 1,464,257,884 | 898,781,587 | 912,551,946 |
Weighted average number of ordinary shares outstanding, Diluted (in shares) | 1,591,094,630 | 898,781,587 | 912,551,946 |
Net (loss) earnings per share-basic and diluted | $ 0.003 | $ (0.03) | $ (0.03) |
Series A Preferred Shares | |||
Numerator: | |||
Deemed dividend from repurchase of Series A preferred shareholders | $ (1,028,055) |
Earnings (Loss) per share - Sha
Earnings (Loss) per share - Shares outstanding were excluded from the calculation of diluted net (loss) earnings per ordinary share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of anti-dilutive securities | 14,495,000 | 2,255,473,778 | 2,167,961,968 |
Series A preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of anti-dilutive securities | 442,174,065 | 451,612,903 | |
Series B preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of anti-dilutive securities | 423,682,617 | 423,682,617 | |
Series B + preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of anti-dilutive securities | 129,616,445 | 129,616,445 | |
Series B -1 preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of anti-dilutive securities | 119,688,525 | 119,688,525 | |
Series C preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of anti-dilutive securities | 651,629,045 | 651,629,045 | |
Series D preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of anti-dilutive securities | 223,478,358 | 223,478,358 | |
Series D-1 preferred shares | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of anti-dilutive securities | 89,668,956 | ||
Share options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of anti-dilutive securities | 175,535,767 | 168,254,075 | |
Restricted shares units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Number of anti-dilutive securities | 14,495,000 |
Related Party Transactions - Lo
Related Party Transactions - Loans (Details) | 1 Months Ended | 12 Months Ended | ||||
Apr. 30, 2017CNY (¥) | Apr. 30, 2017USD ($) | Nov. 30, 2016CNY (¥) | Nov. 30, 2016USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Related Party Transactions | ||||||
Advances to related parties | $ 293,285 | $ 74,734 | ||||
Shareholder | ||||||
Related Party Transactions | ||||||
Advances to related parties | ¥ 2,000,000 | $ 293,285 | ¥ 500,000 | $ 74,734 | ||
Interest rate on loan receivable | 4.08% | 4.08% | 4.08% | 4.08% | ||
Term of the loan receivable | 1 year | 1 year | 36 months | 36 months |
Related Party Transactions - Am
Related Party Transactions - Amounts owed from related parties (Details) | Dec. 31, 2017USD ($) |
Related Party Transactions | |
Current portion | $ 340,955 |
Non-current portion | 24,442 |
Total | $ 365,397 |
Commitments (Details)
Commitments (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments | |||
Rental expenses under operating leases | $ 1,011,379 | $ 847,832 | $ 587,120 |
Future lease payments under operating leases | |||
2019 | 957,522 | ||
2020 | 432,492 | ||
2021 | 414,816 | ||
2022 | 292,520 | ||
Total | $ 2,097,350 |
Segment Information - Group's r
Segment Information - Group's revenue based on revenue streams (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Segment Information | |||
Number of reportable segments | segment | 1 | ||
Net revenues | $ 134,109,632 | $ 37,334,966 | $ 11,030,079 |
Advertising | |||
Segment Information | |||
Net revenues | 131,287,334 | 35,032,557 | 9,967,282 |
Other revenue | |||
Segment Information | |||
Net revenues | $ 2,822,298 | $ 2,302,409 | $ 1,062,797 |
Segment Information - Company's
Segment Information - Company's revenues generated based on geographic location of customers' headquarters (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Information | |||
Net revenues | $ 134,109,632 | $ 37,334,966 | $ 11,030,079 |
USA | |||
Segment Information | |||
Net revenues | 108,309,547 | 20,246,637 | 5,423,026 |
PRC | |||
Segment Information | |||
Net revenues | 25,502,479 | 15,393,590 | 5,135,689 |
Others | |||
Segment Information | |||
Net revenues | $ 297,606 | $ 1,694,739 | $ 471,364 |
Segment Information - Group's n
Segment Information - Group's non-current assets presented based on geographical location of the assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Segment Information | ||
Non-current assets | $ 5,267,005 | $ 2,522,270 |
PRC | ||
Segment Information | ||
Non-current assets | 2,232,800 | 1,757,460 |
USA | ||
Segment Information | ||
Non-current assets | $ 3,034,205 | $ 764,810 |
Segment Information - Customers
Segment Information - Customers accounted for 10% or more of revenue (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment Information | |||
Net revenues | $ 134,109,632 | $ 37,334,966 | $ 11,030,079 |
Revenue | Customer risk | Company A | |||
Segment Information | |||
Net revenues | $ 6,919,426 | $ 4,019,900 | |
Concentration risk (as a percent) | 18.53% | 36.44% | |
Revenue | Customer risk | Company B | |||
Segment Information | |||
Net revenues | $ 73,116,840 | $ 7,467,645 | |
Concentration risk (as a percent) | 54.52% | 20.00% | |
Revenue | Customer risk | Company C | |||
Segment Information | |||
Net revenues | $ 14,609,270 | ||
Concentration risk (as a percent) | 10.89% |
Mainland China Contribution P_2
Mainland China Contribution Plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Mainland China Contribution Plan | |||
Company contributions to defined contribution plan | $ 4,504,045 | $ 3,383,205 | $ 2,370,359 |
Restricted Net Assets (Details)
Restricted Net Assets (Details) | Dec. 31, 2018USD ($) |
Restricted Net Assets | |
Total restricted net assets | $ 66,897,860 |
Subsequent Event (Details)
Subsequent Event (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Apr. 09, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Subsequent Event | |||
Total consideration for shares repurchased | $ 2,499,167 | $ 1,451,616 | |
ADS | |||
Subsequent Event | |||
Number of shares repurchased | 334,357 | ||
Subsequent event | |||
Subsequent Event | |||
Total consideration for shares repurchased | $ 3,200,000 | ||
Subsequent event | Class A | |||
Subsequent Event | |||
Number of shares repurchased | 16,717,850 |
SCHEDULE I-ADDITIONAL FINANCI_2
SCHEDULE I-ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY - CONDENSED BALANCE SHEETS (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||||
Cash and cash equivalents | $ 84,859,915 | $ 26,720,158 | $ 41,056,314 | |
Account receivable, net | 23,373,969 | 10,979,821 | 2,506,398 | |
Prepaid expenses and other current assets | 4,942,285 | 5,391,736 | ||
Total current assets | 113,176,169 | 43,738,752 | ||
TOTAL ASSETS | 118,443,174 | 46,261,022 | ||
Current liabilities: | ||||
Others current liabilities | 74,935 | 31,333 | ||
Total current liabilities | 33,242,553 | 14,814,770 | ||
Other non-current liabilities | 877,826 | |||
Total LIABILITIES | 34,120,379 | 14,814,770 | ||
Convertible redeemable preferred shares (redemption value of US$209,694,647 and nil as of December 31, 2017 and December 31, 2018, respectively) (Note 13) | 156,367,810 | |||
SHAREHOLDERS' (DEFICITS) EQUITY: | ||||
Ordinary shares | 8,984 | |||
Treasury stock | (2,499,167) | |||
Additional paid-in capital | 204,701,187 | 876,560 | ||
Accumulated deficit | (116,752,285) | (126,899,750) | ||
Accumulated other comprehensive income (loss) | (1,158,900) | 1,092,648 | ||
Total Shareholders' (Deficit) Equity | 84,322,795 | (124,921,558) | $ (100,556,616) | $ (70,059,034) |
TOTAL LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED SHARES AND SHAREHOLDERS' (DEFICIT) EQUITY | 118,443,174 | 46,261,022 | ||
Convertible redeemable preferred shares, redemption value | 0 | 209,694,647 | ||
Parent company | Reportable legal entities | ||||
Current assets: | ||||
Cash and cash equivalents | 11,044,673 | 1,307,136 | ||
Account receivable, net | 7,222 | 5,971 | ||
Prepaid expenses and other current assets | 34,027 | 30,596 | ||
Total current assets | 11,085,922 | 1,343,703 | ||
Advances to subsidiaries and VIEs | 74,814,760 | 30,102,549 | ||
TOTAL ASSETS | 85,900,682 | 31,446,252 | ||
Current liabilities: | ||||
Accrued issuance costs | 809,952 | |||
Deferred ADR reimbursement | 117,176 | |||
Others current liabilities | 46,129 | |||
Total current liabilities | 973,257 | |||
Other non-current liabilities | 604,630 | |||
Total LIABILITIES | 1,577,887 | |||
Convertible redeemable preferred shares (redemption value of US$209,694,647 and nil as of December 31, 2017 and December 31, 2018, respectively) (Note 13) | 156,367,810 | |||
SHAREHOLDERS' (DEFICITS) EQUITY: | ||||
Ordinary shares | 31,960 | 8,984 | ||
Treasury stock | (2,499,167) | |||
Additional paid-in capital | 204,701,187 | 876,560 | ||
Accumulated deficit | (116,752,285) | (126,899,750) | ||
Accumulated other comprehensive income (loss) | (1,158,900) | 1,092,648 | ||
Total Shareholders' (Deficit) Equity | 84,322,795 | (124,921,558) | ||
TOTAL LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED SHARES AND SHAREHOLDERS' (DEFICIT) EQUITY | 85,900,682 | 31,446,252 | ||
Convertible redeemable preferred shares, redemption value | $ 0 | $ 209,694,647 |
SCHEDULE I-ADDITIONAL FINANCI_3
SCHEDULE I-ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY - CONDENSED STATEMENTS OF OPERATIONS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
STATEMENTS OF OPERATIONS | |||
Net revenues | $ 134,109,632 | $ 37,334,966 | $ 11,030,079 |
Cost of revenue | (14,932,713) | (20,101,386) | (20,158,565) |
Gross Profit | 119,176,919 | 17,233,580 | (9,128,486) |
Operating expenses: | |||
General and administrative expenses | (10,728,807) | (8,366,698) | (3,920,057) |
Research and development expenses | (19,324,657) | (12,868,356) | (8,691,539) |
Sales and marketing expenses | (80,729,626) | (20,161,353) | (9,396,663) |
Other operating income, net | 1,609,159 | 190,338 | 605,890 |
Total operating expenses | (109,173,931) | (41,206,069) | (21,402,369) |
(Loss) Income from operations | 10,002,988 | (23,972,489) | (30,530,855) |
Foreign exchange (losses) gains | (70,033) | (169,556) | (188,631) |
Income (Loss) before income taxes and equity in earnings of subsidiaries | 10,147,685 | (23,660,113) | (30,706,599) |
Net (loss) Income | 10,147,465 | (23,660,913) | (30,706,599) |
Parent company | Reportable legal entities | |||
STATEMENTS OF OPERATIONS | |||
Net revenues | 146,090 | 116,120 | 68,944 |
Cost of revenue | (87,416) | (66,231) | (44,853) |
Gross Profit | 58,674 | 49,889 | 24,091 |
Operating expenses: | |||
General and administrative expenses | (450,005) | (2,043,737) | (520,067) |
Research and development expenses | (1,788,724) | (544,786) | (445,084) |
Sales and marketing expenses | (127,095) | (70,707) | (35,298) |
Other operating income, net | 9,374 | ||
Total operating expenses | (2,356,450) | (2,659,230) | (1,000,449) |
(Loss) Income from operations | (2,297,776) | (2,609,341) | (976,358) |
Foreign exchange (losses) gains | 9,604 | 2,792,646 | (3,326,826) |
Income (Loss) before income taxes and equity in earnings of subsidiaries | (2,288,172) | 183,305 | (4,303,184) |
Net income (loss) before equity in earnings of subsidiaries | (2,288,172) | 183,305 | (4,303,184) |
Equity in (loss) income of subsidiaries, VIEs and VIEs' subsidiaries | 12,435,637 | (23,844,218) | (26,403,415) |
Net (loss) Income | $ 10,147,465 | $ (23,660,913) | $ (30,706,599) |
SCHEDULE I-ADDITIONAL FINANCI_4
SCHEDULE I-ADDITIONAL FINANCIAL INFORMATION OF PARENT COMPANY - CONDENSED STATEMENTS OF CASH FLOWS (Details) - USD ($) | Oct. 02, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Cash flows from operating activities: | ||||
Net (loss) income | $ 10,147,465 | $ (23,660,913) | $ (30,706,599) | |
Adjustment to reconcile net loss to net cash provided by (used in) operating activities: | ||||
Share-based compensation | 2,359,471 | 876,560 | 727,213 | |
Changes in assets and liabilities: | ||||
Accounts receivable | (12,578,516) | (9,622,450) | (1,807,077) | |
Accrued expenses and other current liabilities | 430,326 | 897,784 | 1,071,541 | |
Other non-current liabilities | 892,551 | |||
Net cash (used in) provided by operating activities | 23,106,005 | (28,049,152) | (28,435,452) | |
Investing activities: | ||||
Net cash used in investing activities | (3,655,042) | (1,758,412) | (831,393) | |
Financing activities: | ||||
Proceeds from issuance of preferred shares | 20,000,000 | 46,000,000 | ||
Issuance of ordinary shares for initial public offering ("IPO") | $ 45,100,000 | 45,930,274 | ||
Repurchase of ordinary shares | (1,451,616) | |||
Net cash provided by financing activities | 40,169,171 | 14,401,620 | 51,306,960 | |
Net (decrease) increase in cash, cash equivalents, and restricted cash | 59,620,134 | (15,405,944) | 22,040,115 | |
Cash, cash equivalents, and restricted cash at beginning of year | 27,026,240 | 41,344,623 | 19,845,488 | |
Cash, cash equivalents, and restricted cash at end of year | 84,859,915 | 27,026,240 | 41,344,623 | |
Parent company | Reportable legal entities | ||||
Cash flows from operating activities: | ||||
Net (loss) income | 10,147,465 | (23,660,913) | (30,706,599) | |
Equity in losses (income) of subsidiaries, VIEs and VIEs' subsidiaries | (12,435,637) | 23,844,218 | 26,403,415 | |
Adjustment to reconcile net loss to net cash provided by (used in) operating activities: | ||||
Share-based compensation | 2,359,471 | 876,560 | 727,213 | |
Changes in assets and liabilities: | ||||
Accounts receivable | (1,251) | (163) | (2,033) | |
Accrued expenses and other current liabilities | 163,305 | (10,000) | 10,000 | |
Other receivables, deposits and other assets | (3,432) | |||
Other non-current liabilities | 604,630 | |||
Net cash (used in) provided by operating activities | 834,551 | 1,049,702 | (3,568,004) | |
Investing activities: | ||||
Investment in Subsidiaries | 19,890,000 | (21,500,000) | ||
Advances to Subsidiaries and VIEs | (54,418,121) | (252,465) | (37,291,793) | |
Net cash used in investing activities | (34,528,121) | (21,752,465) | (37,291,793) | |
Financing activities: | ||||
Proceeds from issuance of preferred shares | 20,000,000 | 46,000,000 | ||
Issuance of ordinary shares for initial public offering ("IPO") | 45,930,274 | |||
Cash paid for other financing activities | (3,451,616) | |||
Repurchase of ordinary shares | (2,499,167) | |||
Net cash provided by financing activities | 43,431,107 | 16,548,384 | 46,000,000 | |
Net (decrease) increase in cash, cash equivalents, and restricted cash | 9,737,537 | (4,154,379) | 5,140,203 | |
Cash, cash equivalents, and restricted cash at beginning of year | 1,307,136 | 5,461,515 | 321,312 | |
Cash, cash equivalents, and restricted cash at end of year | $ 11,044,673 | $ 1,307,136 | $ 5,461,515 |